Author: Frances Ricks

The debate of whether pharmacy benefit managers (PBMs) are necessary in the healthcare field has been ongoing for years and doesn’t seem to be slowing down. PBMs are essentially middlemen and act as negotiating entities in the prescription drug supply chain. PBMs have the opportunity to set the prices of drugs in various ways. For example, PBMs get discounts directly from drug manufacturers and then sell them to pharmacies, while retaining a portion of the profit. Therefore, pharmacies must price their drugs based on how much they purchase them from pharmacy benefit managers. 

There are many different sides to the debate of whether pharmacy benefit managers are necessary. The Pharmaceutical Care Management Association (PCMA), a national association that represents PBMS, argues that PBMs work to lower the price of prescription drugs for patients and payers. On their website, PCMA states that PBMs save payers and patients an average of $1,040 per person every year. On the other hand, PhRMA argues that patients and payers are paying more than they should because of PBMs. They claim that half of every dollar spent on medicine goes to middlemen and others. 

In recent years, there have been numerous issues surrounding PBMs. In 2023, the Federal Trade Commission (FTC) filed multiple 6(b) motions, a special kind of report to study markets and competitions, against multiple PBMs. Further, in September of 2024, the FTC filed an administrative action alleging that the three largest PBMs, Caremark Rx, Express Scripts, and OptumRx violated Section 5 of the FTC Act by utilizing the rebating system to inflate insulin prices. Following this, in November 2024, the PBMs sued to block the FTC’s administrative action. The PBMs allegedthat the suit should have been brought in federal court. Further, Express Script, one of the PBMs, filed another complaint alleging that the FTC’s b(6) reports on PBMs were biased. Specifically, they argue that the report violates the Administrative Procedure Act (APA) because it is arbitrary and capricious and not in the public interest. However, on February 18, 2025, the Missouri District Court refused to block the proceeding. The court explained that the PBMs were unlikely to succeed in their arguments. Therefore, this case is ongoing and could have major implications for the future of PBMs. The FTC’s case, while it focuses on insulin prices, targets the core of the business model used by PBMs. If they succeed, PBMs will have to change the way they operate, essentially changing the entire industry. On the other hand, if Express Script wins on the b(6) report claims, other PBMs who receive similar reports could be more aggressive with their responses to the FTC. Either way, the conflict between the FTC and PBMs will rage on for years to come. 

Federal, State, and local laws all play a massive role in perpetuating healthcare inequities. Preemption is the idea that when two authorities conflict with each other, the higher authority of law will displace the law of  lower authority. In recent years, many states have restricted local laws regarding public health policy through preemption.  This practice became popular in many states during the COVID-19 pandemic, where many local governments were enacting orders to deal with the pandemic.  Many states, such as Iowa, Oklahoma, and Tennessee in turn enacted statutes stating the local governments could not impose certain restrictions, such as requiring citizens to wear masks or show proof of vaccination.

However, problems with state preemption do not stop at purely public health matters. The effects of this new trend will have significant effects on many different regulations, such as economic opportunities, housing, employee benefits, and technology, which all, in turn, can have a severe effect on healthcare and access to healthcare. This use of preemption is important for many reasons, as the states can now utilize preemption to cause harm to many citizens, contributing to the already wide gaps of health disparity.

For example, laws such as requiring businesses to provide for paid family leave and raising the minimum wage for local workers are some proffered by local governments.   However, state laws have shut many of these laws down. Requiring businesses to provide paid family leave can promote public health when there is a short-term disability, sickness, or something else short-term in a family.  This time off would allow the family or person to recover, therefore promoting public health at the local level. However, if states do not allow for this paid time off, many are forced to work through their disabilities, sickness, or other problems. Further, another common local law is adding a local sales tax to smoking and vaping products to prevent youths from obtaining and using them.  However, these once again are struck down at the state level. These laws would prevent the adverse effects of smoking and vaping among youths, which could be a huge problem in the community, but the local government is preempted by state laws.

State legislatures are using this doctrine to advance anti-LGBTQ+ healthcare bills, especially in southern states.  In recent years, states have blocked local LGBTQ+ nondiscrimination protections, banning gender affirming healthcare, and targeted curriculum in schools. For example, in March 2024, Alabama recently passed an Anti-LGBTQ bill which preempts protections for LGBTQ individuals at the local level. There are numerous examples of these types of bills that are being introduced and passed into law daily. This is detrimental for LGBTQ+ healthcare, and is one of the many ways state preemption of local laws is affecting people today. 

Overall, preemption removes opportunities for effective, local public health action and instead prevents leaders from tackling problems in their community.  Local leaders are better at framing the issue, building local partnerships, and getting the message out to the communities. The weight of preemption today is much heavier than it was five years ago, and this needs to change for city leaders to effectively respond to the changes and problems in their communities. To combat these issues, federal and state governments should avoid framing preemptive legislation in a way that hinders public health initiative in the community. way that hinders public health initiatives in the community. The federal and state governments need to fully anticipate and understand the effects their preemptive laws will have on local communities moving forward.