ALEXANDRIA, Va. – The National Community Pharmacists Association (NCPA), American Pharmacists Association (APhA), and Tennessee Pharmacists Association (TPA) have filed a joint amicus brief urging a federal appeals court to uphold Tennessee’s right to regulate pharmacy benefit managers (PBMs), citing harmful and anti-competitive practices by PBMs when left unchecked.
The filing comes as the U.S. Court of Appeals for the Sixth Circuit considers a challenge to Tennessee’s 2021 PBM reform law, which prohibits PBMs from steering patients to affiliated pharmacies and from excluding independent pharmacies from preferred networks. The challenge, brought by McKee Foods, the parent company of Little Debbie, argues that the federal Employee Retirement Income Security Act (ERISA) preempts the law.
A district court previously ruled in favor of McKee Foods, issuing an injunction against the law. Now, national and state pharmacy organizations are backing Tennessee in the appeal, emphasizing the need for state-level authority to regulate PBMs and protect local pharmacies, patients, and health plans.
“Because PBMs owe fiduciary duties only to their shareholders, not the plans that they purport to serve, PBMs have incentives to engage in business practices that can harm plans, patients, and pharmacies. In the absence of regulation, PBMs have done just that,” they argue in the brief.
The brief outlines several PBM practices deemed abusive, including preferential reimbursement to affiliated pharmacies and patient steering, which the organizations argue undermine competition and harm small, independent pharmacies.
“PBMs routinely steer patients to their own affiliated pharmacies, and they routinely reimburse their own affiliated pharmacies more than they reimburse their competitors, which are often small, family-run, independent pharmacies,” said NCPA General Counsel Matthew Seiler. “Nearly every state in the country has enacted, or is trying to enact, PBM reform to curb these abuses. Patients in Tennessee should have access to the health care providers they trust.”
Michael D. Hogue, PharmD, Executive Vice President and CEO of APhA, added, “It’s simple: pharmacies should not lose money when they dispense life-saving prescriptions. Until PBMs change their reimbursement practices to provide fair compensation to pharmacies for the medications as well as the professional services provided by pharmacists, APhA will continue to fight for reform of their practices. The U.S. Supreme Court has already unanimously ruled the states have a right to regulate the PBMs, including allowing pharmacies to participate in networks with favorable reimbursement terms.”
TPA CEO Anthony Pudlo noted Tennessee’s leadership in enacting PBM reforms and cited recent state audits that underscore the necessity of these reforms. “Tennessee has led the nation in advancing meaningful PBM reform—and recent state audits confirm why those laws are necessary. The McKee Foods case threatens the state’s authority to protect patients, providers, and employers from abusive PBM practices. TPA fully supports Tennessee’s effort through this amicus brief and defends its right to enforce laws that ensure transparency, accountability, and fairness in the prescription drug market,” he said.
The pharmacy groups argue that the Supreme Court has already affirmed states’ rights to regulate PBMs and are calling on the Sixth Circuit to uphold Tennessee’s authority to enforce its reform law.
