Court Enjoins Maine Law Based on PCMA’s Arguments

LD 554 Conflicts with Federal ERISA Law, Constitutes Unfair ‘Taking’ of PBM Trade Secrets

Washington, DC; 03.10.04 — Yesterday’s decision by the US District Court in Bangor, Maine to block a new sweeping Maine prescription drug law — LD 554 — from taking effect recognizes the central role PBMs play in delivering affordable prescription drug benefits to consumers and is a reminder to other states considering similar proposals, the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association representing America’s pharmaceutical benefit managers (PBMs).

“In recognizing the central role PBMs play in making prescription drugs more affordable, the Court has put the brakes on Maine’s head-long rush to legislation,”said PCMA President & CEO Mark Merritt. “Given that the Maine law would result in higher prescription drug costs for consumers by giving more power to drug manufacturers, the Court’s decision is both prudent and right on target.”

In the opinion, the Court notes “the centrality of the [PBM] industry in the delivery and cost of health care benefits.” The US District Court’s opinion effectively nullifying LD 554 (”The Act Against Unfair Prescription Drug Practices”) rests on two key findings:

The Court found sufficient grounds that LD 554 conflicts with the federal Employee Retirement Income Security Act (ERISA) by designating PBMs as fiduciaries. Since its inception in 1974, ERISA has been an important avenue for both small businesses and large employers to sponsor health care benefits for their employees and dependents. By imposing additional rules and requirements on ERISA plans, LD 554 conflicts with congressional intent to preserve the uniformity ERISA provides to make health care benefits including prescription drugs more affordable.
The Court found sufficient grounds that by imposing sweeping and unprecedented disclosure of PBMs’ proprietary pricing arrangements, LD 554 represents a “taking” of PBMs’ trade secrets. The ability of a business to protect its trade secrets is a well-established principle in law.
LD 554 — the first of its kind by any State in the Union — was signed into law by the Governor of Maine on June 13, 2003. On September 3, 2003, PCMA filed a motion in the US District Court to stay the law. A hearing was heard before the District Court in early November 2003. Yesterday’s decision by the Court was in response to the November hearing.

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The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmaceutical benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando
202-207-3614