Exclusive: PBM trade group sues Arkansas over pharmacy law
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The trade group representing pharmacy benefit managers sued on Monday to overturn a first-in-the-nation state law that prevents them from owning pharmacies in Arkansas.
Why it matters: The Pharmaceutical Care Management Association's lawsuit adds to legal challenges to the ownership ban and comes as other states consider similar policies that blame large drug-price middlemen for rising pharmaceutical prices.
- Navitus Health Solutions, a PBM that's not a member of the trade association, is also a plaintiff in the lawsuit.
- CVS Health and Cigna, two of the largest PBMs, have filed their own complaints against the law.
What they're saying: The law "will disrupt the way patients, especially patients with very complex medical conditions, receive their medication, and it will require consumers in Arkansas to find new pharmacies," said Katie Payne, senior vice president of public affairs and head of advocacy at PCMA.
- More than 40 retail pharmacies in Arkansas that together fill millions of prescriptions each year will have to cease operation under the law, according to the complaint.
- Payne said that the law will worsen drug affordability in the state by prohibiting out-of-state companies from running pharmacies that offer lower-cost options.
- However, PCMA did not have projections on how Arkansas' law will affect drug prices in the state.
Zoom in: The lawsuit claims that Arkansas' policy gives preferential treatment to pharmacies based in the state, violating the Constitution's dormant Commerce Clause and Privileges and Immunities Clause. It also says the law improperly declares PBMs guilty of antitrust violations and delivers punishment without a trial.
- "Rather than innovating and attempting to compete with PBM pharmacies on the merits, many independent pharmacies have turned to state lawmakers to manipulate the market with the heavy hand of government, to artificially tip the scales of competition in their favor," the complaint alleges.
- Arkansas Gov. Sarah Huckabee Sanders (R) has said the law is necessary to hold PBMs accountable for anticompetitive actions.
- Lawmakers at the state and federal level are increasingly questioning large pharmacy benefit managers like CVS Caremark, Express Scripts and Optum Rx's outsize role in the pharmaceutical supply chain and whether they're contributing to high drug prices.
Between the lines: PCMA's complaint notes that an earlier version of the bill would have required Walmart — Arkansas' largest company — to close its pharmacies as well, since the company administers its own pharmacy benefits for employees.
- State legislators amended the policy before it was passed so Walmart would no longer be subject to the law.
The bottom line: "This is unprecedented, and we felt that ... the harm to patients and to our employer clients is so high and so dramatic that we had to take a stand here," Payne told Axios.
