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Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

July 16, 2020

Oklahoma Federal Judge Nixes PBM Bid to Block State Reforms

The Western District of Oklahoma’s decision last week in Pharmacy Care Management Association (PCMA) v. Mulready concerning the regulation of pharmacy benefit managers (PBMs) might foreshadow a positive outcome for pharmacies besieged by the tactics of the PBMs that manage them. The long-awaited, potentially game-changing decision in Rutledge1 is now scheduled to be heard by the US Supreme Court (SCOTUS) in October 2020 after delays in arguments related to COVID-19.

In an interim decision issued during COVID-19, the Mulready decision cleared the way for some of Oklahoma’s key reforms contained in its new law, which may reign in the often-unchecked power wielded by PBMs.2 PCMA—the trade association for PBMs—had its “go-to” ERISA and Medicare Part D preemption defenses claiming the new reform law was prohibited and preempted in its entirety rejected by the court. This signals a possible shift in favor of bourgeoning state reforms seeking to combat the anticompetitive practices and self-dealing of PBMs at the state level.

Not surprisingly, PCMA immediately appealed the decision to the 10th Circuit, claiming the district court misapplied precedent and standards to determine preemption and seeking an injunction against enforcement of the Oklahoma PBM reform law during the appeal process.3 The battle continues with Rutledge, which is pending before the SCOTUS on similar issues, and is the title bout between states and PBMs.

If you have any questions regarding the content of this alert, please contact Linda Clark, Health Care Controversies Team leader, at lclark@barclaydamon.com; Brad Gallagher, counsel, at bgallagher@barclaydamon.com; Brenda Baddam, associate, at bbaddam@barclaydamon.com; or another member of the firm’s Health Care Controversies Team.

1 Pharm. Care Mgmt. Ass’n v. Rutledge, 240 F. Supp. 3d 951 (E.D. Ark. 2017), cert. granted, Docket No. 18-540 (Jan. 10, 2020).

2 Order, Pharmaceutical Care Management Association v. Mulready et al., 5:19-cv-00977 (W.D. Okla. July 9, 2020).

3 Pharmaceutical Care Management Association v. Mulready et al., CIV-19-977-J (10th Cir. July 13, 2020).

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