AG Fox Joins Bipartisan Coalition Defending States’ Rights to Regulate Prescription Drug Costs

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AG Fox Joins Bipartisan Coalition Defending States’ Rights to Regulate Prescription Drug Costs

Attorney General Tim Fox joined a bipartisan coalition of 46 attorneys general today in filing an amicus brief in the United States Supreme Court supporting states’ rights to regulate and address the rising cost of prescription drugs.  In Rutledge v. Pharmaceutical Care Management Association, the attorneys general argue that in order to protect the well-being of consumers, states must regulate pharmacy benefit managers, also known as PBMs. PBMs act as middlemen between pharmacies, drug manufacturers, health insurance plans, and consumers.


“Regulation of the prescription drug market, including pharmacy benefit managers, is a critical tool for states to protect their residents and address the access and affordability of prescription drugs,” Attorney General Tim Fox said.  “Pharmacy benefit managers are typically in a position that gives them some power to manipulate the market as they develop and maintain prescription drug formularies, contract with pharmacies, negotiate discounts with drug manufacturers, and process and pay prescription drug claims.  Taking away a state’s ability to regulate PBMs would create confusion and uncertainty in the market and harm patients,” Fox added.


Today’s brief supports the state of Arkansas’ position that federal law does not prevent states from regulating PBMs.  In 2015, Arkansas implemented a law that regulated the reimbursement rates PBMs pay to pharmacies.  Under the law, PBMs must raise their reimbursement rate for a drug if that rate falls below the pharmacy’s wholesale costs.  The law also created an appeals process for pharmacies to challenge these reimbursement rates.  The law was challenged by the Pharmaceutical Care Management Association, a PBM trade association, which argued that the Employment Retirement Income Security Act prevents Arkansas from implementing the law. Arkansas has asked the Supreme Court to reverse a lower court judgment that held the law invalid.


In today’s filing, the attorneys general argue that state laws regulating pharmacy benefit managers are not restricted by federal law.  Regulation is critical to the states’ ability to improve the transparency of prescription drug marketplaces and to protect consumers’ access to affordable prescription drugs, especially those in underserved, rural and isolated communities. To date, nearly every state has enacted laws that regulate PBMs in some way, including 44 new or amended laws in the last five years.  Additionally, the attorneys general assert that the regulation of pharmacy benefit managers promotes healthcare access and affordability for residents.

A copy of the brief is available here.

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