Opinion is Limited in Scope; Affirms that PBMs are Not ERISA Fiduciaries

Law Will Increase Drug Costs for Maine Consumers

(Washington, DC)—In response to today’s ruling by the U.S. First Circuit Court of Appeals affirming a lower court’s decision to uphold Maine’s PBM fiduciary-disclosure law, the Pharmaceutical Care Management Association (PCMA) released the following statement. PCMA is the national association representing America’s pharmacy benefit managers (PBMs).

“PCMA will continue to vigorously oppose enactment of this kind of legislation,” said Mark Merritt, PCMA’s President and CEO. He noted that “to date only Maine and the District of Columbia have passed such laws while more than dozen other states have rejected similar legislation once they learned that it would increase, not decrease, drug prices for consumers.”

PCMA has already obtained a federal injunction preventing similar fiduciary legislation from going into effect in the District of Columbia on the grounds that it violated the constitutional rights of PBMs. This case is scheduled to be heard by the D.C. Circuit Court in January of 2006.

“Since Maine passed its law in 2003, a number of developments have confirmed the anti-consumer nature of such state micromanagement. In fact, a 2004 analysis by PricewaterhouseCoopers predicted that such legislation would raise drug prices for consumers in Maine by 10% or $1.7 billion over the next decade.

“Also, the U.S. Federal Trade Commission has issued numerous opinions emphasizing that this kind of legislation is anti-competitive and inevitably raises prices with no corresponding benefit to consumers. In fact the FTC has noted that this kind of regulation has “the unintended consequences of limiting competition, thus increasing the costs of pharmaceuticals and ultimately decreasing the number of Americans with insurance coverage for pharmaceuticals.”

In the case of Maine, the Circuit Court opinion was careful to note that the scope of the opinion is limited, in that it applies only to contracts entered into in Maine with respect to PBM customers, or “covered entities” in Maine. In addition the opinion makes clear that PBMs are not ERISA fiduciaries, but rather that their relationship with their customers is a contractual one.

“In its challenge to D.C.’s fiduciary law and in other states that may consider enacting similar legislation, PCMA will continue to assert that PBMs are integral to the administration of ERISA benefit plans and that states cannot legislate in a field solely regulated by federal law.”

###

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

Contact Information:
Tim Brogan
(202) 207-3610