(Washington, DC)—Despite efforts today by the District of Columbia to amend Title II of the DC AccessRx Act of 2004, the Pharmaceutical Care Management Association (PCMA) believes the underlying fiduciary-disclosure law remains unconstitutional because it conflicts with federal ERISA law, and, in addition, would result in a 10 percent hike in prescription drug costs for District residents and employers, the association said today.

With some reports putting forward inaccurate and/or incomplete information about today’s efforts, PCMA believes it is critical to set the record straight about what DC is doing, its impact on the DC litigation, and, lastly, on the Maine case:

1. Later today, the District of Columbia is expected to amend Title II of the DC AccessRx Act of 2004 by limiting application of the DC law to District residents and employees and altering the law’s fiduciary obligations. PCMA believes these changes do not change the underlying fact that Title II is superseded by federal ERISA law and that the measure will increase prescription drug costs in the District of Columbia.

2. Even as amended, Title II of the DC AccessRx goes much further in its reach than a similar measure approved by Maine in 2003 and currently being litigated by PCMA. As such, the amended DC law does not and will not conform to the Maine statute. The issues in the two cases remain different, and for that and other reasons, the doctrine of collateral estoppel does not apply.

3. PCMA believes that these amendments are akin to the proverbial rearranging of the deck chairs on the Titanic. DC is trying to fix an unworkable law. PCMA believes strongly that both the Maine and DC fiduciary-disclosure laws are inherently unconstitutional, as they conflict with federal ERISA law and constitute an illegal taking of trade secrets.

4. The December 2004 federal injunction blocking the District of Columbia from enforcing Title II remains intact and is expected to remain so for the foreseeable future. The federal injunction was put in place in December 2004 by US District Court Ricardo M. Urbina. In granting the injunction, Judge Urbina specifically upheld PCMA’s argument that Title II of the DC AccessRx Act of 2004 would represent an “illegal takings” of private property â?? an issue not addressed in today’s amendments by the District of Columbia. In doing so, Judge Urbina also noted that “the evidence indicates that if enforced, Title II could have the unintended effect of actually driving the PBM business and its attendant benefits out of the District of Columbia.”

5. Today’s expected efforts by the District of Columbia mean that a ruling on summary judgment in the DC case is likely to be delayed. PCMA fully expects the federal injunction to remain in place until a ruling is handed down. It is unclear when a ruling from the US District Court may be issued.

6. While PCMA continues to litigate the DC law, PCMA is pursuing a separate track with respect to the Maine law. In November 2005, the First Circuit in Boston affirmed the District Court’s upholding of the Maine fiduciary-disclosure law. Last month, PCMA filed a petition with the US Supreme Court asking the Court to review the First Circuit’s decision. PCMA expects a response from the Court before its adjournment in June.

7. A July 2004 analysis by PricewaterhouseCoopers found that the fiduciary-disclosure provisions contained within Title II of the DC AccessRx Act of 2004 would increase prescription drug costs for District consumers and employers by more than 10 percent â?? or about $600.7 billion dollars by 2014.

8. Thus far in 2006, 10 states â?? Alabama, Colorado, Connecticut, Maryland, Mississippi, New Hampshire, Oklahoma, Virginia, Washington State, and West Virginia â?? have now rejected proposals imposing fiduciary and/or disclosure requirements on PBMs. No state has enacted a fiduciary-disclosure law in 2006. In 2006, DC-style proposals have gone down to defeat in Colorado, Connecticut, Oklahoma, and Washington State. DC-style proposals are pending in New Jersey, New York, Pennsylvania, Rhode Island, and Tennessee. In 2006, two states have enacted PBM-related legislation. Mississippi has enacted a PBM prompt-pay law. Kansas has enacted a law requiring PBMs, not already licensed in the state as third-party administrators, to register with the state’s Commissioner of Insurance.

9. Numerous independent government data have concluded that one-size-fits-all public “disclosure” of drug-pricing information would increase prescription drug costs. In 2003, the Congressional Budget Office estimated that public disclosure of drug-pricing information would increase costs in the Medicare prescription drug benefit by 10 percent â?? or about $40 billion over ten years â?? and increase Medicare Part D premiums by more than 5 percent in 2006 alone. In 2004, the US Federal Trade Commission and US Department of Justice issued a joint report on competition in the health care industry stressing that the marketplace will arrive at a more optimal level of disclosure than can be accomplished through legislation.

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PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 200 million Americans with health coverage provided through small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare Part D.

Contact Information:
Phil Blando, 202-207-3614
Charles Coté 202-207-3605