Pharmaceutical Care Management Ass'n v. Rutledge

240 F. Supp. 3d 951, 62 Employee Benefits Cas. (BNA) 1805, 2017 U.S. Dist. LEXIS 68254, 2017 WL 1536277
CourtDistrict Court, E.D. Arkansas
DecidedMarch 1, 2017
DocketCASE NO. 4:15-CV-00510 BSM
StatusPublished
Cited by5 cases

This text of 240 F. Supp. 3d 951 (Pharmaceutical Care Management Ass'n v. Rutledge) is published on Counsel Stack Legal Research, covering District Court, E.D. Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pharmaceutical Care Management Ass'n v. Rutledge, 240 F. Supp. 3d 951, 62 Employee Benefits Cas. (BNA) 1805, 2017 U.S. Dist. LEXIS 68254, 2017 WL 1536277 (E.D. Ark. 2017).

Opinion

ORDER

BRIAN S. MILLER, UNITED STATES DISTRICT JUDGE

Plaintiff Pharmaceutical Care Management Associations’s (PCMA) motion for summary judgment [Doc. No.'75] is granted in part and denied in part, and defendant Leslie Rutledge’s (State of Arkansas) motion for summary judgment [Doc. No. 77] is granted in part and denied in part. The joint motions to extend time [Doc. Nos. 103,104] are denied as moot, and this case is dismissed with prejudice.

I. BACKGROUND

Independent community pharmacies have had to eliminate employees during the last five to ten years due to the financial hardships they have faced. PL’s Resp. Def.’s Statement Material Fact ¶¶ 18, 22-24, 28, 44, Doc. No. 85-1. The Arkansas legislature passed and amended Arkansas Code Annotated section 17-92-507 et seq. in an attempt to address this issue. Act 1194 was passed in 2013 to “Provide for the Transparency of Maximum Allowable Cost Lists for Prescription Drugs,” S.B. [956]*9561138, 89th Gen. Assemb., Reg. Sess. (Ar. 2013), and Act 900 was passed in 2015 to “Amend the Laws Regarding Maximum Allowable Cost Lists; and to Create Accountability in the Establishment of Prescription Drug Pricing.” S.B. 688, 90th Gen. Assemb., Reg. Sess. (Ar. 2015).

A. Act 900 of 2015

Act 900 amended Act 1194 in a number of ways. First, it defines “[pjharmacy acquisition cost” as “the amount that a pharmaceutical wholesaler charges for a pharmaceutical product as listed on the pharmacy’s billing invoice.” Ark. Code Ann. § 17-92-507(a)(6). Second, it provides that a pharmacy benefits manager (“PBM”) must:

[u]pdate its Maximum Allowable Cost List on a timely basis, but in no event longer than seven (7) calendar days from an increase of ten percent (10%) or more in the pharmacy acquisition cost from sixty percent (60%) or more of the pharmaceutical wholesaler doing business in the state or a change in the methodology on which the Maximum Allowable Cost List is based or in the value of a variable involved in the methodology.

Id. § 507(c)(2). Third, it requires a PBM to:

Provide a reasonable administrative appeal procedure to allow pharmacies to challenge maximum allowable costs and reimbursements made under a maximum allowable cost for a specific drug or drugs as: (a) not meeting the requirement of this section or (b) being below the pharmacy acquisition cost.

Id. § 507(c)(4)(A)(i). Fourth, it requires PBMs to permit the challenging pharmacy to reverse and rebill each claim affected by the inability to procure the drug at a cost that is equal to or less than the cost on the relevant maximum allowable cost (“MAC”) list where the drug is not available “below the pharmacy acquisition cost from the pharmaceutical wholesaler from whom the pharmacy or pharmacist purchases the majority of prescription drugs for resale.” Id. § 507(c)(4)(C)(iii). Fifth, it provides that a

pharmacy or pharmacist may decline to provide the pharmacy services to a patient or pharmacy benefits manager if, as a result of a Maximum Allowable Cost List, a pharmacy or pharmacist is to be paid less than the pharmacy acquisition cost of the pharmacy providing pharmacist services.

Id. § 17-92-507(e) (commonly known as the “decline-to-dispense” provision).

B. PCMA, MAC Lists, and Pharmaceutical Reimbursement Scheme

PCMA is a national trade association representing the eleven largest PBMs in the country. Def.’s Resp. Pl.’s Statement Material Fact ¶ 1, Doc. No. 89. None of PCMA’s member PBMs are incorporated in Arkansas, but they have contracts covering beneficiaries in Arkansas. Id. ¶ 19.

PBMs act as intermediaries between health plans and pharmacies. Generally, when a patient is prescribed a drug by a physician, the patient presents the prescription to a pharmacist. The pharmacist, who buys drugs from wholesalers, dispenses the drug to the patient. Often, the patient does not pay the full price that the pharmacist receives for the drug but instead pays a portion, or copay, if the patient is a member of a health plan that covers part of the drug’s cost.

The market for purchasing prescription drugs is national, id. ¶ 21, and PBMs perform such services as' processing claims, generating reports and data, and managing clinical and financial information as well as retail and mail-order drug sales. Pl.’s Resp. Def.’s Statement Material Fact ¶ 5. PBMs also calculate benefit levels and make disbursements. Def.’s Resp. Pl.’s [957]*957Statement Material Fact ¶ 2. To carry out these services, PBMs aggregate market data to create confidential maximum allowable cost (“MAC”) lists. MAC lists are used to set reimbursement rates for pharmacies filling generic prescriptions. Wholesaler pricing information is one type of data used by PBMs to create MAC lists. Pl.’s Resp. Def.’s Statement Material Fact ¶ 69. This information is available through pricing guides such as Medispan and, in some cases, is made available by wholesalers. Id. ¶¶ 69-71.

Contracts between PBMs and pharmacies create pharmacy networks. Def.’s Resp. Pl.’s Statement Material Fact ¶ 12. These contracts generally require pharmacies to fill prescriptions and dispense prescription medications regardless of the amount that the pharmacy will be reimbursed. Pl.’s Resp. Def.’s Statement Material Fact ¶81. These contracts also allow pharmacies to appeal unfavorable reimbursement decisions. Id. ¶ 75. PBMs often select pharmacies willing to take lower reimbursements in exchange for being placed in a preferred network and receiving patronage from beneficiaries of the plans serviced by the PBMs. Id. ¶ 80; Defi’s Resp. PL’s Statement Material Fact ¶ 13.

C. PCMA’s Challenge to Act 900

PCMA challenges Act 900 claiming that it (1) is preempted by ERISA; (2) is preempted by Medicare Part D; (3) violates the Commerce Clause of the United States Constitution; (4) violates the Contract Clauses of the United States Constitution and the Arkansas Constitution; and (5) is so vague as to violate the Due Process Clauses of the United States Constitution and the Arkansas Constitution. Both parties move for summary judgment on all claims.

II. LEGAL STANDARD

Summary judgment is appropriate when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Once the moving party demonstrates that there is no genuine dispute of material fact, the nonmoving party may not rest upon the mere allegations or denials in the pleadings. Holden v. Hirner, 663 F.3d 336, 340 (8th Cir. 2011). Instead, the nonmoving party must produce admissible evidence demonstrating a genuine factual dispute that requires resolution at trial. Id. Importantly, when considering a motion for summary judgment, all reasonable inferences must be drawn in a light most favorable to the nonmoving party. Holland v. Sam’s Club, 487 F.3d 641, 643 (8th Cir. 2007).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
240 F. Supp. 3d 951, 62 Employee Benefits Cas. (BNA) 1805, 2017 U.S. Dist. LEXIS 68254, 2017 WL 1536277, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pharmaceutical-care-management-assn-v-rutledge-ared-2017.