PCMA: U.S. Supreme Court Leaves Door Open to Near-Term Review of Maine, D.C. PBM Fiduciary-Disclosure Laws

6 June 2006

In an expected procedural move, the U.S. Supreme Court today has declined at this time to review the First Circuit's November 2005 ruling in PCMA v. Rowe, but could revisit the ruling in light of a potential conflict arising within the next year from separate litigation currently before the U.S. District Court for the District of Columbia, the Pharmaceutical Care Management Association (PCMA) said today. Historically, where the U.S. Supreme Court has discretionary jurisdiction, the Court is most inclined to review cases where Circuit Courts are in conflict.

"It is increasingly apparent that Maine and DC are outliers among the nation's policymakers and payors, who typically oppose efforts to redefine PBMs as 'fiduciaries' and impose one-size-fits-all disclosure," said PCMA President Mark Merritt. "While we await a decision from the US District Court for the District of Columbia, we are encouraged that state legislatures routinely reject similar legislation upon learning it would actually increase -- - not decrease - -- drug costs by undermining PBMs' ability to negotiate discounts from drug companies. This year alone, 17 state legislatures -- - including seven in the past month -- have rejected such legislation, which increases costs by 10 percent without offering any corresponding 'upside' to consumers or payors."

As background, in April 2005, PCMA petitioned the U.S. Supreme Court to review the First Circuit's November 2005 ruling upholding a 2003 Maine law designating pharmacy benefit managers (PBMs) as fiduciaries under ERISA and imposing onerous public disclosure requirements. PCMA has serious concerns that the Maine law would result in higher prescription drug costs - -- as much as 10 percent, according to one estimate from PricewaterhouseCoopers -- - for Maine consumers and employers. Underscoring the widespread concerns about increased costs associated with the Maine law, four national employer and insurance organizations -- - Business Roundtable, U.S. Chamber of Commerce, American Benefits Council, and America's Health Insurance Plans -- - last month filed an amicus brief asking the Court to review the law as well.

While the U.S. Supreme Court has declined at this time to review the First Circuit's November 2005 ruling, the Supreme Court could revisit the ruling within the next year in light of pending litigation before the U.S. District Court for the District of Columbia. The District of Columbia enacted a fiduciary-disclosure law similar to the Maine law in March 2004. D.C.'s law was subsequently challenged by PCMA and, in December 2004, the U.S. District Court issued an injunction blocking D.C. from enforcing the law. The injunction blocking the D.C. law from being enforced remains currently in effect while the merits of the D.C. law are litigated. A substantive ruling on PCMA's motion for summary judgment could be handed down perhaps in Fall 2006. If a ruling from the U.S. District Court for the District of Columbia conflicts with the First Circuit's decision, this conflict would afford the U.S. Supreme Court a fresh opportunity to review both the Maine and D.C. statutes.

At the state level, the Maine and D.C. laws continue to be anomalies with respect to PBM regulation. Thus far in 2006, 17 states have now rejected imposing fiduciary and/or disclosure requirements on PBMs. Since April 28, seven state legislatures -- - Hawaii, Iowa, Minnesota, Missouri, South Carolina, Tennessee, and Vermont -- - have adjourned without enacting additional fiduciary- disclosure laws. Maine-style fiduciary-disclosure proposals are still pending in New Jersey, New York, Pennsylvania, and Rhode Island.

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PCMA is the national association representing America's pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 200 million Americans with health coverage provided through small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare Part D.

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