Pharm. Care Mgmt. Ass'n v. Wehbi

Pharmaceutical Care Management Association Plaintiff - Appellant v. Nizar Wehbi, in his official capacity as the State Health Officer of North Dakota; Mark J. Hardy, in his official capacity as the Executive Director of the North Dakota Board of Pharmacy; Tyler Lannoye, in his official capacity as the President of the North Dakota Board of Pharmacy; Wayne Stenehjem, in his official capacity as the Attorney General of North Dakota Defendants - Appellees

No. 18-2926

United States Court of Appeals, Eighth Circuit

November 17, 2021

Submitted: September 1, 2021

Appeal from United States District Court for the District of North Dakota - Bismarck

The Chamber of Commerce of the United States of America America's Health Insurance Plans; Association of Federal Health Organizations Amici on Behalf of Appellant(s)

National Association of Chain Drug Stores; National Council of Insurance Legislators; State of Minnesota; State of Alaska; State of Arizona; State of Arkansas; State of California; State of Colorado; State of Connecticut; State of Delaware; State of Georgia; State of Hawaii; State of Illinois; State of Indiana; State of Maine; State of Maryland; State of Massachusetts; State of Michigan; State of Mississippi; State of Nebraska; State of Nevada; State of New Jersey; State of New Mexico; State of New York; State of North Carolina; State of Oklahoma; State of Oregon; State of Rhode Island; State of South Carolina; State of South Dakota State of Texas; State of Utah; State of Vermont; State of Virginia; State of Washington; District of Columbia; National Community Pharmacists Association; American Pharmacists Association; North Dakota

Pharmacists Association; Arkansas Pharmacists Association; Iowa Pharmacists Association; Minnesota Pharmacists Association; Missouri Pharmacists Association; Nebraska Pharmacists Association; South Dakota Pharmacists Association; Alliance for Transparent and Affordable Prescriptions; Community Oncology Alliance; American Pharmacies Amici on Behalf of Appellee(s)

Before SMITH, Chief Judge, GRUENDER and BENTON, Circuit Judges.

GRUENDER, Circuit Judge

Pharmaceutical Care Management Association ("PCMA") sued to enjoin the enforcement of several North Dakota statutory provisions, claiming that they were preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and the Medicare Prescription Drug, Improvement, and Modernization Act of2003 ("Medicare Part D"), 42 U.S.C. § 1395w-101 etseq. The district court concluded that ERISA preempted none of the challenged provisions and that Medicare Part D preempted only one. Pharm. Care Mgmt. Ass'n v. Tufte, 326 F.Supp.3d 873 (D.N.D. 2018), ail'd in part, rev'd in part, 968 F.3d 901 (8th Cir. 2020), vacated sub nom. Wilke v. Pharm. Care Mgmt. Ass'n, 141 S.Ct. 1364 (2021) (mem.). PCMA appealed, and we reversed on the issue of ERISA preemption. Tufte, 968 F.3d 901. Subsequently, the Supreme Court vacated our judgment and remanded for us to reconsider the case in light of Rutledge v. Pharmaceutical Care Management Association, 592 U.S. -, 141 S.Ct. 474 (2020). Wilke, 141 S.Ct. 1364. Having done so, we affirm in part and reverse in part.

I.

In 2017, North Dakota enacted two laws, codified at North Dakota Century Code sections 19-02.1-16.1 and -16.2. The laws regulate entities known as "pharmacy benefits managers" ("PBMs") that manage prescription-drug benefits on behalf of health-insurance plans. The relevant provisions in section 16.1 read as follows:

2. A pharmacy benefits manager or third-party payer may not directly or indirectly charge or hold a pharmacy responsible for a fee related to a claim:

a. That is not apparent at the time of claim processing;

b. That is not reported on the remittance advice of an adjudicated claim; or

c. After the initial claim is adjudicated at the point of sale.

3. Pharmacy performance measures or pay for performance pharmacy networks shall utilize the electronic quality improvement platform for plans and pharmacies or other unbiased nationally recognized entity aiding in improving pharmacy performance measures.

a. A pharmacy benefits manager or third-party payer may not collect a fee from a pharmacy if the pharmacy's performance scores or metrics fall within the criteria identified by the electronic quality improvement platform for plans and pharmacies or other unbiased nationally recognized entity aiding in improving pharmacy performance measures.

b. If a pharmacy benefits manager or third-party payer imposes a fee upon a pharmacy for scores or metrics or both scores and metrics that do not meet those established by the electronic quality improvement platform for plans and pharmacies or other nationally recognized entity aiding in improving pharmacy performance measures, a pharmacy benefits manager or third party payer is limited to applying the fee to the professional dispensing fee outlined in the pharmacy contract.

c. A pharmacy benefits manager or third-party payer may not impose a fee relating to performance metrics on the cost of goods sold by a pharmacy.

4.....If a patient pays a copayment, the dispensing provider or pharmacy shall retain the adjudicated cost and the pharmacy benefits manager or third-party payer may not redact the adjudicated cost.

5.....A pharmacy or pharmacist may disclose to the plan sponsor or to the patient information regarding the adjudicated reimbursement paid to the pharmacy which is compliant under the federal Health Insurance Portability and Accountability Act of 1996 [Pub. L. 104191; 110 Stat. 1936; 29 U.S.C. 1181 et seq.].

7. A pharmacy or pharmacist may provide relevant information to a patient if the patient is acquiring prescription drugs. This information may include the cost and clinical efficacy of a more affordable alternative drug if one is available. Gag orders of such a nature placed on a pharmacy or pharmacist are prohibited.

8. A pharmacy or pharmacist may mail or deliver drugs to a patient as an ancillary service of a pharmacy.

9. A pharmacy benefits manager or third-party payer may not prohibit a pharmacist or pharmacy from charging a shipping and handling fee to a patient requesting a prescription be mailed or delivered.

10. Upon request, a pharmacy benefits manager or third-party payer shall provide a pharmacy or pharmacist with the processor control number, bank identification number, and group number for each pharmacy network established or administered by a pharmacy benefits manager to enable the pharmacy to make an informed contracting decision.

11. A pharmacy benefits manager or third-party payer may not require pharmacy accreditation standards or recertification requirements inconsistent with, more stringent than, or in addition to federal and state requirements for licensure as a pharmacy in this state.

The relevant provisions in section 16.2 read as follows:

2. If requested by a plan sponsor contracted payer, a pharmacy benefits manager or third-party payer that has an ownership interest, either directly or through an affiliate or subsidiary, in a pharmacy shall disclose to the plan sponsor contracted payer any difference between the amount paid to a pharmacy and the amount charged to the plan sponsor contracted payer.

3. A pharmacy benefits manager or a pharmacy benefits manager's affiliates or subsidiaries may not own or have an ownership interest in a patient assistance program and a mail order specialty pharmacy, unless the pharmacy benefits manager, affiliate, or subsidiary agrees to not participate in a transaction that benefits the pharmacy benefits manager, affiliate, or subsidiary instead of another person owed a fiduciary duty.

4. A pharmacy benefits manager or third-party payer may not require pharmacy accreditation standards or recertification requirements to participate in a network which are inconsistent with, more stringent than, or in addition to the federal and state requirements for licensure as a pharmacy in this state.

5. A licensed pharmacy or pharmacist may dispense any and all drugs allowed under that license.

Shortly after these laws were enacted, PCMA-a national trade association representing PBMs-sued various North Dakota officials in their official capacities. PCMA asked the district court to enjoin the enforcement of the provisions reproduced above on the ground that they are preempted by ERISA and Medicare Part D.

Both parties moved for summary judgment. The district court held that Medicare Part D preempted section 16.2(2) as applied to Medicare Part D plans but otherwise rejected PCMA's challenges. Tufte, 326 F.Supp.3d 873. PCMA appealed, and we reversed on the issue of ERISA preemption. Tufte, 968 F.3d 901. The defendants petitioned the Supreme Court for a writ of certiorari. While the defendants' petition was pending, the Court decided Rutledge, where it overturned the precedent that we had relied on to conclude that ERISA preempted the laws at issue here. See Rutledge, 141 S.Ct. at 479, 481; Tufte, 968 F.3d at 904-06. The Court then granted the defendants' certiorari petition, vacated our judgment, and remanded for us to reconsider the case in light of Rutledge. Wilke, 141 S.Ct. 1364.

In the meantime, Congress passed the Know the Lowest Price Act of 2018, Pub. L. No. 115-262, 132 Stat. 3670 (codified at 42 U.S.C. § 1395w-104(m)). The defendants concede that this statute preempts section 16.1(7) and the challenged portions of section 16.1(5) as applied to Medicare Part D plans. The defendants also now concede that section 16.1(2)(c) is preempted as applied to Medicare Part D plans. For its part, PCMA has withdrawn its claims that ERISA preempts section 16.1(2), section 16.1(3), the challenged portions of section 16.1(4), and section 16.2(5).

II.

We review de novo the district...