First Circuit Rejects PBM Challenge to Disclosure Statute

The U.S. Court of Appeals for the First Circuit rejected the Pharmaceutical Care Management Association's ("PCMA") challenge to provisions of Maine's Unfair Prescription Drug Practices Act ("UPDPA") that required pharmacy benefit managers (PBMs) to disclose certain business practices, such as rebates and discounts from drug manufacturers. The PCMA, a national trade association of PBMs, challenged the UPDPA on a number of grounds. While this is not an antitrust case, it is a significant case for CIGNA and other companies that provide pharmacy benefit management services.

First, the PCMA claimed that the UPDPA is preempted by either the Employee Retirement Income Security Act of 1974 ("ERISA") or the Federal Employee Health Benefits Act ("FEHBA"), both of which pertain to employee benefit plans. Finding that PBMs are not fiduciaries under ERISA, the court held that the UPDPA was not preempted by ERISA (and by extension by FEHBA) since ERISA only preempts state laws relating to acts