Last week, a federal judge refused to stop the enforcement of Act 900 created in 2015. The law dictates how Arkansas pharmacists are reimbursed for dispensing generic drugs to patients. A preliminary injunction was requested to prevent Act 900, but was denied based upon the fact that the requestors did not properly demonstrated the need for such an “extraordinary remedy”.
In last week’s proceedings, Chief U.S. District Judge Brian Miller carefully reviewed the facts presented by the Pharmaceutical Care Management Association (PCMA). The association is a national trade group that represents benefits managers for health plans and insurers. However, Judge Miller ruled that they failed to show significant ad credible evidence that without an injunction, the benefits managers would “suffer irreparable harm”. According to court documents, PCMA had to show that harm was “both certain and great” and “not theoretical.”
The action was initially brought by the trade group, seeking an injunction as part of a lawsuit that challenged the law that took effect earlier this year. When filing their suit, they alleged that to properly comply with the new law, benefits managers would have to adopt an unreasonable solution for their pharmacy contracts in the state of Arkansas. This would require them to significantly change their business model across the country to correctly apply the law’s standards, or cease conducting business in Arkansas. However, Miller stated that the allegations were merely “…theoretical and unsubstantiated injuries that are not sufficient to warrant injunctive relief.”
Interestingly enough, although Judge Miller denied the injunction request, he did not dismiss the lawsuit. In a separate order, he agreed that the lawsuit had sufficiently alleged that Act 900 has a “impermissible connection with the federal Employment Retirement Income Security Act of 1974, known as ERISA”.
The Judge also noted the validity of the argument by benefits managers that MAC lists (Maximum Allowable Costs lists) are “crucial in developing a nationally established network of pharmacies that health plans, including ERISA plans, use to guaranty their participants will fill their drug prescriptions at certain set prices. Accordingly, by allowing pharmacists in Arkansas to decline to fill ERISA plan participants’ drug prescriptions at these set prices, Act 900 disrupts the uniformity provided by the [benefits managers’] network of pharmacies and relied upon by the plans’ managers.”
He went on to say that allowing Act 900 to continue as it currently stands could force benefits managers to create MAC lists that would need to be specific to Arkansas. This would then force ERISA benefit plans to alter their administration procedures for prescriptions being filled in Arkansas. Accordingly, Judge Miller determined that such allegations properly stated a cause of action. As such, the attorney general’s motion to dismiss was denied.
In further support of their action, benefits managers claim that the law in question was improperly pushed through the state Legislature so that pharmacists could make more money at the expense of insurance companies and government benefits plans. They also say that the new reimbursement procedures enacted by Act 900 will undoubtedly result in increased costs for the plans and consumers.
On the other hand, Pharmacists, argue that the changes brought by the new law are long overdue. Additionally, they strongly believe that changes are needed to stop benefits managers from insufficient payment on reimbursements.
According to the United States Department of Labor, ERISA is “a federal law that sets minimum standards for pension plans in private industry.” One example, is if an employer maintains a retirement pension plan, ERISA dictates when employees must be allowed to participate, how long they have to work to gain interest in their pension, how long they can be away from their job before it affects their benefits, and whether spouses has the right to a portion of such a pension if the participant dies. The applicable provisions of ERISA apply to benefits or pensions beginning January 1, 1975.
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