On January 2, 2024, the United States Court of Appeals for the Tenth Circuit (“Tenth Circuit”) denied the State of Oklahoma’s motion for a stay pending appeal to the United States Supreme Court and one week later transferred jurisdiction back to the district court[1] regarding Pharmaceutical Care Management Association v. Mulready.[2] What this means is that the Tenth Circuit’s August 2023 ruling striking down provisions of Oklahoma’s Patient’s Right to Pharmacy Choice Act[3] as preempted by the federal Employee Retirement Income Security Act (“ERISA”) and Medicare Part D, remains in effect, and thus Oklahoma may not enforce those preempted provisions of its law. Arguably, there is now a circuit split between the Eighth and Tenth Circuits as to the extent of federal preemption regarding efforts by states to regulate pharmacy benefit managers. Oklahoma is expected to appeal to the United States Supreme Court.[4] Whether or not the Supreme Court will choose to accept the case is uncertain.
Procedural Recap
In April 2022, the United States District Court for the Western District of Oklahoma ruled largely in favor of Oklahoma’s Patient’s Right to Pharmacy Choice Act, upholding most of the act against federal preemption while finding that some provisions are preempted by Medicare Part D. In August 2023, the Tenth Circuit reversed, finding the disputed provisions preempted by both ERISA and Medicare Part D. In December 2023, the Tenth Circuit denied Oklahoma’s petition for en banc rehearing. Days later, Oklahoma filed a motion to stay the mandate and the Pharmaceutical Care Management Association (“PCMA”) filed its opposition 10 days later. As noted above, 5 days later the Tenth Circuit denied Oklahoma’s motion to stay pending appeal. A petition for certiorari to the United States Supreme Court has not yet been filed but is presumed per the filing to stay the mandate.
Recent Filings
Last month, Oklahoma filed a motion to stay the mandate, which if granted, would have functionally put the Tenth Circuit’s decision on hold while Oklahoma appeals to the Supreme Court. Earlier this month, the Tenth Circuit denied that motion. A circuit court of appeals may grant a motion to stay a mandate pending a petition for certiorari when (a) the petition presents a “substantial question” and (b) there is good cause for a stay. Furthermore, a stay “in a civil case will not be granted unless the court finds there is a substantial possibility that a petition for writ of certiorari would be granted.”[5] The Tenth Circuit ruled that Oklahoma did not meet these requirements.
What’s Next
The big question remains to be answered: will the Supreme Court grant certiorari? The extent of ERISA or Medicare Part D preemption as to pharmacy benefit managers (“PBMs”) is a matter of great public import as evidenced by the 49 amicus curiae, including the United States, 34 states,[6] the District of Columbia, and 13 trade associations. In recent years, all 50 states have taken some degree of action to regulate PBMs, many in reliance upon the Supreme Court’s unanimous 2020 decision in Rutledge.[7] The reach of that decision appears uncertain and thus the Supreme Court may need to step back into the fray.
[1] United States District Court for the Western District of Oklahoma.
[2] Pharm. Care Mgmt. Ass’n .v Mulready, 78 F.4th 1183 (10th Cir. 2023), en banc hearing denied Dec. 12, 2023.
[3] Okla. Stat. tit. 36, §§ 6958 et seq.
[4] Both the Oklahoma Attorney General and Insurance Commissioner have publicly stated that they will appeal to the Supreme Court. See, https://www.oid.ok.gov/release_082123/.
[5] 10th Cir. R 41.1(B).
[6] The United States and each of the following 34 states as amicus curiae in support of Oklahoma: Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, Virginia, and Washington.
[7] Rutledge v. Pharm. Care Mgmt. Ass’n, 141 S. Ct. 474 (2020).
