ERISA and Part D Preemption

Legislative & Regulatory Position

AMCP opposes attempts to erode the Employee Retirement Income Security Act (ERISA) and Medicare Part D preemption. AMCP believes that the certainty that comes with a single uniform federal standard ensures that plans subject to these laws are better able to provide access to needed medications regardless of where the patient lives or works.

ERISA was enacted in 1974 and allows multistate employers to uniformly design and administer health benefit plans regardless of where their employees live or work.¹ When Congress enacted ERISA, it recognized that multistate employers cannot provide quality, affordable benefits if they must comply with a patchwork of recordkeeping, reporting, or other state and local mandates on ERISA plans in addition to federal rules. For this reason, Congress explicitly prohibited states and localities from enacting statutes or ordinances controlling the administration of an ERISA plan, preempting any state or local law that “relates to” an employee benefit plan subject to ERISA.² Despite this broad statutory preemption, ERISA does not preempt state laws regulating the business of insurance, banking, or securities.³

Medicare Part D preemption is also expressly set out in statute.⁴ Congress intended for Part D to be only a “federal program operated under Federal rules,”⁵ setting out a single comprehensive set of laws to govern Part D.

States have attempted to circumvent and test the limits of federal preemption by imposing various reporting, recordkeeping, or other mandates on ERISA plans, with mixed results. In a 2023 decision, the 10th Circuit found that ERISA and Part D preempted an Oklahoma state law that attempted to restrict certain network design practices by pharmacy benefit managers (PBMs).⁶ On the other hand, in 2020, the Supreme Court held that an Arkansas statute regulating the relationship between PBMs and pharmacies does not make “reference to” or have an impermissible connection with ERISA plans.⁷

AMCP believes that state attempts at eroding ERISA and Part D preemption may have negative outcomes for patients by creating disadvantages based on where they live or work, reducing benefit coverage, and raising the overall cost of health insurance. A patchwork of state laws would render Medicare’s prescription drug coverage unreliable and inconsistent and would make it more difficult for employer plans to meet the requirements of the different states in which they operate. This may ultimately mean that some people will be unable to afford coverage, thereby reducing access to needed medications. For these reasons, AMCP opposes state attempts to chip away at federal preemption for ERISA and Part D plans.

Approved by the AMCP Board of Directors, October 2023

1. 29 U.S.C. Chapter 18. See also https://www.dol.gov/general/topic/health-plans/erisa.
2. 29 U.S.C. § 1144(a).
3. 29 U.S.C. § 1144(b)(2)(A).
4. 42 U.S.C. § 1395w-112(g), applying the federal preemption provision of 42 U.S.C. § 1395w-26(b)(3) to Part D plans (“The standards established under [Part D] shall supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to [prescription-drug plans] which are offered by [prescription-drug-plan sponsors] under [Part D].”)
5. H.R. Rep. No. 108-391, at 557 (2003) (Conf. Rep.). See also Uhm v. Humana, Inc., 620 F.3d 1134, 1149 (9th Cir. 2010).
6. Pharm. Care Mgmt. Ass’n v. Mulready, No 22-6074 (10th Cir. August 15, 2023), available at https://www.ca10.uscourts.gov/sites/ca10/files/opinions/010110903570.pdf
7. Rutledge v. Pharm. Care Mgmt. Ass’n, 140 S. Ct. 474 (2020), available at https://www.supremecourt.gov/opinions/20pdf/18-540_m64o.pdf. See also Pharm. Care Mgmt. Ass’n v. Wehbi, No. 18-2926 (8th Cir. Nov. 17, 2021), available at https://www.govinfo.gov/content/pkg/USCOURTS-ca8-18-02926/pdf/USCOURTS-ca8-18-02926-1.pdf.