A recent federal district court decision has upheld an Arkansas Insurance Department rule that requires health benefit plans to submit certain pharmacy compensation information to the Department. The court ruled that this reporting requirement is not preempted by ERISA, finding that the rule does not apply exclusively to ERISA plans and that the reporting required by the rule was incidental to its purpose of assessing whether the compensation was fair and reasonable to ensure a sustainable network of pharmacy services.
The court’s ruling and its reasoning raise significant concerns for plan sponsors and could require group health plans to meet a patchwork of state reporting requirements. Indeed, Florida and several other states have already enacted their own PBM reporting requirements or are considering their implementation. For these reasons, we expect the ruling to be appealed and closely scrutinized under ERISA’s preemption provisions.