On June 30, 2025, the U.S. Supreme Court declined to review PCMA v. Mulready, leaving in place the 10th Circuit Court of Appeals decision. This decision struck down key provisions of the Oklahoma Patient’s Right to Pharmacy Choice Act as applied to ERISA plan sponsors. The Court’s decision not to review the case is an implicit endorsement of the 10th Circuit’s holding that reaffirms the scope of ERISA preemption by limiting state efforts to regulate self-funded ERISA plans.
The 10th Circuit found the following provisions of the Oklahoma law to be preempted by ERISA:
- Network access standards – required pharmacy benefit managers (PBMs) to design networks that met certain geographic access standards
- Discount prohibitions – prohibited PBMs from restricting a participant’s choice of pharmacy by incentivizing certain pharmacies through discounts or reductions in copay or cost-sharing
- Any willing pharmacy provision – prohibited denying a pharmacy the opportunity to participate in any network if the pharmacy is willing to accept standard terms and conditions
- Probation prohibition – prohibited denying, limiting or terminating a pharmacy’s contract based on the probation status of a licensed pharmacist employed at the pharmacy
What does this mean for plan sponsors?
While the 10th Circuit’s decision is only binding in the 10th Circuit jurisdiction (Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming), it is persuasive authority elsewhere and sends a strong signal to states that PBM laws that go beyond reimbursement regulation and intrude into plan design decisions are preempted by ERISA. Existing state laws that dictate plan design choices or interfere with benefits structure are now even more vulnerable to preemption challenges in light of this decision.
If another circuit were to hold the opposite on this issue, that would present a situation where the Supreme Court would be more likely to grant review. The Court resolves questions of legal uncertainty with national implications, especially when there is a conflict in how lower courts have interpreted federal law. Because the 10th Circuit decision was consistent with existing precedent and there was no conflicting ruling, the Court denied review.
How does this decision affect the Court’s prior ruling in Rutledge v. PCMA?
The 10th Circuit distinguished this case from the 2020 case, Rutledge v. PCMA, where the Supreme Court held that an Arkansas law that required PBMs to reimburse pharmacies at acquisition cost was not preempted by ERISA. After the Rutledge decision, many states widely interpreted its ruling to allow for broad regulation of PBMs and plan service providers without regard to how the laws impacted underlying benefit plans. The Mulready decision fits within the framework of and clarifies the scope of Rutledge by confirming that states MAY pass laws that regulate reimbursements and alter incentives for ERISA plans, but MAY NOT force ERISA plans to adopt particular network, benefit design or substantive coverage requirements. The latter remains preempted by ERISA, regardless of whether the law is worded to solely regulate third-party service providers and not plans.
Are there other ERISA preemption cases plan sponsors should be aware of?
In March 2025, a federal district court in Tennessee found that key provisions of Tennessee’s comprehensive PBM statute were preempted by ERISA. The court found that the law’s any willing pharmacy mandate and discount/incentive prohibitions interfered with a plan sponsor’s ability to structure benefit plan designs.
There is also a case challenging a similar Minnesota PBM regulation. An important element of this case is that it also challenges the state’s extraterritorial enforcement of the law against out-of-state plans.
In late June the Iowa Business Association and a group of employer and union groups sued the Iowa Insurance Commissioner seeking a temporary restraining order and preliminary injunction of the state’s recently passed comprehensive PBM law, SF 383.
Final thoughts
Employers Health will continue to monitor state legislative developments and promptly communicate any compliance strategy changes responsive to these recent legal developments.
To learn more, contact Madison Connor at [email protected]
Learn more about ERISA preemption and state pharmacy benefit legislation in Madison’s article, State Pharmacy Benefit Laws May Get Second Look from U.S. Supreme Court.
