ERISA Preemption Developments in Managed Care

By and on April 13, 2023

For plans governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 (ERISA), the doctrine of federal ERISA preemption over state statutes, regulations or administrative schemes has been a central subject of litigation since the inception of the statute. In December 2020, the US Supreme Court issued a decision on the subject in Rutledge v. Pharm. Care Mgmt. Ass’n, 208 L. Ed. 2d 327 (2020).

In the short, unanimous opinion, the Supreme Court in Rutledge held that ERISA did not preempt an Arkansas statute that regulates pharmacy benefit managers’ (PBM) drug reimbursement rates. Arkansas passed Act 900 in 2015 to regulate PBM reimbursement rates for pharmacies, which, in effect, established a reimbursement floor that requires PBMs to reimburse pharmacies at a rate that reflects the pharmacy’s acquisition cost for the drug in question.

Access this McDermott Health 2023 Annual Report (pg. 9).

Jeremy Earl
Jeremy Earl represents a broad range of healthcare organizations, with a focus on managed care legal issues. His clients include health insurers, HMOs, healthcare provider organizations, pharmacy benefit managers and administrative service providers to managed care organizations. Jeremy is a practice area leader for the Managed Care Group.Read Jeremy Earl's full bio.

Kate McDonald
Kate McDonald represents clients across the healthcare industry on complex regulatory matters and high-stakes mergers and acquisitions, affiliations and other investments. She delivers strategic advice on federal and state laws applicable to health insurers and HMOs, including the downstream implications for their provider organizations and vendors, as well as the reimbursement landscape of federal healthcare programs. Kate serves as partner-in-charge of McDermott’s healthcare practice in Washington, DC. Read Kate McDonald's full bio.




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