The ERISA Industry Committee (ERIC) earlier last week filed a friend of the court brief in a case challenging an Iowa law regarding pharmacy benefit managers.
Iowa Association of Business and Industry vs. Iowa Commissioner of Insurance is being heard in the U.S. Court of Appeals for the Eighth Circuit. A lower court had ruled that although ERISA preempts certain provisions of the law, other provisions are not preempted. In its brief, the committee asked the court to affirm the lower court’s decision in part and reverse it in part to enable ERISA to preempt all of the law.
“A core tenet of ERISA is to provide self-funded health benefit plans the freedom to address employee needs wherever the employee may reside, whether that is Cedar Rapids, Iowa, or Grand Rapids, Michigan,” said Tom Christina, executive director of the ERIC Legal Center. “Employers rely on that clarity to design value-driven policies that promote more affordable options like lower copays at onsite and in-network pharmacies.”
The plaintiff is challenging the Iowa law requiring that, among other provisions, “any willing pharmacy” be included in a prescription drug plan’s provider network, including self-insured prescription drug plans governed by ERISA. In October, a federal judge blocked enforcement of several portions of the law, citing potential conflict with ERISA. In its brief, ERIC argued that ERISA preempts Iowa’s law because that law directly interferes with prescription-drug benefit plan design and administration by:
- Restricting plan sponsors’ ability to design pharmacy networks for their plans; and
- Limiting the ability of plan sponsors to implement effective cost-saving measures for their plans.
“Requiring ERISA self-insured plans to comply with the Iowa law increases complexity and drives up health care costs -- the exact opposite of what ERISA was intended to accomplish,” Christina said. “ERIC urges the Eighth Circuit Court of Appeals to not only uphold the lower court’s injunction but to broaden the application of ERISA preemption and block enforcement of the law.”
The American Benefits Council, America’s Health Insurance Plans and the Association of Federal Health Organizations joined ERIC in the brief. Health insurers, pharmacies and state officials also are involved in legal battles in Arkansas. Differences between how federal courts handle the Arkansas and Iowa PBM laws eventually could lead to a new battle at the U.S. Supreme Court over state efforts to regulate PBMs.
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