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Seyfarth Synopsis: As expected, the lawsuits have commenced following the enactment of the Arkansas legislation prohibiting pharmacy benefit managers (PBM’s) from owning or operating actual pharmacies within the state. Michigan has filed its own lawsuit against PBMs. Further, a similar bill targeting PBMs is winding its way through the Illinois legislature.

Arkansas Law

As we discussed in our blog post here, Arkansas recently became the first state in the nation to prohibit licenses for retail, mail order or specialty pharmacies that are owned (directly or indirectly) by a PBM. The law does contain a limited exception that allows the issuance of licenses to PBM-affiliated pharmacies for certain rare, orphan, or limited distribution drugs, but this window for exceptions closes in September 2027 (presumably intended to provide a transition period to source these drugs through pharmacies not affiliated with PBMs). 

PBM Reaction

Two lawsuits have now been filed by PBMs challenging Arkansas’ authority to pass this legislation. The lawsuits allege harm to residents of Arkansas by causing the closure of many brick and mortar pharmacies across the state and the inability to access mail-order pharmacies. Express Scripts, in its suit, argues that the Arkansas state law violates several provisions of the United States Constitution, claiming that:

  • the intended purpose of the state statute — to protect local pharmacies — violates the Commerce Clause.
  • the protectionist purpose of burdening out-of-state citizens violates the Privileges and Immunities Clause
  • the singling out of PBMs and their affiliated pharmacies for punishment violates the Attainder Clause, which bars legislative punishment (including banishment) of specific groups.

Because Express Scripts and its affiliates provide services to the US Defense Department’s TRICARE program, the suit also claims that the state statute is preempted by the federal law and regulations surrounding that program.

Arkansas has not yet filed its response to the suits.Continue Reading States Seeking Remedies for the Rising Costs of Prescription Drugs

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Seyfarth Synopsis: Arkansas has become the first state in the nation to enact legislation, effective starting in 2026, prohibiting pharmacy benefit managers (PBMs) from owning or operating actual pharmacies within the state. We take a look at what that may mean for employers sponsoring health plans with pharmacy benefits in the state.

Background on PBMs Role in the Marketplace

PBMs have become a unifying scapegoat in the escalating concern about the cost of prescription drug coverage in the country. So, it becomes important to understand what role they really play. PBMs act as a middle man of sorts for the prescription drug coverage offered by many employer health benefit plans. With the ever-expanding universe of prescription drugs, including the many specialty drugs that are being offered and widely advertised to the public, it is difficult for plan sponsors to be able to directly manage this benefit. PBMs grew up as an answer to the needs for a third party to administer drug coverage under plans. Continue Reading Cutting Out the Middle Man

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Seyfarth Synopsis:  Since September 2023, there have been at least 25 lawsuits filed claiming the ability to choose between using 401(k) forfeitures to reduce plan expenses or the plan sponsor’s contributions is a fiduciary choice, and that choosing to reduce the plan sponsor’s contributions constitutes a violation of ERISA’s fiduciary duties.  In the latest decision…

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Seyfarth Synopsis: Access to reproductive health care has been a part of the national debate for years, and even more so since 2022 when the US Supreme Court issued its ruling in Dobbs overturning decades of precedent established under Roe v. Wade.  As a result, the topic has become a focal point in the Presidential election with the two main candidates having seemingly very different platforms and catering to their constituencies who have strongly held beliefs and values on the issue. This aspect has been well covered in the media.  However, employers also have a vested interest in how the federal and state laws and jurisprudence evolve in this area, which is largely dependent on which party wins the White House and down ticket races this November. 

Under Dobbs, the Supreme Court dismantled the federal Constitutional protections around abortion access specifically (and arguably reproductive health care more generally), and in light of the absence of specific federal legislation regarding the right to an abortion, gave the decision on access to each of the states. This triggered fairly immediate action in many of the state legislatures and mobilized citizen initiatives around the country. Continue Reading Reproductive Health Care: A Future in Flux with the Next Administration

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On Monday, September 9, 2024, the Departments of Health and Human Services, Labor and Treasury (the “Departments”) issued their final rule regarding the nonquantitative treatment limitation (NQTL) comparative analysis required under the Mental Health Parity and Addiction Equity Act (MHPAEA). (These acronyms roll right off the tongue, don’t they?) The Departments note that final rules…

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Seyfarth Synopsis: Following years of back and forth, new final rules were published by the Department of Health and Human Services (HHS) on May 6, 2024 reinstituting the Department’s interpretation that the prohibition on discrimination by health programs and activities “on the basis of sex” includes treatments for gender-affirming care. In this post, we explore…

On Wednesday, May 22, at 3:00 p.m. Eastern, Employee Benefits partners Ben Conley and Diane Dygert will present “The Final Rule: 1557 Nondiscrimination Rule and LGBTQ Protections under the Civil Rights Act of 1964” as part of a webinar for The ERISA Industry Committee (ERIC).

Diane and Ben will lead a discussion on the Department…

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This post was originally published to Seyfarth’s Global Privacy Watch blog.

Seyfarth Synopsis: This past Monday, the Office for Civil Rights (OCR) at the Department of Health and Human Services (HHS) issued its final rule aimed at strengthening the HIPAA Privacy rules as they are applied to reproductive health data.

On the heels of the release of the 2022 US Supreme Court decision in Dobbs v. Jackson Women’s Health Organization, the Biden Administration directed the Federal agencies to examine what they could do to protect women’s health and privacy. Shortly thereafter, HHS released guidance under HIPAA related to reproductive health care services under a health plan, focusing on information required to be disclosed by law, for law enforcement purposes, and to avert a serious threat to health or safety (see our earlier Alert here). Then, in April 2023, HHS issued proposed modifications to the HIPAA Privacy Rule aimed at these concerns. A year later, the agency finalized those rules on April 22, 2024 – the Final Rule.Continue Reading HHS Strengthens HIPAA Rules to Protect Reproductive Health Privacy

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Seyfarth Synopsis: The agencies have finalized a portion of their proposed rules impacting so-called “junk insurance” regarding short-term limited-duration insurance, but deferred finalizing the more significant changes that would have impacted most fixed indemnity policies. 

In early April 2024, the Treasury Department, Department of Labor, and Health and Human Services (the “agencies”) issued final rules regarding short-term limited-duration insurance (STLDI). Avid readers of this blog may recall our earlier post on the proposed rules, found here, which impacted STLDI as well as other issues surrounding excepted benefits. The new final rules primarily address the STLDI portion of the proposed rules, and generally adopt them as proposed. Aside from a new notice requirement, the agencies delayed finalizing the rules on fixed indemnity insurance, but warned that the delay should not be an endorsement of the abusive practices that have emerged in this space.Continue Reading Agencies Defer Final Action on Junk Insurance, While Suggesting Caution Against One Last “Binge”

In 2024, we commemorate a significant milestone in the landscape of employee benefits law: the 50th Anniversary of the Employee Retirement Income Security Act (ERISA). Enacted on Labor Day in 1974 by President Gerald Ford, ERISA has since served as a cornerstone in safeguarding the retirement and welfare benefits of American workers.

Here at Seyfarth…