An attorneys general coalition files brief with Supreme Court over drug policy

March 3, 2020 – Attorneys general from Nebraska and Kansas have joined a coalition of 46 AGs in a brief filed with the Supreme Court on Monday over 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. Nebraska AG Doug Peterson said PBMs act as middlemen between pharmacies, drug manufacturers, health insurance plans, and consumers.

Peterson said their position 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.

“The rising cost of prescription drugs is an issue at the top of mind for many Kansans,” Kansas Attorney General Derek Schmidt said. “As we continue to face uncertainty from a gridlocked Congress in Washington, it is vitally important that states are not prevented from improving access to affordable prescription drugs – particularly in rural communities in states like ours.”

Peterson said the attorneys generals were led by California Attorney General Becerra in filing the amicus brief in the United States Supreme Court. It argues that state laws regulating PBMs are not restricted by federal law.

The attorneys general argue that in order to protect the well-being of consumers, states must regulate PBMs. The brief argues that regulation of the prescription drug market, including PBMs, is a critical tool for states to protect residents and address the access and affordability of prescription drugs.

The Nebraska Attorney General’s office stated that in 2015, the state of 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.

He said the law also created an appeals process for pharmacies to challenge these reimbursement rates.

Peterson said the law was challenged by the Pharmaceutical Care Management Association, a PBM trade association, which argued that the Employment Retirement Income Security Act prevents the state of Arkansas from implementing the law. Arkansas has asked the Supreme Court to reverse a lower court judgment that held the law invalid.

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