Federal Court Dismisses ERISA Challenge to Arkansas Pharmacy Reimbursement Rule

A federal district court has dismissed a lawsuit challenging the Arkansas Insurance Department’s Rule 128: Fair and Reasonable Pharmacy Reimbursements, confirming that the rule is not pre-empted by federal ERISA law.

In Central States, Southeast and Southwest Areas Health and Welfare Fund et al. v. McClain, the U.S. District Court for the Northern District of Illinois ruled on September 2, 2025, that Rule 128 lawfully applies to all health benefit plans and healthcare payors in Arkansas and does not impermissibly interfere with ERISA plan administration.

Rule 128, issued in December 2024, authorizes the Arkansas Insurance Commissioner to review pharmacy benefit manager (PBM) compensation programs to ensure that reimbursements for pharmacy services are fair and reasonable. The court found that the rule’s reporting requirement and potential dispensing fee adjustments regulate payment processes, not plan design or administration.

The decision reaffirms Arkansas’s authority to oversee PBM and health plan reimbursement practices under state law.

You can read the court order here.