WASHINGTON (CN) – The D.C. Circuit permitted an organization representing pharmacy benefit managers to challenge a District of Columbia law requiring greater transparency in deals made with drug companies, despite the group’s having lost claims over a nearly identical law in Maine.
The court ruled that the doctrine of collateral estoppel does not bar the claims of the Pharmaceutical Care Management Association. The association represents pharmacy benefit managers that health-benefit providers hire to negotiate deals with pharmacies and drug companies.
Some large pharmacy benefit managers began making deals with drug companies, substituting more expensive drugs than prescriptions ordered to receive rebates from drug manufacturers. They then kept the rebates instead of passing them on to the health-benefit providers, including employers, HMOs and private health plans.
To combat these “middlemen” deals, the District of Columbia passed the AccessRx Act in 2004, which requires pharmacy benefit managers to act as fiduciaries, to fully disclose their contracts with drug makers, and to pass on any discounts or rebates to benefit providers.
The association claimed the federal Employee Retirement Income Security Act of 1974 pre-empts the AccessRx Act. While the case was pending, the 1st Circuit upheld a similar statute in Maine. The District of Columbia then amended its law to conform to the Maine law, prompting the lower court to rule that the association’s loss in the Maine case barred it from suing over the D.C. law.
The federal appeals court reversed, ruling that collateral estoppel does not bar the association’s suit, and its application would “freeze the development of the law in an area of substantial public interest.”