# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

__ __ __ __ __ __ __ __ __ __ __ __ __ _

No. 1 5- 32 92

__ __ __ __ __ __ __ __ __ __ __ __ __ _

Ph arm aceu ti cal Care Man ag em en t As so ci at io n

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

Nick Gerh art , In h is off

ic ia l ca pa ci ty as In su ran ce Co m m is si on er o f th e St at e o f

Io wa; Th om as J. Mi ll er, In hi s o ffi ci al cap aci ty as Att or ne y Gene ral of t he Sta te of

Io wa

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el le es

----- ----- ----- ----- ----- -----

Nati on al Co m

m un it y Ph arm aci st s As so ci at io n; Iowa Ph arm acy A ss oc ia ti on

ll ll ll ll ll ll ll ll ll ll l Amici on Beha lf of App el le es

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e So ut he rn Dis tri ct of I owa - Des M oi ne s

__ __ __ __ __ __

Su bm it te d: Ju ne 14 , 20 16
Fil ed : J an ua ry

11 , 20 17

__ __ __ __ __ __Befo re MUR PHY an d S HEPHERD, Circ ui t J ud ge s, an d P ERRY , Dis tri ct Ju dg e. 1

__ __ __ __ __ __

PERRY, Dis tri ct Ju dg e.

Thi s ca se in vo lv es th e qu es ti on of whe th er the Em pl oyee Ret ire m en t Inco m e

Secu rit y Act of 19 74 (ERISA)

, 29 U.S.C. §§ 10 01

, et se q. , ex pr es sl y pr eem pt s se ct io n

51 0B .8 of th e Io wa Co de

. The di st ric t co ur t de te rm in ed th at it di d no t an d di sm is se d

Ph arm aceu ti cal Care Man ag em en t Ass oc ia ti on ’s ( P C MA’s) co m pl ai nt se ek in g a
de cl arat io n o f pr eem

pt io n. W e rev ers e an d rem an d with di rect io n th at jud gm en t b e

en te red for PCMA.

I o w a Co de § 51 0B .8 reg ul at es ho w ph arm acy be ne fit s m an ag ers (PBM s )

es ta bl is h ge ne ric dr ug pr ic in g, a n d req ui res th at cert ai n di sc lo su res on th ei r dr ug

pr ic in g m et ho do lo gy be m ad e to th ei r ne two rk ph ar mac i e s a s well as to Io wa’s

in su ran ce co m

m is si on er. Sh or tl y aft er th e st at ut e wen t i n t o effe ct

, PCM A br ou gh t

th is act io n ag ai ns t Io wa’s in su ran ce co m m is si o n e r an d it s at to rn ey ge ne ral
(co ll ect ive ly

, “ th e St at e”), se ek in g a de cl arat io n th at th e st at ut e pl aces res tri ct io ns an d

req ui rem en ts on PBM s th at im pe rm is si bl y refe ren ce or are co nn ect ed w i th ERISA
pl an s, th us m ak in g th e st at ut e ex pr es sl y pr eem pt ed by ERISA. PCM A fu rth er so ug ht

a de cl arat io n th at t h e s t a tu te vi ol at es th e do rm an t Co m m erce Cl au se of th e Uni te d

St at es Co ns ti tu ti on

.

Th e di st ric t co ur t gr an te d th e St at e’s m ot io ns to di sm is s th es e cl ai ms u n d e r
Fed eral Ru le of Ci vi l Pro ced ur e 1 2 ( b ) ( 6 ) f or fai lu re to st at e a cl ai m , an d PCM A

The Hon or ab le Cat he rin e D. Perr y , Unit ed St at es D ist ric t Ju dg e fo r th e East ern 1

Dis tri ct of M is so ur i, s it ti ng by des ig na ti on

.

-2

-ap pe al s. W e rev ie w de no vo th e d is tri ct co ur t’s g ran t o f a Ru le 12 (b )(6 ) m ot io n t o 2

di sm is s, acce pt in g th e fact s al le ge d in th e co m pl ai nt as tru e. Gor og v. Best Buy Co

. , 76 0 F.3 d 78 7, 79 2 (8 th Ci r. 20 14 ); Haf le y v. Lo hma n , 90 F.3 d 26 4, 26 6 (8 t h C i r.

19 96 ). W e al so rev ie w de no vo th e qu es ti on of whe th er ERISA pr eem pt s a St at e la w, gi ve n th at it is a m at te r of fed eral la w in vo lv in g st at ut or y in te rp ret at io n. Se e Sh ea v.

Esen st en , 20 8 F .3d 71 2, 7 17 (8t h C ir. 2 00 0)

.

I.

PCM A is a na ti on al tra de as so ci at io n rep r es en ti ng PBM s. PBM s are th ird

pa rty pl an ad m in is tra to rs who m an ag e an d a dm in is te r pr es cri pt io n d ru g b en efi ts on
be ha lf o f he al th pl an s s ub ject t o ERI SA, as we ll as f or no n- ERISA p la ns

.

The ret ai l ph arm aci es in a PBM ’s ne two rk fil l pr es cri pt i o n s o f he al th pl an

pa rti ci pa nt s wit h dr ug s th e ph arm aci es pu rch as e fro m who le sa le rs or m an uf act ur ers

. W he n a pl an pa rti ci pa nt fil ls a pr es cri pt io n at a ph arm acy, th e ph arm acy ch eck s wit h

th e PBM to de te rm in e co ve rag e an d ob ta in co pa y m en t in fo rm at io n. Afte r th e ph arm acy fil ls th e pr es cri pt io n, th e PBM rei m bu rs es th e ph arm acy at a co nt ract ua ll y

ag reed rat e, mi n us th e co pa y co ll ect ed by th e ph arm acy fro m th e pl an pa rti ci pa nt

. The PBM th en se pa rat el y bi ll s th e he al th pl an at th e rat e ne go ti at ed be twee n th e PBM

an d t he he al th pl an

.

Co nt ract s be twee n PBM s an d th ei r ne two rk ph arm aci es co nt ai n ag reem en ts

ab ou t th e m ax im

um am ou nt th at th e PBM wil l rei m bu rs e a ph arm acy fo r g e n eri c
dr ug s. To de te rm in e th is m ax im um am ou nt , P BMs us e wha t i s ca ll ed a “ m ax im um

al lo wab le co st ” (MAC) m et ho do lo gy. Ea c h P BM us es it s own m et ho do lo gy an d

T he dis trict co ur t al so di sm is se d PCM A’ s du e pr oc es s an d co nf li ct pr eem pti on 2

cl ai m s, as well as it s Tak in gs cl ai m s un de r th e Uni te d St at es an d Io wa co ns ti tu ti on s,

an d th e cl erk en te red jud gm en t on th e c a s e i n f a v or of th e St at e. PCM A do es no t

ap pe al th e d is tri ct co ur t’s d is m is sa l o f th es e o th er cl ai m s.

-3

-de ve lo ps it s own pr ic e li st fo r ge ne ric dr ug s. PCM A cl ai m s th at th e rei m bu rs em en t

li m it s es ta bl is he d by t he PBM s th ro ug h th e i r M A C pr ic e li st s m ot iv at e ph arm aci es

t o se ek an d pu rch as e ge ne ric dr ug s at th e lo wes t av ai la bl e pr ic es , wh ic h ul t i mat e l y

res ul ts in a co st -eff

ect iv e b en efi t t o h eal th pl an s.

In earl y 20 14

, th e Io wa Gen eral Ass e mb l y pa ss ed an “ Act Rel at in g to th e Reg ul at io n of Ph arm acy Ben efi ts Man ag ers .” The Act was si gn ed in to la w on Mar ch

14

, 20 14

, an d be cam e effe ct iv e Ju ly 1, 20 14

. The Act ad de d a ne w se ct io n to Ch ap te r

51 0B of t he Iowa Co de , nam el y sec ti on 51 0B .8, wh ic h p ro vi de s as fol lo ws:

1. The co m

m is s i o n e r m ay req ui re a ph arm acy be ne fit s m an ag er to

su bm it in fo rm at io n to th e co m m is si on er rel at ed to the pharm acy be ne fit s

m an ag er’s p ric in g m et ho do lo gy for m ax im um rei m bu rs em en t am ou nt

.

2. Fo r pu rp os es of th e di sc lo su re of pr ic in g m et ho do lo gy, m ax im um rei m bu rs em en t am ou nt s s ha ll be im pl em en te d a s fo ll ows :

a. E sta

bli she d for m

ul ti pl e-sour ce pr es cr ipt ion dr ugs pr es cr ibe d af

te r th e ex pi rat io n o f an y

ge ne ric ex cl us iv it y

pe rio d.

b. Est ab li sh ed fo r an y pr es cri pt io n dr ug wit h at le as t two or m or e Arat ed th er ap eu tic al ly eq

uiv al en t, m

ult ip le -s ou rce pr es cri pt io n dr ug s wit h
a si gn ifi can t co st di ffer en ce.

c. Dete rm in ed us in g co m pa rab le pr es cri pt io n dr ug pr ic es ob ta in ed
fro m m ul ti pl e na ti on al ly reco gn iz ed co m pr eh en si ve da ta so ur ces i n c l u d i n g w h o l e s a l e r s , p r e s c r i p t i o n d r u g f i l e v e n d o r s , a n d ph arm aceu ti cal m an uf

act ur ers fo r pr es cri pt io n dr ug s th at are na ti on al ly

av ai la bl e an d av ai la bl e fo r pu rch as e lo cal ly b y mult ip le ph arm aci es in
th e st at e.

3. Fo r th os e pr es cri pt io n dr ug s to whi ch m ax im um rei m bu rs eme n t

am ou nt pr ic in g ap pl ie s, a ph arm acy be ne fit s m an ag er sh al l in cl ud e in a

co nt ract wi t h a p h arm acy in fo rm at io n reg ard in g whi ch of th e na ti on al

co m pe n d ia is us ed to ob ta in pr ic in g da ta us ed in th e cal cu la ti on of th e

-4

-m ax im um rei m bu rs em en t am ou nt pr ic in g an d sh al l pr ov id e a pr oc es s to al lo w a ph a r mac y to co m m en t on , co nt es t, or ap pe al th e m ax im um rei m bu rs em en t am ou nt rat es o r m ax im um rei m bu rs em en t am ou nt li st

. The rig ht to co m

m en t on , co nt es t, or ap pe a l th e m ax im um rei m bu rs em en t amo un t rat es or m ax im um rei m bu rs em en t am ou nt li st sh al l be li m it ed i n du rat io n an d al lo w fo r ret ro act iv e pa y m en t in th e

ev en t th at it is de te rm in ed th at m ax im um rei m bu rs em en t am ou nt pr ic in g ha s b een ap pl ie d i nc or rect ly.

Io wa Co de § 51 0B .8. In sh or t, Su bs ect io n 1 req ui res PBMs to pr ov id e in fo rm at io n

reg ard in g t he ir pr ic in g m et ho do lo gi es to Io wa’s in su ran ce co m m is si on er at th e

co m m is si on er’s requ es t; Su bs ect io n 2 li m it s th e types of dr ug s to whi ch a PBM can

ap pl y MA C p r i c i n g a nd li m it s th e so ur ces fro m whi ch a PBM m ay ob ta in pr ic in g

in fo rm at io n; an d Su bs ect io n 3 req ui res PBM s to pr ov id e in fo rm at io n reg ard in g th ei r

pr ic in g m et ho do lo gi es in th ei r co nt ract s wit h ph arm aci es an d to pr ov id e pr oc ed ur es by whi ch ph arm aci es can co m m en t on an d ap pe al MAC pr ic e li st s or r a te s, wit h

po te nt ia l re tro act iv e p ay m en t t o p ha rm aci es for in co rrec t p ric in g.

Two m on th s aft er § 51 0B .8 wen t i n t o e f f ect

, ap pe ll an t PCM A br ou gh t th is

de cl arat or y jud gm en t act io n se ek in g, in te r al ia

, a de cl ar a t i o n th at th e st at ut e is

ex pr es sl y pr eem

pt ed by ERISA. The St at e m ov ed to di sm is s PCM A’ s cl ai m of

ex pr es s pr eem

pt i o n un de r Fed

. R. Ci v. P. 12 (b )(6 ), arg ui ng th at th e cl ai m fai le d to

st at e a cl ai m up on whi ch rel ie f can be gr an te d. The di st ric t co ur t gr an te d th e m ot io n

aft er con cl ud in g th at

, whi le th e st at ut e “ do es reg ul at e an area of ERI SA co nc ern by

r eg ul at in g PBM s” in th e m an ne r pr es cri be d, it do es no t un du ly res tri ct t h e
ad m in is tra ti on of an y ERISA pl an , req ui re a pa rti cu la r pr ic e or pr ic in g m et ho do lo gy

fo r dr ug s, or m an da te th e pr ov is io n of an y be ne fit s. Bec au se PBM s co nt in ue to ha ve

“ su ffi ci en t ch oi ce an d co nt ro l,” th e di st ric t co ur t fo un d th e st at ut e no t to ha ve an

im pe rm is si bl e co nn ect io n wi th ERISA.

-5

-The di st ric t co ur t al so fo un d th e st at ut e no t to im pe rm is si bl y refe ren ce ERISA,

co nc lu di ng th at th e ex is te nc e of ERISA pla ns is no t ess en ti al to th e la w’ s op erat io n

an d, fu rth er , th at th e st at ut e do es no t act “ im m ed ia te ly an d ex cl us iv el y ” on ERISA
pl an s. The di st ric t co ur t fu rth er fo un d th at

, whi le th e de fin it io ns po rti on of th e st at ut e

m ak es a sp eci fic an d ex pr es s refe ren ce to ERISA, t h e refe ren ce is to o far rem ov ed

fro m § 5 10 B.8 to fin d t ha t § 51 0B .8 i ts el f refe ren ces ERISA.

III.

ERISA pr eem

pt s “ an y an d al l St at e la ws in so far as th ey m ay no w or he reaf te r
rel at e to an y em

pl oyee be ne fit pl an [.]” 29 U.S.C. § 11 44 (a). A St at e la w “ ‘relat es to ’

an ERISA pl an an d is pr eem pt ed if it ha s ‘a co nn ect io n wit h or a refe ren ce to su ch a pl an .’ ” Exp re ss Sc ri

pt s, In c. v. W

en ze l

, 2 6 2 F.3 d 82 9, 83 3 (8 th Ci r. 20 01 ) (q uo ti ng

New Y or k St at e Co nf

er en ce of Blu e Cr os s & Blu e Sh ie ld Pla ns v. Tr av el er s In s. Co

. , 51 4 U.S. 64 5, 65 6 (1 99 5) ). A St at e la w ne ed no t act di rect l y o n an ERISA pl an in

or de r to be pr eem

pt ed

. Id

. (ci ti ng In ge rs ol l-Ra nd Co

. v. McCl en do n , 49 8 U.S. 13 3,

13 9 (1 99 0) ). W he re a St at e la w in di rect ly fo rces a pl an ad m in is tra to r to m ak e a

pa rti cu la r de ci si on or ta ke a pa rti cu la r act io n, th e la w m ay be he l d t o “re l at e to ”

em pl oyee be ne fit pl an s. Id

. (ci ti ng Met ro . L if e In s. Co . v . Ma ss ac hu se tt s , 4 71 U.S.

72 4, 7 39 (19 85 )).

A St at e la w ha s a n i mp e r m is si bl e “ refe ren ce to ” ERISA pl an s whe re it “ act s

im m ed ia te ly an d ex cl us iv el y up on ERISA pl an s

. . . or whe re th e ex is te nc e of ERISA
pl an s is es se nt ia l to th e la w’ s op erat io n[ .] ” Gob ei ll e v. Li be rt y Mut

. In s. Co

. , 13 6 S.

Ct

. 93 6, 94 3 (2 01 6) (in te rn al ci ta ti on an d qu ot at io n m ark s om it te d)

. A St at e la w ha s

an im pe rm is si bl e “ co nn ect io n wit h” ERISA pl an s whe re it “ go ve rn s

. . . a c en tra l

m at te r of pl an ad m in is tra ti on ” or “ in te rfer es wit h na ti on a l l y u n i fo rm pl an

a d mi ni st rat io n.” Id

. (in te rn al ci ta ti on an d qu ot at io n m ark s om it te d)

. ERI S A

ex pr es sl y pr eem

pt s th e la w if it ei th er refe rs to or ha s an im pe rm is si bl e co nn ect io n
wit h ERI SA. Sect io n 5 10 B.8 do es bo th

.

-6

-A.

A St at e la w ha s a pr oh ib it ed “ refe ren ce to ” ERISA or ERISA pl an s whe n th at

la w (1 ) im

po se s req ui re men ts by refe ren ce to ERISA-c ov ered pr og ram s, (2 )

sp eci fic al ly ex em

pt s ERISA pl an s fro m an ot he rwis e ge ne ral ly ap pl ic ab le st at ut e, or (3 ) pr em is es a cau se of act io n on th e ex is te nc e of an ERISA pl an

. Pru de nt ia l In s. Co

. of Am. v. Na t’l Pa r k M

e d

. C tr

., In c. , 15 4 F.3 d 81 2, 82 2 (8 th Ci r. 19 98 ) (q uo ti ng

Ca li fo rn ia Div. of La bo r St an da rd s Enf. v. Dil li ng ha m Co ns tr

., N.A., In c. , 51 9 U.S.

31 6, 3 24 -2 5 (1 99 7) ).

The pa rti es do no t di sp ut e th at § 51 0B .8 reg ul at es th e m an ne r by whi ch PBM s

m an ag e an d ad m in is te r pr es cri pt io n dru g ben efi ts by ov ers eei ng th ei r MAC pri ci ng

m et ho do lo gi es , li m it in g th e dr ug s su bjec t to MAC pr ic in g, an d di ct at in g th e m an ne r by whi ch PBM s co nt ract wit h p h a r m aci es reg ard in g MAC pr ic in g. Alt ho ug h §

51 0B .8 do es no t ap pe ar on it s face to im pe rm is si bl y refe r to ERISA whe n read al on e,

we m ay no t lo ok on ly at an is ol at ed pr ov is io n of a st at ut e to co ns tru e it s m ean in g.

Gus ta fs on v. All oy d Co

. , 51 3 U.S. 56 1, 56 8 (1 99 5) (ci ti ng Phi lb ro ok v. Glo dg et t

, 42 1

U.S. 70 7, 7 13 (1 97 5) ; Ko ko sz ka v. Belf or d

, 41 7 U.S. 64 2, 65 0 (19 74 )). In st ead , we

m us t co ns tru e a st at ut e “ ‘so th at effe ct is gi ve n to al l of it s pr ov is io ns , so th at no pa rt

wil l be in op erat iv e or su pe rfl uo us , vo id or in si gn ifi can t

. . . .’ ” Co rl ey v. Uni te d

St at es , 55 6 U.S. 30 3, 31 4 (2 00 9) (q uo ti ng Hib bs v. W in n , 54 2 U.S. 88

, 20 1 (2 00 4) ).

Term s sh ou ld be c o n st ru ed to ha ve co ns is te nt m ean in g th ro ug ho ut a st at ut e.

Gus ta fs on , 51 3 U.S. at 56 8.

Io wa Co de § 51 0B .1 co nt ai ns de fin it io ns fo r te rm s “ as us ed in ” Ch ap te r 51 0B

, whi ch ne ces sa ril y in cl ud es § 51 0B .8. A “ ph arm acy be ne fit s m an ag er” is de fin ed as

“ a pe rs on who pe rfo rm s ph arm acy be ne fit s m an ag em en t se rv i c e s , ” § 51 0B .1(9 ),

wh i c h

, b y de fin it io n, is “ th e ad m in is tra ti on or m an ag em en t of pr es cri pt io n dr ug
be ne fit s pr ov id ed by a co ve red en ti ty un de r th e te rm s an d co nd it io ns of th e co nt ract

be twee n th e ph arm acy be ne fit s m an ag er a n d t h e co ve red en ti ty.” Io wa Co de §

-7

-51 0B .1(8 ). A “ ph arm acy be ne fit s m an ag er” in cl ud es pe rs on s “ act in g on be ha lf of a

ph arm acy be ne fit s m an ag er in a co nt ra c t u a l or em pl oym en t rel at io ns hi p in th e

pe rfo rm an ce of ph arm acy be ne fit s m an ag em en t se rv ic es fo r a co ve red en ti ty.” Io wa

Co de § 5 10 B.1 (9 ). “ Co ve red en ti ty” is d efi ne d a s:

a no np ro fit ho sp it al or m e d i c al se rv ic es co rp or at io n, he al th in su rer, he al th be ne fit pl an , or he al th m ai nt en an ce or ga ni zat io n; a he al th

pr og ram ad m in is te re d by a de pa rtment or th e st at e in th e cap aci ty of

pr ov id er of he al th co ve rag e; or an em pl oyer, la bo r un io n, or ot he r gr ou p of pe rs on s o rg an iz ed in th e st at e th at pro vi de s h eal th co ve rag e.

Io wa Co de § 5 10 B.1 (2 ).

Sect io n 51 0B .1 al so co nt ai ns sp eci fic ex cl us io ns fro m wha t is co ns i d ered a

“ co ve red en ti ty” for p ur

po se s o f Ch ap te r 51 0B :

“ Co ve red en ti ty” do es no t in cl ud e a se lf- fu nd ed he al th co ve rag e pl an th at is ex em

pt fro m st at e reg ul at io n pu rs ua nt to th e fed eral Em pl oyee R e t i r em en t In co m e Secu rit y Act of 19 74 (ERISA)

, as co di fie d at 2 9

U

. S.C. § 10 01

, et se q.; a pl an is su ed fo r he al th co ve rag e fo r fed er a l

em pl oyees; or a he al th pl an th at pro vi de s co ve rag e on ly fo r acci de nt al
i n ju ry , sp eci fie d di se as e, ho sp it al in de m ni ty, Med ic al su pp le m en ta l

, di sa bi li ty in co m e, or lo ng -te rm care , or ot he r li m it ed be ne fit h e a l th
in su ran ce p ol ic y

or c on tra ct

.

Io wa Co de § 51 0B .1(2 ). Acco rd in g l y, w h e n Ch ap te r 51 0B ’s de fin ed te rm s are

co ns id ered i n to to

, it is ap pa ren t th at § 51 0B .8 ap pl ie s to on ly th os e PBM s who

ad m in is te r or m an ag e be ne fit s pr ov id ed by a “ co ve red en ti ty,” whi ch

, by de fin it io n,

sp eci fic al ly ex cl ud es cert ai n pl an s un de r ERISA. Bec au se by its ex pr es s t erm s, t he

st at ut e can no t reac h PBM s who m an ag e be ne fit s fo r cert ai n ex em pt ed ERISA pl an s, § 51 0B .8 sp eci fic al ly ex em pt s cert ai n ERISA pl an s fro m it s ot he rwis e ge ne ral

ap pl ic at io n. If th e effe ct of a St at e la w is to ex cl ud e so m e em pl oyee be ne fit s pl an s

-8

-fro m it s co ve rag e, th at la w ha s a p ro hi bi te d refe ren ce to ERISA an d is pr eem pt ed

un de r 29 U.S.C. § 11 44 (a). Pru de nt ia l In s. Co

. of Am.

, 15 4 F.3 d at 82 3- 24 (q uo ti ng

In ge rs ol l-Ra nd , 49 8 U.S. at 14 0)

.

In ad d i t i o n to th is ex pr es s refe ren ce to ERISA, th e Io wa la w al so m ak es

im pl ic it refe ren ce to ERISA th ro ug h reg ul at io n of PBM s who ad m in is te r be ne fit s fo r

“ co ve red en ti ti es ,” whi ch

, by de fin it io n, in cl ud e he al th be ne fit pl an s an d em pl oyers,

la bo r un io ns , or ot he r gr ou ps “ th at pr ov id e[] he al th co ve rag e.” The se en ti ti es are

ne ces sa ril y su bjec t to ERISA reg ul at io n. Pru de nt ia l In s. Co

. of Am.

, 15 4 F.3 d at 82 4-

25 ; 29 U.S.C. §§ 10 02 (1 ), 10 03 (a). Bec au se be ne fit s affe ct ed by § 51 0B .8 are

pr ov id ed by ERISA-c ove re d pr ogr am s, the re qui re m en ts im posed fo r th e m an ag em en t

an d ad m in is tra ti on of th es e be ne fit s ne ces sa ril y affe ct s ERISA pl an s. “Th us , it

can no t be sa id th at th e [Io wa la w] ‘fun ct io ns irr es pe ct i v e of

. . . t he ex is te nc e of an

ERISA pl an .’ ” Pru de nt ia l In s. Co

. of Am.

, 15 4 F.3 d at 82 5 (q uo ti ng Dil li ng ha m , 51 9

U.S. at 3 28 ).

Sect io n 51 0B .8 ap pl ie s to on ly th os e PBM s who ad m in is te r pr es cri pt io n dr ug
be ne fit s fo r pl an s su bjec t to ERISA reg ul at io n, an d sp eci fic al ly ex em pt s cert ai n

ERISA pl an s fro m it s ap pl ic at io n. Bec au se of th is im pe rm is si bl e refe ren ce to ERISA

or ERISA p la ns , Iowa Co de § 5 10 B.8 is pre em pt ed un de r 29 U.S.C. § 1 14 4( a).

B.

W he re a St at e la w is pr eem pt ed be cau se it ha s a pr oh ib it ed “re f e r en ce to ”

ERISA or ERI S A pl an s, we ne ed no t reac h th e qu es ti on of whe th er it is al so

pr eem pt ed un de r th e “ co nn ect io n wit h” pr on g of th e an al y si s. Pru de nt ia l In s. Co

. of

Am.

, 15 4 F.3 d at 82 5. Nev ert he le ss , ou r rev ie w of § 51 0B .8 sh o w s i t t o h a ve a

pr oh ib it ed co nn ect io n wi th ERISA.

-9

-A St at e la w “ h a s a n i m pe rm is si bl e ‘con ne ct io n wit h’ ERISA pl an s” whe n it

“ ‘g ov ern s

. . . a cen tra l m at te r of pl an ad m in is tra ti on ’ or ‘int erfe res wit h na ti on al ly

u n ifo rm pl an ad m in is tra ti on .” Gob ei ll e , 13 6 S. Ct

. at 94 3 (q uo ti ng Ege l h o f f v

. Ege lh of f

, 53 2 U.S. 14 1, 14 8 (2 00 1) ) (o m is si on in Gob ei ll e ). Obl ig at io ns un de rta ke n
wit h pl an ad m in is tra ti on in cl ud e “ de te rm in in g th e el ig ib il it y of cl ai m an ts

, cal cu lati ng
be ne fit le ve ls

, m ak in g di sb ur se m en ts

, m on it or in g th e av ai la bi li ty of fu nd s fo r be ne fit

pa y m en ts

, an d ke ep in g ap pr op ria te reco rd s in or de r to co mp l y wit h ap pl ic ab le

rep or ti ng req ui rem en ts .” Fo r t H al if ax Pac ki ng Co

., In c. v. Co yn e , 48 2 U.S. 1, 9
(1 98 7)

.

The m os t effi ci en t way to m eet th es e r e s p o n s i b i li ti es is to es ta bl is h a

un ifo rm ad m in is tra ti ve sc he m e, whi ch pr ov id es a se t of s t an da rd

pr oc ed ur es to gu id e pr oc es si ng of cl ai m s an d di sb ur se m en t of be ne fit s. Su ch a syste m is di ffi cu lt to ach ie ve , ho wev er, if a be ne fit pl an is su bjec t

to di ffer in g reg ul at or y req ui rem en ts of di ffer in g St at es

. A p la n wou ld
be req ui red to ke ep cert ai n reco rd s in so m e S ta te s bu t no t in ot he rs ; to mak e cert ai n be ne fit s av ai la bl e in so m e St at es bu t no t in ot he r s ; t o
pr oc es s clai m s in a cert ai n way in so m e St at es bu t no t in ot he rs ; and to

co m pl y wit h cert ai n fid uc ia ry st an da rd s in so m e St at es bu t no t in ot he rs

.

Id

. W he re a St at e’s la w crea te s th e pr os pe ct th at a pl an ’s ad m in is tra ti ve sc he m e wil l

be su bjec t t o c on fli ct in g req ui rem en ts

, ERISA’s pr eem pt io n pr ov is io n is en fo rced

. Id

. at 10

. “ Pree m

pt io n en su res th at th e ad m in is tra ti ve pr act ic es of a be ne fit pl an wil l

be go ve rn ed by on ly a si ng le se t of reg ul at io ns .” Id

. at 11

. The se ov ers ig ht syste m s

an d ot he r st an da rd pr oc ed ur es “ are in te nd ed to be un ifo rm .” Gob ei ll e , 13 6 S. Ct

. at

94 4 (c it in g Tr av el er

s , 51 4 U.S. at 65 6)

.

PCM A arg ue s th at

, co nt rary to ERISA’s int en t to m ai nt ai n a un ifo rm sc he m e

of pl an ad m in is tra ti on , al l face ts of § 51 0B .8 in te rfer e wi t h t h e st ru ct ur e an d

ad m in is tra ti on of ERISA pl an s in Io wa an d req ui re ad m in is tra ti ve pr oc es se s un iq ue

to th at St at e. The St at e an d it s am ic i arg ue th a t t h e s t a t ut e reg ul at es in te ract io ns

-1 0-be twee n PBM s an d ph arm aci es on ly an d do es no t in vo lv e ER I S A p la ns or th ei r

be ne f i c i a r i e s. Thi s arg um en t is fo recl os ed by ou r di sc us si on ab ov e. The y fu rth er

arg ue th at th e m ere po ss ib il it y th at th e st at ut e m ay in di rect ly in crea se co st s to he al th
pl an s is an in su ffi ci en t ba si s fo r pr eem pt io n. Eco no m ic co st to a pl an , ho wev er, is no t

th e on ly m eas ur e of a la w’ s co nn ect io n wit h ERISA. Se e Gob ei ll e , 13 6 S. Ct

. at 94 5.

“ [R]epo rti ng , di sc lo su re, an d reco rd ke ep in g are cen tra l to

, an d an es se nt ia l pa rt of

, th e u ni fo rm

syste m of p la n a dm in is tra ti on co nt em pl at ed by E RISA. . . . [ I]n fact

, . .
. t he se req ui rem en ts are in te gr al as pe ct s of ERISA.” Id

. Dire ct reg ul at io n of th es e

fu nd am en ta l as pe ct s o f ERISA n eces si ta te s p reem pt io n. Id

. at 9 46

.

Here, Io wa’s la w co m

pe ls PBM s as th ird -p art y ad m in is tra to rs to rep or t to th e

co m m is si on er an d to ne two rk ph arm aci es th ei r m et ho do lo gy fo r es ta bl is hi ng
rei m bu rs em en t am ou nt s pa id to ph arm aci es fo r p r o v i d in g cert ai n ge ne ric dr ug s to pl an pa rti ci pa nt s. Req ui rin g rep or ts an d di sc lo su res to a St at e of fic ia l an d to pr iv at e

en te rp ris e ab ou t th e eco no m ic ba se s fo r a pl an ’s pr ov is io n of pr es cri p t i o n dr ug
be ne fit s in th at St at e in tru de s up o n a m at te r cen tra l to pl an ad m in is tra ti on an d

in te rfer es wit h na ti on al ly un ifo rm pl an ad m in is tra ti on

. Se e Gob ei ll e , 13 6 S. Ct

. at

94 5. Io wa’s la w al so res tri ct s th e cl as s of dr ug s to whi ch t h e s e th ird -p art y
ad m in is tra to rs m ay es ta

bli sh m ax im

um re im bur se m en t am ounts an d li m it s th e so ur ces

fro m whi ch th ey m ay ob ta in pr ic in g in fo rm at io n, im pl ic at in g an ot he r area cen tra l to pl an ad m in is tra ti on – th at is

, th e cal cu la ti on of pr es cri pt io n be ne fit le ve ls an d m ak in g
di sb ur se m en ts fo r th es e be ne fit s. Se e Co yn e , 48 2 U.S. at 9. Fi na ll y , th e la w req ui res

th es e th ird -p art y ad m in is tra to rs to in cl ud e in th ei r co nt ract s wit h ne two rk ph arm aci es

pr ov is io ns th at al lo w ph arm aci es to co nt es t an d ap pe al rei mb u r s e men t rat es an d to

“ al lo w fo r ret r o a c t i ve pa y m en t in th e ev en t th at it is de te rm in ed ” th at th e
rei m bu rs em en t ra te s wer e ap pl ie d i nc or rect ly. Not on ly d oe s th is pr ov is io n re st ric t

an ad m in is tra to r’s co nt ro l in th e cal cu la ti on of dr ug be ne fit s, it al so rem ov es th ei r
ab il it y to co nc lu si ve ly de te rm in e fin al dr ug be ne fit pa y m en ts an d m on it or fu nd s. In

ad di ti on , whi le Io wa’s in su ran ce co m m is si on er pr es um ab ly ha s th e du ty to de te rm in e

-1 1-whe th er rei m bu rs em en t rat es are ap pl ie d “ in co rrec tl y ,” se e Io wa Co de § 51 0B .3(1 ), 3

th ere is no th in g in th e st at ut e id en ti fy in g th e y ard st ic k ag ai ns t whi ch an y m eas ur e of

“ co rrec tn es s” is m ad e – fu rth er ex acer ba ti ng th e ad m in is tra to r’s la ck of co nt ro l ov er

th e cal cu la ti on an d d is bu rs em en t o f be ne fit s.

ERISA’s cen tra l de si gn “ is to pr ov id e a si ng le un ifo rm na ti on al sc he m e fo r th e
ad m in is tra ti on of ERISA pl an s wit ho ut in te rfe r e n c e fro m th e la ws of th e se ve ral

St at es [.]” Gob ei ll e , 13 6 S. Ct

. at 94 7. S e c t i o n 5 10 B.8 im po se s m an da te s an d

res tri ct io ns on a PBM ’s rel at io ns hi p wit h Io wa an d it s ph arm aci es th at ru n co un te r

to ERISA’s in te nt of m ak in g pl an ov ers ig h t a n d pr oc ed ur es un ifo rm

. “ Req ui rin g

ERISA ad m in is tra to rs to mas t er th e rel ev an t la ws of 50 St at es an d to co nt en d wit h

li ti ga ti on wou ld un de rm in e th e co ng res si on al go al of m in im iz in g th e ad m in is tra ti ve

an d fin an ci al bu rd en [s ] on pl an ad m in is tra to rs – bu rd en s ul ti m at el y bo rn e by th e
be ne f i c ia rie s.” Gob ei ll e , 13 6 S. Ct

. at 94 4 (in te rn al qu ot at io n m ark s an d ci ta ti on s

om it te d) (al te rat io n i n Gob ei ll e ).

Bec au se th e du ti es an d res tri ct io ns im po se d by § 51 0B .8 on PBM s in th ei r ro le

as th ird -p art y ad m in is tra to rs fo r ERISA pl an s are in co ns is te nt wit h ERISA’s cen tra l

de si gn , ERISA’s ex pr es s pr eem pt io n cl au se req ui res in va li da ti on of th e st at ut e as

ap pl ie d to PBM s in th ei r ad m in is tra ti on an d m an ag em en t of p r e s c r i p ti on dr ug
be ne fit s fo r ERISA pl an s. Gob ei ll e , 13 6 S. Ct

. at 94 7. W e th eref or e rev ers e th e
di st ric t co ur t’s fi nd in g t ha t t he st at ut e is no t ex pr es sl y pre em pt ed un de r ERISA.

IV.

W e m ay rev ers e an y jud gm en t or or de r of a di st ric t co ur t la wfu ll y be fo re us fo r

rev ie w an d “ rem an d th e cau se an d di rect th e en try of su ch ap pr op ria te jud gm en t

. .

. as m ay be jus t un de r th e ci rcu m st an ces .” 28 U.S.C. § 21 06

. Dire ct in g th e en try of

“ The co m m is si on er s ha ll en fo rce t he pro vi si on s o f th is ch ap te r.” 3

-1 2-jud gm en t is ap pr op ria te whe re no rel ev an t fact ua l di sp ut e ex is ts

, t h e r e c o r d on th e

is su e is su ffi ci en tl y de ve lo pe d, an d t he pa rti es ha d a fai r op po rtu ni ty to di sp ut e an d

de ve lo p th e is su e b e fo re th e di st ric t co ur t. Uni on Elec . v . S ou th wes t Bell Tel . L .P.

, 37 8 F.3 d 78 1, 78 6 (8 th Ci r. 20 04 ); Fab ri c v. Pro vi de nt Li fe & Acci de nt In s. Co

. , 11 5

F.3 d 90 8, 91 5 (1 1t h C ir. 1 99 7) (ci te d app ro vi ng ly in Uni on Elec

. , 37 8 F.3d at 78 6)

. Thi s is so ev en in ci rcu m st an ces whe re a pa rty di d no t m ov e fo r en try of jud gm en t in

th e d is tri ct co ur t. Fab ri c , 11 5 F .3d at 9 14 -1 5 (a nd cas es cit ed th erei n)

.

Here, al th ou gh th ere was no de ve lo pm en t of a fact ua l reco rd in th e di st ric t

c o u r t

, t he is su e of ex pr es s pr eem pt io n in th is cas e in vo lv es pu re st at ut or y

in te rp ret at io n wit h no fact ua l m at te rs to be co ns id ered ot he r th an t h e t e x t of th e

st at ut e it se lf. The re si m

pl y is no fact ua l reco rd to be de ve lo pe d. Fu rth er, th e pa rti es

ha d a fai r op po rtu ni ty to di sp ut e an d dev el op th e is su e be fo re t he di st ric t co ur t, an d

th ey fu ll y de ve lo pe d th e is su e on ap pe al

. In de e d, th e is su e of whe th er to di rect th e

en try of jud gm en t ha s it se lf be en de ve lo pe d be fo re us in th is ap pe al

. Giv en al l of

th es e co ns id erat io ns , th ere is no pr ejud ic e to th e St at e by ou r di rect in g th e di st ric t

co ur t t o e nt er jud gm en t o n P CMA’s cl ai m of e xp res s p reem

pt io n, wh ic h we f

in d t o
be ap pr op ria te an d ju st un de r th e ci rcu m st an ces

.

V.

Fo r th e fo reg oi ng reas on s, th e jud gm en t of th e di st ric t co ur t is rev ers ed an d th e

cas e is rem an de d f

o r e n t r y o f jud gm en t in fav or of PCM A on th e is su e of ex pr es s

pr eem pt io n. In vi ew of ou r ho ld in g, we do no t reac h th e do rm an t Co m m erce Cl au se
is su e rai se d b y

PCMA i n t hi s ap pe al

.

__ __ __ __ __ __ __ __ __ __ __ __ __ _

-1 3-