Pharm. Care Mgmt. Ass'n v. Wehbi

18 F.4th 956

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

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)

No. 18-2926

United States Court of Appeals, Eighth Circuit.

Submitted: September 1, 2021

Filed: November 17, 2021

Counsel who presented argument on behalf of the appellant was Michael B. Kimberly, of Washington, DC. The following attorney(s) appeared on the appellant brief; Sarah Hogarth, of Washington, DC.

The following attorneys appeared on amicus briefs in support of appellants:

Chamber of Commerce of the United States of America: Tara S. Morrissey and Paul V. Lettow of Washington, DC; Helgi C. Walker, Matthew S. Rozen, Max E. Schulman and Roberta Batista of Washington, DC.

America's Health Insurance Plans: Julie Simon Miller and Thomas M. Palumbo of Washington, DC; Patrik A. Shah of Washington, DC, and Aileen M. McGrath of San Francisco, CA.

Association of Federal Health Organizations: David M. Ermer and Anthony F. Shelley of Washington, DC.

Counsel who presented argument on behalf of the appellee was Robert Thomas Smith, Special Assistant, U.S. Attorney General, of Washington, DC. The following attorney(s) appeared on the appellee brief; Matthew A Sagsveen, Solicitor General and James Nicolai, Deputy Solicitor General of the North Dakota Attorney General's Office, Bismarck, ND, Howard Robert Rubin and Daniel E. Lipton, Special Assistants, U.S. Attorney General, Washington, DC.

The following attorney(s) appeared on the amicus parties’ briefs in support of appellees; National Association of Chain Drug Stores, Inc., Mary Ellen Kleiman of Arlington, VA and Adam G. Unikowsky of Washington, DC.

On the brief of National Council of Insurance Legislators, Michael M. Marick and W. Joel Vander Vliet of Chicago, IL.

On the brief of the States of Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Indiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington and the District of Columbia: Angela Behrens, Stephen Melchionne and Allen Cook Barr, AAGs, St. Paul, MN.

On the brief of The National Community Pharmacists Association, American Pharmacists Association, North Dakota Pharmacists Association and Six Other State Pharmacy Associations: William E. Copley, Matthew S. Krauss and William E. Jacobs of Washington, DC.

On the brief of the Alliance for Transparent and Affordable Prescriptions, The Community Oncology Alliance and American Pharmacies: Daniel L. Geyser of Dallas, TX.

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 of 2003 ("Medicare Part D"), 42 U.S.C. § 1395w-101 et seq. 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), aff'd in part, rev'd in part , 968 F.3d 901 (8th Cir. 2020), vacated sub nom. Wilke v. Pharm. Care Mgmt. Ass'n , ––– U.S. ––––, 141 S. Ct. 1364, 209 L.Ed.2d 114 (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, 208 L.Ed.2d 327 (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. 104-191 ; 110 Stat. 1936; 29 U.S.C. 1181 et seq. ].

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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

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