Minnesota AG Ellison pushes for U.S. Supreme Court review of state PBM laws

Minnesota Attorney General Keith Ellison is leading a bipartisan group of 32 attorneys general that is asking the U.S. Supreme Court to review a case that could otherwise limit the state’s regulation of pharmacy benefit managers (PBMs).

These companies are hired by health insurers to manage drug benefits for health plans, which includes everything from setting drug copays to creating a network of pharmacies where patients can fill prescriptions.

Minnesota, Oklahoma and other states say PBM practices have in some cases enriched insurance companies, hurt independent pharmacies and made it more difficult for patients to purchase and access drugs.

In August 2023, an appeals court sided with the Pharmaceutical Care Management Association, an industry group for PBMs, in a legal challenge to some regulations regarding how companies can manage pharmacy chains in Oklahoma.

“Review by this court is therefore necessary to ensure that states continue to be able to enforce necessary consumer protections and prevent the egregious abuses that PBMs would otherwise commit,” the attorney general said in an amicus brief filed Monday with the Supreme Court.

The Pharmaceutical Care Management Association did not immediately respond to a request for comment.

Minnesota is home to two of the largest PBMs in the country.

OptumRx, a division of Minnetonka-based UnitedHealth Group, handles pharmacy benefits for UnitedHealthcare and other health insurers. Eagan-based Prime Therapeutics works with many Blue Crosss and Blue Shield health plans across the country.

In 2019, the Minnesota Legislature passed a law regulating PBMs, which also negotiate the prices health plans pay to drugmakers and pharmacies. These payments are made through a complex system of rebates and/or administrative fees that has been criticized for its lack of transparency.

Last year, the state Department of Commerce imposed a $500,000 fine on Rhode Island-based CVS Caremark, saying the company used strategies prohibited under Minnesota law to steer consumers to its own pharmacies. CVS Caremark denied the allegations and did not admit liability.

The Oklahoma case involved self-insured employer health plans, which are regulated primarily by the federal government. The appeals court ruled that federal law preempted state laws that effectively pushed PBMs to create broader networks of pharmacy service providers.

Oklahoma asked the U.S. Supreme Court to review the case. A brief filed Monday by Ellison and other attorneys general supported the state’s request.

Last year’s ruling in Oklahoma conflicts with an earlier ruling in which the court found that “PBM companies cannot circumvent state consumer protection laws under the guise of ERISA preemption,” the Minnesota Attorney General’s Office said in a news release. ERISA is a federal law that regulates self-insured health plans in which employers assume the financial risk of medical claim costs.

“The result (along with last year’s ruling) is nationwide regulatory uncertainty, a corresponding increase in consumer harms, and a significant likelihood of continued litigation in this matter in light of the deeply divided circuits,” the attorneys general wrote in their brief filed Monday.

Ellison’s office said the Commerce Department has reached agreements or issued cease-and-desist orders in 12 cases since Minnesota passed a law regulating PBMs.