While multiple states have passed laws that regulate and reform policies of pharmacy benefit managers (PBMs), these laws have faced a recent deluge of legal challenges in federal court by industry groups and some plan sponsors. At the same time, Congress has imposed new transparency requirements that affect the compliance duties of sponsors of Employee Retirement Income Security Act (ERISA)-covered group health plans. These developments have led to differing rules for plan sponsors to follow depending on the jurisdiction and the type of law involved. Supreme Court decided Rutledge v. Pharmaceutical Care Management Association, holding that ERISA does not preempt state laws regulating PBM reimbursement rates paid to pharmacies. Since that decision, lower courts have found Rutledge inapplicable when holding that ERISA preempts other PBM regulatory laws. For instance, in…

In its complaint, plaintiff claims that ERISA preempts provisions of the Act related to reporting requirements, restrictions on network design, and limitations on steering because they mandate plan sponsors to adopt plans tailored to meet each state’s requirements. Similarly, the Arkansas PBM law addressing ownership and vertical integration is the subject of legal challenges under ERISA, the Dormant Commerce Clause, and the Equal Protection Clause. Congress has contributed to the steadily shifting PBM landscape by adding transparency requirements. Under the Consolidated Appropriations Act of 2026 (CAA), PBMs affiliated with ERISA-governed group health plans qualify as covered service providers under ERISA. As a result, the CAA requires PBMs to pass through 100% of rebates, fees, discounts, and other payments to the plan, with some limited exceptions for bona fide ser…