Judge Denies Preliminary Injunction Against North Dakota Laws Regulating PBMs

Earlier this year, North Dakota passed two laws to regulated pharmacy benefit managers (PBMs) and curb their abuses. The laws were S.B. 2258, which protects pharmacies from hidden charges and clawbacks and prevents PBMs from charging patients co-pays that exceed the cost of their medication, and S.B 2301, which requires PBMs to provide more transparency for their clients, to disclose if they practice spread pricing, and to agree to fair competition. Last week, on Tuesday, November 7th, a judge denied an request for an injunction against the laws, allowing them to go into effect.

These two measures regulating PBMs were signed into law on April 5th, 2017. Almost immediately, the Pharmaceutical Care Management Association (PCMA), the main PBM lobbying association, filed a lawsuit challenging the laws and claiming they were unconstitutional. Among other things, they asked the judge for a preliminary injunction, saying the measures would greatly harm patient safety and increase prescription drug costs. Originally the laws were scheduled to go into effect on August 1st, but North Dakota Governor Doug Burgum said he would not enforce them until a judge ruled on the injunction.

And now we have our answer. U.S. District Court Judge Daniel Hovland denied PCMA's request for an injunction against the laws. In his opinion he wrote that PCMA had "not met its burden for establishing the necessity" for the injunction. North Dakota Attorney General Wayne Stenehjem praised the ruling, while PCMA responded that it "would continue to challenge the laws on the merits in the district court and if necessary the federal court of appeals."

This ruling is a significant victory for consumers--North Dakota's new PBM laws put a stop to several important PBM abuses, and now they can be enforced. PCMA claims that the laws will increase drug prices, but there is no evidence for that. This claim is particularly rich given a growing body of evidence that PBMs contribute to higher drug prices, and the lack of transparency which makes it almost impossible to determine whether they are really passing savings on to consumers.

North Dakota's laws regulating PBMs are a good way to protect consumers, and other states should adopt similar measures.