Bass, Berry & Sims attorney Doug Dahl provided insight for an article in Benefits Pro examining the Tenth Circuit ruling that certain state regulation of pharmacy benefit managers (PBMs) is preempted by ERISA. The case stems from an Oklahoma law that sought to further regulate PBMs and other pharmacy networks which caused conflict between the federal ERISA mandates and state law.

Doug told Benefits Pro that the ruling would help protect businesses with self-funded plans trying to hold down pharmacy costs. “The PBM law at issue in the 10th Circuit Case would almost certainly have increased the cost to employers of providing pharmacy benefits in the state of Oklahoma. So, this decision essentially keeps in place the status quo for most of the existing cost-savings structures (such as affiliated pharmacies, mail order pharmacies, etc.) for employers that are governed by 10th circuit law,” he said.

“It’s a win for both PBMs and employers that operate self-funded plans. The patchwork of state pharmacy laws was already forcing employers with operations in multiple states to weigh compliance with the various differing laws against a uniform plan design across their entire populations and significant pharmacy cost increases,” he said, adding that employers and PBMs were likely to continue to innovate on cost-cutting ideas. “This decision will not stop employers from exploring other ways to keep RX costs at a manageable level, even if that means alternative arrangements that don’t look exactly like the common PBM arrangements that exist now.”

The full article, “A Big Win for PBMs (and Self-Funded Health Plans) in Oklahoma Appeals Court Ruling,” was published by Benefits Pro on September 5 and is available online. Doug and colleagues Susie Bilbro and Catherine Simpson wrote about this topic on the firm’s HR Law Talk blog – read their post here.