Attorney General Nessel Joins Multistate Efforts

Contact: Lynsey Mukomel 517-599-2746
Agency: Attorney General

July 9, 2021

LANSING - Michigan Attorney General Dana Nessel continues to join attorneys general from across the nation in a variety of multistate actions, including the following: 

Brief Supporting Regulation of Pharmacy Benefit Managers 

On July 1, Nessel joined a bipartisan coalition of 30 attorneys general from across the country, led by Minnesota Attorney General Keith Ellison, in an amicus brief to the Eighth Circuit Court of Appeals in support of North Dakota laws that regulate abusive behavior of pharmacy benefit managers (PBMs), which have been challenged by the PBM industry's national lobbying association.  

The case, Pharmaceutical Care Management Association (PCMA) v. Wehbi, is on remand from the U.S. Supreme Court, which vacated the Eighth Circuit's previous decision that ERISA preempts North Dakota's laws regulating PBMs. The Supreme Court directed the Eighth Circuit to reconsider the case in light of the Supreme Court's December 2020 decision in Pharmaceutical Care Management Association v. Rutledge. In Rutledge, the Supreme Court rejected the Eighth Circuit's ERISA analysis and held that Arkansas had authority to impose various cost regulations on PBMs: for example, Arkansas could require PBMs to reimburse pharmacies for at least the amount pharmacies pay to acquire a drug, as other states do.  

As the coalition wrote in the brief, they "have an interest in preserving states' authority to regulate companies doing business in their states and in protecting their residents' access to healthcare and shielding them from abusive business practices. To advance these interests, nearly all states regulate pharmacy benefit managers."  PCMA's broad approach to federal preemption would "severely impede states' abilities to protect their residents and potentially upend licensing and regulatory structures in nearly every state."  

Abusive business practices of PBMs  

PBMs are intermediaries in the prescription pharmaceutical industry between prescription drug plans, pharmacies, and drug manufacturers.  The PBM industry reaps hundreds of billions of dollars annually.  PBMs profit from fees charged to market participants and by reimbursing pharmacies less than the PBM is paid by plans for dispensing medications. PBMs have imposed self-serving protections that reduce reimbursement rates to pharmacies, maximize rebates to PBMs, and impose various confidentiality requirements. For example, PBMs have tried to prevent pharmacies from even telling consumers the actual cost of drugs.  

These business practices have harmed consumers, pharmacies, and states. Rural and independent pharmacies have especially struggled to survive when PBMs impose financially unsustainable conditions.   

PBMs have been largely unregulated for decades and are still largely unregulated at the federal level. States like North Dakota and others have stepped up and paved the way for PBM regulation to protect consumers and pharmacies.  

Comments Encouraging EPA to Restore California Waiver for Clean Car Standards 

On July 6, Nessel joined a coalition of 22 attorneys general, as well as the cities of Los Angeles, New York, Oakland, San Francisco and San Jose, to encourage the EPA to restore California's waiver under the Clean Air Act for its greenhouse gas and zero emission vehicle (ZEV) programs. The coalition also encourages the EPA to rescind its previous determination that Section 177 of the Clean Air Act does not authorize other states to adopt California's greenhouse gas standards for passenger cars and light trucks. California's standards, which already result in emissions reductions of hundreds of thousands of tons annually, are essential components of Michigan and other states' plans to fight climate change and protect public health. 

Sixty years ago, California was a pioneer in adopting vehicle emission standards - long before any federal vehicle emission standards even existed. Since then, California has been granted more than 100 waivers, including in 2013 when the EPA granted California a waiver for its Advanced Clean Car program. Six years later, under the Trump Administration, the EPA withdrew California's waiver to set its own greenhouse gas and ZEV standards, which a California-led coalition swiftly challenged in court. Litigation in that case is currently held in abeyance to permit the current EPA to reconsider. 

California's clean car standards have been adopted by thirteen states representing more than one-third of the U.S. automobile market and are currently under consideration in a number of others. These standards, which have been implemented in some states for more than a decade, are essential components of state plans to reduce emissions and attain federally mandated National Ambient Air Quality Standards for particulate matter and ozone - two pollutants which cause significant adverse health impacts. According to CARB analysis, California's Advanced Clean Car Program, of which its greenhouse gas and ZEV standards are critical components, is expected to result in a 75% reduction in smog-forming pollution and a 40% reduction in greenhouse gas emissions for an average car sold in 2025 as compared to 2012 when the program was adopted. These standards are not only crucial for reducing emissions now to mitigate the threats residents face from climate change - they also drive technological innovation that will enable deeper emissions reductions of all of these harmful pollutants in the future. 

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