State PBM regulation hits a SCOTUS roadblock

Politico

01-07-2025

Programming note: We'll be off this Friday but will be back in your inboxes next Monday.
Driving the Day
STATES DEALT A PBM BLOW — The Supreme Court declined Monday to consider an appellate court's 2023 decision overturning portions of an Oklahoma law regulating pharmacy benefit managers, raising questions about the implications for state actions to rein in the companies' business practices.
The 10th Circuit appeals court ruled that federal laws regulating private employer-sponsored health plans and Medicare's drug benefit preempt the 2019 state law's provisions that aimed to bolster independent pharmacies' bargaining power with PBMs, which help negotiate retail drug prices between drugmakers and payers. Community pharmacies have long panned the middlemen — which are responsible for 80 percent of the market — for steering customers toward pharmacy chains they own.
Nearly three dozen states and Washington, D.C., plus several pharmacy organizations, joined the case as 'friends of the court' on the side of Oklahoma, illustrating state-level interest in overseeing how PBM practices affect where patients pick up their prescriptions. Several states have considered PBM bills in recent years as congressional efforts to police the industry have floundered.
Reaction: 'We are disappointed, but hopeful that the Court will take up this issue in the near future and clarify that States can indeed regulate PBMs in the way envisioned by Oklahoma's laws in question,' Leslie Berger, a spokesperson for Oklahoma Attorney General Gentner Drummond, said in a statement.
B. Douglas Hoey, CEO of the National Community Pharmacists Association, said the group is 'very disappointed' the Supreme Court didn't act to 'reinforce' a unanimous 2020 decision upholding Arkansas' regulation of PBM reimbursement practices — a ruling widely seen as giving states more leeway to act amid Congress' silence.
'Now the lower courts are divided, and the states are confused about what they can do to protect patients and small-business pharmacies from the unfair, anticompetitive practices of the PBMs, higher drug costs and from PBMs overruling doctors' prescribing decisions,' he said.
PBMs celebrate: The PBMs' lobbying group, which challenged Oklahoma's law, applauded the high court's denial of Mulready v. Pharmaceutical Care Management Association and suggested it portends a similar fate for similar laws in other states.
'In recent months, various businesses and unions have joined to challenge state restrictions on health benefit in Iowa, Minnesota, Arkansas, and Tennessee,' PCMA general counsel Jack Linehan said in a statement. 'These cases and the Mulready decision send a powerful reminder that overbroad state laws are not only illegal, but they boost healthcare costs for businesses and their workers.'
NCPA said the 10th Circuit's decision likely stands for now, but only for the six states covered by that court. 'States contemplating PBM reform should not be dissuaded,' it said.
PBMs have taken Arkansas back to court — this time over a new law that would prevent them from owning pharmacies like CVS in the state.
IT'S TUESDAY. WELCOME BACK TO PRESCRIPTION PULSE. No more excess humidity in D.C. would be great.
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In the courts
MORE DENIALS — Federal courts have rebuffed two attempts by anti-vaccine activists to challenge past losses.
The Supreme Court also denied on Monday a bid by Children's Health Defense — the group founded by Health Secretary Robert F. Kennedy Jr. — to have its censorship case against social media giant Meta heard. The group alleged that the owner of Facebook and Instagram colluded with the federal government to deplatform its content.
And the U.S. Court of Federal Claims denied CHD attorney Rolf Hazlehurst's motion to reopen his son's case claiming that childhood vaccines caused his autism.
Judge Edward H. Meyers signed the order Thursday, according to the court docket, but the document is not yet public due to court rules that embargo the release of decisions until parties decide whether to request the redaction of any medical or otherwise private information.
Mary Holland, CHD's president and CEO, said the group is disappointed by both decisions. 'It is our understanding that Mr. Hazlehurst is already evaluating the next steps,' she said in a statement.
Separately, she said 'the problem' the organization presented in its Meta case 'has lessened' — seemingly a nod to Kennedy's ascension to power within the federal government.
'The censorship-industrial complex agreements of the past seem to have gone by the wayside, at least for now, and for that I am grateful,' she said.
In Congress
A BBB ORPHAN DRUG WIN? Drugmakers notched a win in the GOP megabill Monday, David writes.
Senate Parliamentarian Elizabeth MacDonough allowed an expansion of Medicare's drug-price negotiation exemption for orphan drugs to include medicines that treat multiple rare diseases to remain in the package. She initially ruled that it violated the so-called Byrd rule — which limits what can pass with a simple majority during the reconciliation process — over the weekend.
The decision means the policy remains in the underlying GOP reconciliation package being debated by the Senate.
Pharma Moves
Parexel, a clinical trial consulting company, has hired two FDA alums — Dr. Lola Fashoyin-Aje as senior vice president and head of regulatory oncology, cell and gene therapies and Tala Fakhouri as vice president of consulting for artificial intelligence and digital policy. Fashoyin-Aje was director of the Office of Clinical Evaluation within the FDA's Center for Biologics Evaluation and Research, while Fakhouri was associate director for data science and AI in the Office of Medical Policy at the FDA's Center for Drug Evaluation and Research.
Anindita 'Annie' Saha will take on the lead AI policy role at the FDA's drug division, according to an internal email reviewed by POLITICO. Saha is a 20-year agency veteran who will also keep her role as associate director for strategic initiatives at the Digital Health Center of Excellence within the FDA's device center. Saha replaces Fakhouri.
Shara Selonick has joined the Senior Care Pharmacy Coalition, which advocates for long-term care pharmacies, as vice president of strategy and government affairs. She most recently was a public health adviser at the FDA.
Document Drawer
The Government Accountability Office published a report on its forum on 'reducing spending and enhancing value in the U.S. health care system.
AbbVie is scheduled to meet with the White House Office of Information and Regulatory Affairs on Tuesday to discuss the Health Resources and Services Administration's 340B rebate guidance. AHIP is scheduled to meet with OIRA on Wednesday to discuss the policy.
WHAT WE'RE READING
The Supreme Court's decision upholding the Affordable Care Act's coverage mandate for preventive services may now shift the legal landscape toward defining what constitutes 'evidence' underpinning federal recommendations, Lauren writes.
Kennedy's influence over federal health regulation under a Republican president is being seen in a once-unlikely area — psychedelics as sanctioned mental health treatments, POLITICO's Erin Schumaker reports.
A federal judge ruled last week that the Health Resources and Services Administration didn't violate the law by requiring Johnson & Johnson to get its approval before changing how it reimburses providers participating in a drug discount program, Stat's Ed Silverman writes.