As
greater
scrutiny
envelops
the
largest
pharmacy
benefit
management
companies,
one
thing
is
clear:
They
are
not
going
to
give
up
without
a
fight.
And
in
that
existential
battle,
they
just
notched
a
major
win.
Last
week,
U.S.
District
Judge
Brian
Miller
blocked
an
Arkansas
law
(Act
624)
that
would
have
banned
PBMs
from
owning
and
operating
pharmacies
in
the
state.
Arkansas
Governor
Sarah
Huckabee
Sanders
signed
Act
624
into
law
in
April,
arguing
that
PBMs
have
increasingly
bought
pharmacies,
allowing
them
to
increase
drug
prices
and
put
competitors
out
of
business.
Shortly
after,
CVS
Caremark,
Express
Scripts
and
PBM
lobbying
group
Pharmaceutical
Care
Management
Association
filed
separate
lawsuits
challenging
the
law.
Miller
issued
a
preliminary
injunction
against
the
law,
stating
that
it
violates
the
Commerce
Clause,
which
says
that
states
cannot
pass
laws
that
unfairly
hurt
or
discriminate
against
businesses
from
other
states.
In
response
to
the
decision,
Sanders
said
in
a
statement
that
“Arkansas
was
the
first
state
to
force
big
drug
middlemen
called
PBMs
to
stop
inflating
drug
prices
and
manipulating
the
market.
The
PBMs
sued
Arkansas
and
a
judge
let
them
get
away
with
it.
But
we’ll
appeal,
win
in
higher
court,
and
set
a
new
standard
for
the
country.”
While
the
state
plans
to
appeal,
at
least
one
healthcare
expert
isn’t
so
sure
that
this
law
has
a
future.
“I
could
be
wrong,
but
I
don’t
think,
as
it
is
drafted
today,
that
there’s
any
possibility
that
it
gets
around
the
constitutional
challenges
that
it
faces,”
said
Chris
Deacon,
principal
and
founder
of
VerSan
Consulting.
That
said,
Arkansas’
efforts
still
sent
a
powerful
message.
“If
anything,
what
I
think
this
does
is
it
very
clearly
sends
a
signal
to
Congress
that
the
states
are
trying
[and
that]
this
is
a
problem,”
Deacon
stated.
“They
are
trying
to
deal
with
it
head
on.
‘We
cannot
do
this
alone.
…
We
need
Congress
to
act
because
the
holding
is
very
clear:
Congress
has
the
authority
to
regulate
interstate
commerce.
The
states
do
not.’”
The
judge’s
decision
The
judge
granted
the
plaintiffs’
motions
for
a
preliminary
injunction
for
a
few
reasons.
That
includes
his
conclusion
that
they
are
likely
to
“prevail”
on
their
Commerce
Clause
and
TRICARE
preemption
claims.
The
Commerce
Clause
gives
Congress
the
power
to
regulate
interstate
commerce,
while
the
negative
implication
of
this
authority
—
the
dormant
Commerce
Clause
—
bars
states
from
discriminating
against
interstate
commerce.
“Act
624
appears
to
overtly
discriminate
against
plaintiffs
as
out
of
state
companies
and
the
state
has
failed
to
show
that
it
has
no
other
means
to
advance
its
interests,”
the
judge
stated.
“This
is
true
because
section
one
of
Act
624
specifically
states
that
its
purpose
is
to
eliminate
plaintiffs’
‘business
tactics
that
have
driven
locally-operated
pharmacies
out
of
business.’”
Moreover,
the
judge
found
that
Act
624
conflicts
with
the
federal
TRICARE
program,
which
is
a
healthcare
program
for
active
duty
service
members.
TRICARE
includes
a
preemption
clause,
meaning
it
overrides
state
laws
that
are
inconsistent
with
TRICARE.
“Act
624
is
explicitly
preempted
by
TRICARE’s
‘health
care
delivery’
provision
because
Act
624
prohibits
PBM-owned
pharmacies
from
delivering
healthcare
to
Arkansas
patients.
This
prohibition
is
inconsistent
with
the
TRICARE
program
that
has
existing
contracts
with
some
of
the
plaintiffs,”
Miller
said.
The
judge
also
wrote
that
the
plaintiffs
would
“suffer
irreparable
harm”
from
the
Arkansas
law,
including
great
financial
consequences.
CVS
previously
told
MedCity
News
that
it
would
be
forced
to
close
23
community
pharmacies
in
Arkansas
and
fire
more
than
500
local
healthcare
workers.
Express
Scripts
doesn’t
operate
brick
&
mortar
pharmacies
in
Arkansas,
but
it
does
have
25
non-resident
pharmacy
licenses
in
Arkansas
that
would
be
affected
by
the
law.
The
ruling
was
warmly
greeted
by
plaintiffs
whose
response
was
framed
in
the
context
of
how
Arkansas’s
law
would
harm
patients
with
no
mention
of
how
it
harmed
their
business
prospects
in
the
state.
David
Whitrap,
vice
president
of
external
affairs
at
CVS
Health,
said
the
company
is
“pleased
with
the
Court’s
decision
to
grant
a
preliminary
injunction
to
stop
the
implementation
of
Act
624.
We
continue
to
be
focused
on
serving
people
in
Arkansas
and
are
actively
looking
to
work
together
with
the
state
to
reduce
drug
prices
and
ensure
access
to
pharmacies.”
A
representative
for
Express
Scripts
echoed
this.
“We
appreciate
the
Court
acting
to
protect
Arkansans’
access
to
their
pharmacies,”
said
Andrea
Nelson,
chief
legal
officer
of
The
Cigna
Group,
which
owns
Express
Scripts.
“Every
day,
our
nurses,
pharmacists
and
other
dedicated
team
members
provide
care
to
Arkansas
patients
that
can’t
be
easily
replaced,
and
we
will
continue
doing
everything
we
can
to
protect
Arkansas
patients’
access
to
care
and
affordable
medicines.”
What’s
ahead?
It
will
be
interesting
to
see
how
the
battle
between
a
Republican
governor
of
a
conservative
state
and
the
PBMs
plays
out
if
Sanders
formally
appeals.
Deacon
of
VerSan
Consulting
believes
there
isn’t
any
hope
left
for
Arkansas’
PBM
law,
given this
decision
from
the
lower
court
was
expected
as
it’s
a
“clear
violation
of
the
Commerce
Clause.”
She
speculated
that
whoever
reviewed
the
legality
of
the
law
likely
knew
that
it
would
be
challenged.
However,
passing
the
law
brought
great
awareness
to
the
issue
of
PBMs,
she
said.
“I
think
when
the
law
was
passed,
it
was
by
far,
one
of
the
most
radical
PBM
state
bills
out
there,”
she
said.
“It
was
definitely
the
talk
of
the
town.
I
think
for
the
state
of
Arkansas,
it
really
showed
that
they
were
ready
to
move
on
this
and
act
against
some
of
these
big
industries’
corporate
interests,
which
made
a
big
statement.”
Not
all
are
swayed
by
this
bleak
prospect
for
the
law.
The
National
Community
Pharmacists
Association
(NCPA),
meanwhile,
believes
Arkansas’
law
is
going
to
prevail.
“I
do
feel
like
it
was
the
wrong
decision
because
if
you
look
at
the
way
the
law
was
written,
you
get
away
from
all
of
the
extraneous
information
that
was
brought
into
the
record
by
the
PBMs
to
sort
of
place
a
fog
over
the
overall
purpose
and
meaning
of
this
law.
I
think
reasonable
minds
will
agree
that
this
does
not
violate
the
Commerce
Clause
because
there’s
not
a
regulation
of
out-of-state
entities,
as
the
PBMs
have
claimed,”
declared
Matthew
Seiler,
general
counsel
at
the
NCPA,
in
an
interview.
He
noted
that
it
is
actually
a
regulation
of
the
corporate
structure
of
PBMs,
“regardless
of
where
they
are
located.”
Whatever
the
legal
future
of
the
Arkansas
law
is,
meaningful
PBM
reform
needs
to
come
from
a
national
level
instead
of
a
patchwork
of
states,
Deacon
said.
And
currently,
PBM
reform
is
at
the
top
of
a
lot
of
lawmakers’
minds.
Numerous
bills
have
been
introduced
targeting
PBMs,
including
efforts
to
delink
PBM
compensation
from
list
prices
and
banning
spread
pricing,
in
which
PBMs
charge
payers
more
than
they
pay
the
pharmacy
for
a
medication
and
then
keep
the
difference.
Deacon
is
particularly
in
favor
of
the
Patients
Deserve
Price
Tags
Act,
which
goes
beyond
PBM
reform
by
requiring
providers
to
publish
the
costs
of
services
so
Americans
can
compare
prices.
It
ensures
employer
access
to
claims
data
and
PBM
information
as
well.
Seiler
also
called
out
the
PBM
Reform
Act,
which
would
ban
spread
pricing
in
Medicaid
and
delink
PBM
compensation
from
the
cost
of
medications
under
Medicare
Part
D.
In
December,
a
bill
in
Congress
similar
to
the
Arkansas
law
was
also
introduced.
It’s
called
the
Patients
Before
Monopolies
Act
and
would
ban
the
joint
ownership
of
PBMs
and
pharmacies.
However,
this
bill
may
be
a
“bridge
too
far”
from
what
the
federal
government
can
achieve
at
this
point,
but
it
is
indicative
of
where
lawmakers
want
to
go
in
the
future,
Deacon
said.
In
the
absence
of
Congressional
action,
the
states
will
likely
continue
to
try
and
regulate
PBMs.
For
example,
California
recently
proposed
a
bill
that
would
delink
PBM
compensation
from
the
list
price
of
a
drug,
which
Paul
Markovich,
CEO
of
Ascendiun,
noted
in
a
recent
episode
of
MedCity
Debunked.
Ascendiun
is
the
nonprofit
parent
company
of
Blue
Shield
of
California.
He
argued
that
the
role
of
PBMs
has
absolutely
nothing
to
do
with
the
price
of
the
drug.
“It’s
not
as
if
Amazon
charges
you
for
the
cost
of
the
contents
of
the
box,”
he
said.
But
Deacon
hopes
that
with
states
stepping
up,
that
Congress
won’t
slow
its
roll.
“What
I
would
hate
to
see
is
Congress
lose
their
energy
and
impetus
to
do
something
on
a
federal
level
[thinking]
the
states
have
this,”
she
said.
“That
would
be
a
real
lost
opportunity.”
She
added
that
states
likely
aren’t
cracking
down
on
PBMs
because
they
simply
want
to,
but
because
they’ve
become
a
serious
problem.
Most
states
would
probably
be
in
favor
of
federal
action
against
PBMs.
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