On April 7, 2026, in McKee Foods Corporation v. BFP, Inc. dba Thrifty Med Plus Pharmacy, the Sixth Circuit U.S. Court of Appeals (Sixth Circuit) held that Tennessee’s “any willing pharmacy” laws are preempted by ERISA.
Background
McKee Foods, a Tennessee bakery, sponsors a self-insured, ERISA-governed health plan with a prescription drug program (PDP) that favors in-network pharmacies. Thrifty Med, which was formerly in-network, was removed in 2019 and spent the next three years seeking reinstatement through meetings, petitions, advertising, legal counsel, and lobbying to expand Tennessee’s any-willing-pharmacy statute to self-insured plans. This statute required covered entities to admit any willing licensed pharmacy to their networks without showing preference for one pharmacy over another. In July 2021, the statute was amended to cover self-insured entities like McKee’s plan; in April 2022, it was further amended to cover ERISA plans.
After McKee denied Thrifty Med’s efforts to rejoin the PDP, McKee filed suit seeking rulings on ERISA preemption and its obligations regarding Thrifty Med. McKee argued that ERISA preempts Tennessee’s PBM laws and bars enforcement of those laws against ERISA plans and their PBMs. Further, McKee asked the court to enjoin enforcement of the PBM laws against McKee. The district court originally dismissed the case but eventually held that Tennessee’s PBM laws had an impermissible connection with ERISA plans because the laws required specific plan structures, governed central aspects of plan administration, and interfered with uniform national plan administration. Therefore, the court found the PBM laws were preempted and permanently enjoined Tennessee’s insurance commissioner from enforcing the laws against McKee. Review our article on the district court ruling. The commissioner appealed, returning the case to the Sixth Circuit.
Sixth Circuit Decision
The Sixth Circuit agreed with the district court. The appellate court noted that the Tennessee PBM laws forced PBMs and plans to allow any licensed pharmacy into their networks and prohibited interference with member pharmacy choices. Unlike other state PBM laws that targeted pharmacy reimbursement rates, the Tennessee laws targeted more fundamental elements of plan design and administration, such as the ability to determine which pharmacies will be included and the ability to design its network to be most accommodating and beneficial to its participants, matters which are already governed by ERISA.
In addition, the Tennessee PBM regulations banned financial incentives or penalties for using certain pharmacies. The appellate court found that the Tennessee law’s incentive provisions mandate copays and fees at every pharmacy in a network, ruling this as an improper attempt to control plan design and structure, which are within ERISA’s scope. Accordingly, the appellate court concluded that ERISA preempts the Tennessee PBM laws.
Finally, Tennessee argued its PBM laws should be protected as insurance regulations, which are not preempted by ERISA. However, the Sixth Circuit noted that ERISA prohibits states from treating self-insured ERISA plans as insurers. Since Tennessee’s statutes apply to ERISA plans (which include self-insured plans), they remain preempted.
Employer Takeaway
Employers should be aware of this case. The relationship between state PBM laws – which are growing in number – and ERISA is still evolving. Cases like this one help define the boundaries between them. ERISA is intended to preempt state laws that seek to affect how benefit plans are structured and administered and to provide uniformity for employers who design their plans. It appears that state PBM laws like the ones at issue here wander too far into ERISA territory, by doing more than regulating reimbursement rates and costs and attempting to control plan design and structure. This case is likely not the final word here, but it shines more light on where the lines are.
Read the Sixth’s Circuit’s opinion in McKee Foods Corporation v. BFP, Inc. dba Thrifty Med Plus Pharmacy.