Attorney General Miyares joins bipartisan coalition to regulate abusive practices of pharmacy benefit managers

On October 18, 2022, Attorney General Jason Miyares joined a bipartisan coalition of 34 attorneys general from across the country in an amicus brief in the U.S. Court of Appeals for the Tenth Circuit supporting Oklahoma’s laws regulating pharmacy benefit managers’ abusive behavior (PBMs).

Oklahoma’s laws regulating PBMs are similar to Virginia’s and are being challenged in the latest of a string of lawsuits by the PBM industry’s national lobbying association, the Pharmaceutical Care Management Association (PCMA).

Attorney General Miyares and the bipartisan coalition seek to protect Virginia consumers by assuring that Virginia and all states can regulate PBMs.

As Attorney General Miyares and the coalition write in their amicus brief to the Tenth Circuit, “states have an interest in preserving states’ authority to regulate companies doing business in their states, protecting their residents’ access to healthcare, and curbing abusive business practices. To advance these interests, nearly all states regulate pharmacy benefit managers.” PCMA’s broad approach to federal preemption, however, would “severely impede states’ abilities to protect their residents and potentially upend licensing and regulatory structures in nearly every state.”

“Virginians’ healthcare costs continue to rise, and PBMs are partially to blame. Virginia has enacted laws to protect consumers from abusive PBM practices, including those I supported in the General Assembly. Now, as your Attorney General, protecting consumers is one of my most important jobs, and I will continue to fight for these laws and the consumers they protect,” said Attorney General Miyares.

PBMs are intermediaries between prescription-drug plans, pharmacies, and drug manufacturers in the prescription pharmaceutical industry. PBMs profit from fees charged to market participants and by reimbursing pharmacies less than the PBM is paid by plans for dispensing medications. PBMs have imposed self-serving protections that reduce competition, limit prescription medication access, and impose various confidentiality requirements. For example, PBMs have tried to force consumers to use PBM-affiliated pharmacies at the expense of independent, often more convenient, pharmacies by giving consumers preferential rates if they use a PBM-affiliated pharmacy or by denying coverage at non-affiliated pharmacies altogether.

These business practices have harmed consumers, pharmacies, and states. Rural and independent pharmacies have especially struggled to survive when PBMs impose financially unsustainable conditions. The PBM industry, however, reaps hundreds of billions of dollars annually.

PBMs have been largely unregulated for decades. States like Virginia, Oklahoma, and others have stepped up and paved the way for PBM regulation to protect consumers and pharmacies.

In the absence of meaningful federal regulations, Oklahoma — like many states — passed laws regulating PBM-pharmacy interactions. The Oklahoma laws at issue address two key components of PBM business practices: ensuring pharmacy-network adequacy and curtailing PBM’s self-dealing. More specifically, Oklahoma requires PBM’s pharmacy networks to have sufficient geographic coverage, allow all in-network pharmacies to receive preferred-participation status if they meet the PBM’s criteria for that status, prohibit network exclusion solely because a pharmacy employee may be on probationary status, and prohibit PBMs from incentivizing the use of particular (typically PBM-affiliated) in-network pharmacies.

In Mulready, PCMA sued various Oklahoma officials, alleging that federal law (ERISA and Medicare Part D) preempts Oklahoma’s laws. The district court held that federal law did not preempt the state laws. PCMA appealed to the Tenth Circuit, which will decide whether ERISA or Medicare preempts Oklahoma’s laws.

Attorney General Miyares was joined by the attorneys general of Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, and Washington.

Read the brief HERE.