We recently learned that certain pharmacy benefit managers (PBMs) in Tennessee are notifying plan sponsors of self-insured plans that their prescription drug claims data may be provided in response to market conduct audits by the Tennessee Department of Commerce and Insurance (TDCI).

The notices state that plan sponsors who do not want their information disclosed must obtain an injunction through the courts. No action is required from plan sponsors that do not seek injunctive relief.

Background

In May 2021, the Tennessee legislature enacted Public Chapter 569, establishing new requirements for prescription drug programs.  Under these regulations, TDCI has broad authority to conduct audits of PBMs to ensure compliance.

Although the Sixth Circuit has held that Tennessee’s network and cost-sharing requirements under the regulations are preempted by ERISA, other provisions were not preempted. The TDCI is therefore requiring disclosure of broad claims data from PBMs, including claims data for self-insured ERISA plans.

Under similar regulations in other states, PBMs have given self-insured plan sponsors the option to opt out of sharing this data. That approach has changed as states have increasingly threatened penalties and potential loss of licensure for PBMs that fail to comply. Consequently, unless a court grants a plan sponsor injunctive relief prohibiting disclosure, PBMs have elected to comply with the state mandated submission requirements.

Client Actions

Clients with self-insured plans covering employees in Tennessee who receive a similar notice should consult with their legal counsel to determine whether seeking injunctive relief is advisable.

No action is required for clients who decide not to seek injunctive relief. Your Piper Jordan client team is available to answer questions.

Information contained in this email is intended for general information purposes only and should not be considered legal or tax advice or legal or tax opinion on any specific facts or circumstances. Recipients are urged to consult their legal counsel and tax advisor concerning any legal or tax questions that may arise.