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The Employee Retirement Income Security Act of 1974 (ERISA) pre-empts any and all State laws insofar as they may now or hereafter relate to any employee benefit plan covered by ERISA. A state law relates to an ERISA plan if it has a connection with or reference to such a plan. Because 2015 Ark. Acts 900 has neither of those impermissible relationships with an ERISA plan, ERISA does not pre-empt it.
Pharmacy benefit managers (PBMs) acted as intermediaries between pharmacies and prescription-drug plans. In that role, they reimbursed pharmacies for the cost of drugs covered by prescription-drug plans. To determine the reimbursement rate for each drug, PBMs developed and administer maximum allowable cost (MAC) lists. Later, Arkansas passed Act 900, which effectively required PBMs to reimburse Arkansas pharmacies at a price equal to or higher than the pharmacy's wholesale cost. To accomplish this result, Act 900 required PBMs to timely update their MAC lists when drug wholesale prices increase and to provide pharmacies with an administrative appeal procedure to challenge MAC reimbursement rates. Respondent sued, alleging that Act 900 is pre-empted by the Employee Retirement Income Security Act of 1974 (ERISA). The district court held that ERISA pre-empted Act 900. The court of appeals affirmed.
Did 2015 Ark. Acts 900 pre-empt ERISA?
2015 Ark. Acts 900 had neither an impermissible connection with nor reference to ERISA and was therefore not preempted under 29 U.S.C.S. § 1144(a). Act 900 was merely a form of cost regulation, and its enforcement mechanisms did not require plan administrators to structure their benefit plans in any particular manner and did not lead to anything more than potential operational inefficiencies.