A federal judge in Illinois dismissed a Teamsters-backed complaint that sought to overturn Arkansas’ pharmacy benefit manager rule on ERISA preemption grounds, according to BestWire.
The case was brought by the Central States, Southeast and Southwest Areas Health and Welfare Fund—primarily funded by the Teamsters—and trustee Charles A. Whobrey.
The complaint named former Arkansas Insurance Commissioner Alan McClain as the lead defendant.
At issue was Arkansas Rule 128, first introduced as an emergency measure in Sept. 2024 and made permanent three months later.
The rule requires additional dispensing fees when reimbursements are deemed unfair and obligates health plans to provide cost data supporting pharmacy reimbursement programs.
The plaintiffs argued that the rule interfered with ERISA-governed plans by imposing reporting obligations that burdened administration and by dictating plan design through mandatory dispensing fees.
The Illinois court disagreed. It found the rule applies broadly to all health benefit plans and payers, not just ERISA-covered entities.
For preemption to apply, the judge noted, the law must act “immediately and exclusively” on ERISA plans or require their existence to function—criteria Arkansas’ regulation did not meet.
On reporting, the court held the requirements were incidental to the rule’s core function of regulating fees, not plan administration. As for fee mandates, the court pointed to a prior Supreme Court decision allowing state cost-regulation statutes, provided they do not compel specific coverage arrangements.
The Illinois ruling stressed that Rule 128 does not regulate plan design and only “may” require additional fees in some cases, meaning not all plans are affected.
The decision narrows the scope of ERISA preemption claims and gives states more room to regulate pharmacy reimbursements—a space increasingly under scrutiny as costs escalate.
