Federal Appeals Court Rejects Key Aspects of Oklahoma PBM Law

A federal appeals court has rejected four provisions of an Oklahoma law regulating prescription benefit managers (PBM), arguing the provisions were preempted by existing federal law.

In a unanimous decision issued Tuesday, the three-judge panel of the U.S. Court of Appeals for the Tenth Circuit ruled in favor of a challenge brought by the Pharmaceutical Care Management Association (PCMA), a PBM advocacy group, finding that the Oklahoma law conflicts with the Employee Retirement Income Security Act of 1974 (ERISA) and Medicare Part D program, which covers prescription drugs.

“Though the Act avoids mentioning ERISA plans or Medicare Part D plans by name, it encompasses these plans by striking at the heart of network and benefit design,” wrote Judge Gregory Phillips, who penned the court’s opinion. “But the states have an avenue by which to meaningfully seek redress,” he continued, noting that they may approach Congress “to take up the mantle” of legislating PBM reform.

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