Cigna suing state of Minnesota

Cigna, along with other plaintiffs, is suing the State of Minnesota over a state law regulating Pharmacy Benefit Managers (PBMs). The lawsuit, filed in December 2024, challenges the Minnesota Pharmacy Benefit Manager Licensure and Regulation Act, which aims to protect small pharmacies and consumers by limiting PBMs' ability to steer customers to their own affiliated pharmacies, particularly through mail-order systems.

Key Points of the Lawsuit:

1. Legal Basis:

- Cigna and other plaintiffs argue that Minnesota's PBM law violates the Employee Retirement Income Security Act (ERISA), a federal law that governs self-insured health plans. They claim the state law interferes with employers' ability to design and administer their health plans, which is a federal prerogative under ERISA.

2. Specific Allegations:

- The law prevents PBMs from requiring customers to use PBM-owned pharmacies, which Cigna argues restricts their ability to manage costs and quality effectively.

- Cigna contends that the law complicates multistate health plan offerings and increases costs for employers and consumers.

3. Background on Minnesota's PBM Law:

- Passed in 2019, the law was designed to curb practices that critics say drive independent pharmacies out of business and inflate drug prices. It also prohibits PBMs from mandating the use of mail-order pharmacies for maintenance medications.

- In 2022, CVS Caremark was fined $1.5 million for violating this law by steering customers to its own pharmacies, though it settled for $500,000.

4. Broader Context:

- The lawsuit is part of a larger pushback by PBMs against state-level regulations. Similar legal challenges have been mounted in other states, including Oklahoma, where PBMs successfully argued that state regulations were preempted by ERISA.

- The Federal Trade Commission (FTC) has also been investigating PBMs for practices that allegedly inflate drug prices and harm independent pharmacies.

5. Plaintiffs and Defendants:

- Plaintiffs include Cigna Health and Life Insurance Company, The ERISA Industry Committee, and the National Labor Alliance of Health Care Coalitions.

- Defendants are the Minnesota Department of Commerce and its commissioner, Grace Arnold.

6. Outcome Sought:

- The plaintiffs are asking the court to declare Minnesota's PBM regulations preempted by ERISA and to issue an injunction against their enforcement for ERISA-covered health plans.

Implications:

- If successful, the lawsuit could limit states' ability to regulate PBMs, potentially affecting efforts to protect small pharmacies and control drug prices.

- Conversely, a win for Minnesota could strengthen state-level efforts to regulate PBMs and address concerns about "pharmacy deserts" and rising drug costs.

For more details, you can refer to the original sources: Fox 9 News