Businesses Urge Court To Keep Oklahoma PBM Law On Ice

By Danielle Nichole Smith
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Law360 (May 18, 2020, 3:31 PM EDT) -- The State Chamber of Oklahoma and Hobby Lobby Stores Inc. have urged a federal judge to maintain the status quo and keep Oklahoma from enforcing a state law regulating pharmacy benefit managers until the U.S. Supreme Court provides more clarity on ERISA preemption.

The business organization and Hobby Lobby asked the court Friday to submit an amicus brief in the Pharmaceutical Care Management Association's suit claiming that H.B. 2632, the Patient's Right to Pharmacy Choice Act, was preempted by the Employee Retirement Income Security Act and Medicare Part D.

In the brief, the amici argued that the Oklahoma Insurance Department shouldn't be allowed to begin enforcing the law, as the agency said it intended to, before the Supreme Court reached a decision in Rutledge v. PCMA, a case involving an ERISA preemption challenge to an Arkansas law regulating PBMs.

"ERISA plans and those who manage them should not be required to alter the structure, administration, or finances of the plans until Rutledge is decided," the amici said. "A contrary ruling could cause irreparable injuries to the plans and those who manage them."

According to the amici, Oklahoma is trying to directly regulate significant aspects of ERISA plans, including dispute resolution, network providers, and the relationship between pharmacies and benefit plans. And the state law also aims to regulate plan structure, administration and finances, the amici said.

The amici told the court that having a bunch of state laws that regulated PBMs differently would throw "ERISA plans and their managers into a regulatory morass." Already 40 states have enacted laws regulating PBM reimbursement practices, but Oklahoma is the only state moving forward with enforcement before Rutledge was decided, the amici said.

"Soon, this court, Oklahoma, and everyone else will learn from Rutledge whether ERISA preempts state laws like the Oklahoma PRPCA," the amici said. "There is no point in permitting Oklahoma to begin enforcing the PRPCA because it could very well be preempted by ERISA."

The PCMA and Oklahoma Insurance Department had agreed in January to stay the case while the Supreme Court mulled Rutledge, but the agency asked the court in April to lift the stay, arguing that the COVID-19 pandemic changed the situation.

Further, the agency announced its intention to withdraw from a November stipulation, in which it agreed not to enforce the law before the resolution of the case while the PCMA in return agreed not to seek a preliminary injunction against the law.

The agency said that it would wait at least 21 days before enforcing the law once the stay was lifted unless the PCMA moved for a preliminary injunction, in which case the agency would wait until the court ruled on that request before starting enforcement.

U.S. District Judge Bernard M. Jones lifted the stay at the end of April, and the PCMA filed its request for a preliminary injunction in May.

The organization said that enforcement of the law would cause irreparable harm that outweighed "any interest the defendants might have in enforcing a statute preempted by federal law." Additionally, enforcement would hurt the public by diverting PBMs' resources away from responding to the pandemic, the PCMA said.

A spokesperson for the PCMA told Law360 in a statement Monday that "the law would increase health care costs and threaten access to prescription drugs for Oklahoma's businesses, employees, and Medicare beneficiaries."

Oklahoma Insurance Commissioner Glen Mulready said in a statement Monday that it was "no surprise" that the amici filed the brief.

"We will wait to hear what the courts say in the coming months," Mulready said.

PCMA is represented by Joe E. Edwards of Crowe & Dunlevy and Dean Richlin, Kristyn DeFilipp, Andrew London and Stephen Stich of Foley Hoag LLP.

The Oklahoma Insurance Department is represented by Randall J. Yates and Zach West of the Oklahoma Attorney General's Office.

The case is Pharmaceutical Care Management Association v. Mulready et al., case number 5:19-cv-00977, in the U.S. District Court for the Western District of Oklahoma.

--Editing by Abbie Sarfo.

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Case Information

Case Title

Pharmaceutical Care Management Association v. Mulready et al

Case Number



Oklahoma Western

Nature of Suit

Constitutional - State Statute


Bernard M. Jones

Date Filed

October 25, 2019

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