Man forced to drive 70 miles to fill prescriptions takes fight to Eighth Circuit

(CN) — An Arkansas man seeking to fill his prescriptions closer to home brought his battle against a pharmacy benefit manager to the Eighth Circuit on Tuesday, pushing for enforcement of state regulations instead of a federal law that sets nationwide standards for employee benefits plans.

Last year, a federal judge threw out Kevin Flowers’ unjust enrichment putative class action against CVS Caremark, the pharmacy benefits arm of CVS Health. Flowers claims Caremark, which manages prescription drug benefits for his employee benefits plan, is violating Arkansas law by requiring him to fill “maintenance” prescriptions (prescriptions regularly taken for more than 90 days) at CVS pharmacies or through a Caremark mail-order pharmacy.

In order to use his prescription benefits, Flowers is restricted to either filling prescriptions through the mail or making a 70-mile roundtrip to a CVS retail pharmacy.

Flowers argues this arrangement violates two state laws. One of the laws requires pharmacy benefit managers like Caremark to enable patients to fill prescriptions at “pharmacies within a reasonable distance from a patient’s residence” and mandates that a certain percentage of plan members live within a certain distance of a retail community pharmacy that is part of the pharmacy benefits manager’s pharmacy network. Mail-order pharmacies are not included in these calculations.

The other law prohibits pharmacies that are affiliated with a pharmacy benefit manager from requiring that patients fill their prescriptions through the mail.

U.S. District Judge Susan Hickey found that both of these laws, as applied to Flowers’ employee benefits plan, are preempted by the Employee Retirement Income Security Act. The U.S. Supreme Court has held that a state law is preempted by ERISA if it “governs a central matter of plan administration,” which the Barack Obama appointee found the Arkansas laws do by regulating which pharmacies pharmacy benefit managers must include in their networks.

Flowers’ attorney, Gary Marts, told the Eighth Circuit panel Tuesday that Hickey’s finding was incorrect.

“These statutes that are at issue do not force a plan to adopt any scheme of substantive coverage,” Marts said. “They don’t require the payment of specific benefits. They don’t bind plan administrators to specific rules for determining pharmacy beneficiary status. They do not require plans to provide any particular benefit to any particular beneficiary in any particular way. The statutes don’t change anything as far as what or who the plan must cover.”

One of the judges on the panel pointed out both the 10th Circuit and Sixth Circuit have found that Oklahoma and Tennessee laws setting similar pharmacy benefit network requirements are preempted by ERISA.

“There are three states in a row there — Oklahoma, Arkansas and Tennessee,” the judge said in an audio-only hearing. “Shouldn’t they all have the same rule?”

Caremark’s attorney, Michael Leffel, told the panel that how drugs are delivered to plan members is a “very important part” of a prescription benefits plan. When state lawmakers “start monkeying with” that, he argued, they “impact what ERISA was getting at.”

“We want to be able to have [employers] provide prescription benefits in a uniform manner that isn’t disruptive, and we want to make sure that they’re able to do that and encouraged to do that,” Leffel said. “And if you start taking away their tools, the way they’ve structured it, you’re interfering with their ability to deliver that.”

U.S. Circuit Judges Raymond Gruender and Duane Benton, both George W. Bush appointees, and U.S. Circuit Judge Ralph Erickson, a Donald Trump appointee, made up the panel.