The court has decided against providing a “writ of certiorari,” or official review, for a ruling by the 10th U.S. Circuit Court of Appeals on Glen Mulready et al. v. the Pharmaceutical Care Management Association.
The 10th Circuit rejected efforts by Oklahoma Insurance Commissioner Glen Mulready to apply state PBM laws — such as a law requiring all PBMs to work with “all willing pharmacies” — to PBMs working with the employer health plans governed by the Employee Retirement Income Security Act.
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The Supreme Court has been considering Mulready’s appeal since February 2024. The court has distributed case pleadings to all of the justices twice. But the court ended up rejecting Mulready’s petition for certiorari without comment.
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What it means: States may have a tougher time setting rules for PBMs or other entities that sell services to ERISA plans.
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If employers, pharmacies or other benefit market players want someone to set new rules for benefit plan service providers, Congress may have to set the rules.
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ERISA basics: When Congress drafted ERISA, it tried to hold down costs for large employers and multistate employers by “preempting,” or blocking, state efforts to regulate the plans that come under ERISA.
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The goal was to make large, multistate plans cheaper and simpler to operate by providing benefit plan law uniformity.
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PBMs: Pharmacists and many employers have objected to large PBMs’ strategies. Critics contend that the biggest PBMs make deals that do more to increase their own profit margins than to hold costs down for employers and patients.
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The big PBMs and PCMA argue that high PBM employer plan retention rates show that most employers are happy with the PBM services they’re getting.
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An employer group, the ERISA Industry Committee, has argued that any new PBM rules that are necessary should come from Congress, not the states, and respect the ERISA provision that preempts state efforts to regulate benefit plans.
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Officials in Arkansas, Oklahoma and Texas have been especially active in efforts to regulate the services PBMs provide for self-insured plans.
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Rutledge: Traditionally, the Supreme Court and federal appeals courts have sided with the employers in ERISA preemption cases.
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In 2020, the Supreme Court ruled in connection with Rutledge v. PCMA that an Arkansas PBM law, which set standards for PBMs’ payments for prescription drugs, was too far away from ERISA and ERISA plans to have an “impermissible connection” with ERISA plans, even though the Arkansas law had an indirect on what ERISA plans paid for prescription drugs.
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Mulready v. Oklahoma: Oklahoma tried to develop a law that would fit within the guidelines given in the Rutledge ruling.
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A federal district court supported the law in 2022.
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The 10th Circuit ruled against the law in August 2023.
By denying to rule on the Mulready case, the Supreme Court has backed away from a chance to explain why it thinks the Rutledge standards should or should not apply to the Oklahoma PBM law.
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Reactions: The PCMA welcomed the Supreme Court ruling.
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“ERISA preemption has been the cornerstone of the American system for employer-sponsored health care benefits, and it is vital to maintain the statute’s authority to allow plan sponsors to administer uniform health benefits across state lines and control costs for their workers,” according to a statement by Jack Linehan, the PCMA’s general counsel.
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Oklahoma officials could not immediately be reached for comment.
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