FEDERAL COURT BLOCKS WASHINGTON, D.C., PBM DISCLOSURE LAW

A federal court has blocked a provision in a Washington, D.C., prescription drug law that would have imposed fiduciary duties on pharmaceutical benefit managers (PBMs) and required them to disclose proprietary financial information negotiated with drugmakers.

The U.S. District Court for the District of Columbia granted a preliminary injunction Dec. 21 on Title II of the city's AccessRx Act, which D.C. lawmakers unanimously passed this year in an attempt to lower prescription drug costs. Title II would have required PBMs to publicly disclose financial information and contract terms negotiated with drug manufacturers, including rebates, discounts and other payments. The provision also would have required PBMs to pass on any discounts to consumers.

The Pharmaceutical Care Management Association (PCMA), a PBM trade group, had sought the injunction against Title II, contending it was unconstitutional and would have resulted in irreparable harm to PBMs.

PCMA argued Title II violated the U.S. Constitution's commerce clause, as well as the takings clause of the Fifth Amendment, which prohibits the taking of private property by the government without just compensation. The court agreed in part with PCMA, saying there is "substantial likelihood of success on the plaintiff's takings argument." The court concluded that PBMs would suffer irreparable injury if the injunction were not granted and that the injunction would not substantially injure other interested parties.

The court also concluded that Title II would have compelled PBMs to disclose trade secrets. In addition, the court noted the provision could have the unintended effect of actually driving the PBM business, and its attendant benefits, out of the District of Columbia.