Court Finds D.C. Law Regarding PBMs Pre-empted by ERISA

July 12, 2010 ( – A federal appeals court has found that a law passed by the District of Columbia intended to regulate pharmacy benefit managers (PBM) is pre-empted by the Employee Retirement Income Security Act (ERISA).

The law gives PBMs fiduciary status, requires them to disclose conflicts of interest and drug substitutions, and requires them to pass along any rebates to clients. The U.S. Court of Appeals for the District of Columbia agreed with the U.S. District Court that because PBMs provide claims administration services for self-insured employers, they are governed by ERISA, which pre-empts state and municipal laws affecting employee benefit plans, Business Insurance reports.    

The District of Columbia Council passed the AccessRx Act in 2004 in response to rising prescription drug prices; however, the law never went into effect because of the litigation that ensued.    

According to Business Insurance, the Pharmaceutical Care Management Assn., a national trade association based in Washington that represents PBMs, filed suit shortly after the law’s passage, arguing that it was pre-empted by ERISA. It also argued Title II is pre-empted by the Commerce Clause and violates the First Amendment and the Takings Clause of the Fifth Amendment of the U.S. Constitution.    

The appellate court sent PCMA’s constitutional challenges back to the district court for reconsideration.    

The case is Pharmaceutical Care Management Ass’n v. District of Columbia, D.C. Cir., No. 09-7042, 7/9/10.