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Benefit Managers Can Fight Calif. Law Again

(CN) - The 9th Circuit will take another look at California laws that require pharmacy benefit managers to report drug-pricing information to insurance companies and other clients.

A three-judge panel of the federal appeals court in San Francisco found the state statutes constitutional in July, but a majority of judges agreed Monday to convene a full, 11-judge panel to rehear the case.

A group of retail pharmacies sued several pharmacy benefit managers (PBMs) in 2002 to enforce laws that require managers to conduct biannual studies of local pharmacies' retail drug pricing for private, uninsured customers, and to release those studies to their clients. The managers argued that the laws were unconstitutional because they unlawfully compelled speech.

A federal judge in Riverside ruled for the plaintiffs, and a three-judge panel of the 9th Circuit agreed.

"The statute requires PBMs merely to conduct or obtain the results of studies of the prices charged by pharmacies to their private customers and to report the objective data revealed by these studies to the third-party health plan managers for whom they process claims," Judge Betty Fletcher wrote for the panel. "The 'compelled speech' at issue, therefore, is nothing more than the reporting of the purely statistical facts that these studies yield. The statute does not in any way regulate the content of the speech - content is instead dictated solely by the results of the studies themselves."

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