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1 1 (March 26, 2021)

handle is hein.crs/govecun0001 and id is 1 raw text is: Congressional_______ *Research Service Supreme Court Decision Sheds Light on State Authority to Regulate Health Care Costs March 26, 2021 Alongside recent federal efforts to combat escalating prescription drug costs, state governments have sought to address these high costs within their borders. Many state efforts involve restrictions on pharmacy benefit managers (PBMs), companies that facilitate the purchase of drugs through the pharmaceutical distribution chain and administer prescription drug coverage on behalf of health insurers, employers, and others. While many states have enacted legislative measures intended to hold PBMs accountable for their role in the pharmaceutical marketplace, PBMs have challenged some of these measures on the basis that they are preempted by the federal Employee Retirement Income Security Act (ERISA). On December 10, 2020, in Rutledge v. Pharmaceutical Care Management A ss 'n, the Supreme Court weighed in on this issue, concluding that a state PBM law withstood preemption by the federal act. Why does this case warrant attention for the Biden Administration and the 117th Congress? In the past, courts have concluded that ERISArestricts states from enacting certain health care regulatory measures that affect employment-based health coverage. In the wake of Rutledge, questions may arise about the degree to which states have leeway to regulate health care costs in the context of PBMs and beyond. This Legal Sidebar provides background on ERISApreemption; examines the Rutledge decision; and concludes with selected legal considerations for Congress as it continues to address drug pricing reforms. ERISA Preemption Overview ERISA provides a comprehensive federal scheme for the regulation of private-sector employee benefit plans. Although ERISA was enacted in 1974 primarily to regulate pension plans following some notable pension defaults, the Act also regulates employment-based plans that provide medical, surgical, and other health benefits. Under ERISA, health plans must comply with various standards, including plan fiduciary standards, reporting and disclosure requirements, and numerous private health insurance market reforms established by the Patient Protection and Affordable Care Act. Recent reports estimate that approximately 135 million individuals in the United States have employer-sponsored health coverage to which ERISA applies. According to the Supreme Court, Congress, through ERISA, federalized the regulation of plan administration to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government. This goal is carried out in part Congressional Research Service https://crsreports.eongress.gov LSB10587 CRS Legal Sidebar Prepared for Membersand Committeesof Congress

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