Last Tuesday, a federal judge in Illinois ruled that Arkansas' law requiring self-funded plans to report data on dispensing fees is not preempted by ERISA.  Arkansas Rule 128 generally requires health plans to submit pharmacy compensation data to the Arkansas Insurance Commissioner, which the Insurance Commissioner reviews to determine whether the compensation paid to Arkansas pharmacists is fair and reasonable.  If the Commissioner determines it is not fair and reasonable, the Commissioner can require the plan to pay an additional dispensing fee.  

ERISA's broad preemption language has historically prevented states from regulating ERISA-covered plans if the state law included an impermissible reference to or had an impermissible connection with the ERISA-covered plan.  In his decision, Judge Daniel cited the Supreme Court's decision in Gobeille v. Liberty Mutual Insurance Company and held that Rule 128 was not preempted under ERISA because its reporting requirement is “incidental” to the central purpose of the law, which is to “ensure that the reimbursement for pharmacist services paid to a pharmacist or pharmacy is fair and reasonable to provide an adequate pharmacy benefits manager network for a health benefit plan.”  Judge Daniels further cited the Supreme Court's decision in Rutledge v. Pharmaceutical Care Management Association and held that the possibility that an ERISA plan “may” be required to pay an increased dispensing fee does not create an impermissible connection with ERISA. 

More than half the states have enacted PBM laws that specifically impact group health plans, such as New York, Arkansas, Texas, Tennessee, Colorado, Oregon, New Mexico, Florida, North Carolina, and Oklahoma.  Until the status of ERISA's preemption of such laws is settled, plan sponsors should work with their PBMs and TPAs to ensure they have a roadmap on complying with such laws.  

You can read the court's decision here.