On June 29, 2026, in Flowers v. Caremark PCS Health, LLC, the Eighth Circuit U.S. Court of Appeals held that Arkansas regulations requiring pharmacy benefit managers (PBMs) to satisfy specific geographic network adequacy standards are preempted by ERISA.
Background
Kevin Flowers was a participant in an ERISA plan that included prescription drug benefits administered by Caremark. Flowers filed a class action lawsuit, alleging the prescription drug plan violated two Arkansas laws. First, a mail-order provision restricting certain PBM-affiliated pharmacies from requiring participants to receive maintenance (i.e., ongoing) prescriptions through home delivery. Second, a network adequacy provision requiring PBMs to maintain a reasonably adequate and accessible pharmacy network. The network adequacy implementing rules imposed geographic coverage standards that required PBMs to ensure that specified percentages of covered plan participants in urban, suburban, and rural areas lived within set distances of a network pharmacy. For example, 90% of urban covered individuals within two miles, 90% of suburban covered individuals within five miles, and 70% of rural covered individuals within fifteen miles.
Eighth Circuit Decision
The Eighth Circuit affirmed the district court’s dismissal of both of Flowers’ claims. First, the court quickly rejected the mail-order claim because Flowers did not plausibly allege that Caremark required participants to use home delivery exclusively. Rather, the plan design allowed participants to fill maintenance prescriptions either through mail order or at CVS retail pharmacies.
The court then turned to Arkansas’ network adequacy rules. The Eighth Circuit concluded that the geographic coverage requirements had an “impermissible connection” with ERISA plans because they would require PBMs to “tailor and continually adjust” pharmacy networks to satisfy state-specific standards. In the court’s view, those ongoing network changes would interfere with ERISA’s goal of allowing plan sponsors to administer benefit plans under a nationally uniform framework. As a result, the court held that the geographic coverage requirements are preempted by ERISA. However, the court left open whether Arkansas’ broader network adequacy statute, standing alone and without the implementing geographic regulations, would also be preempted.
Employer Takeaway
Employers should be aware of this decision as states continue to adopt laws regulating PBMs and pharmacy access. ERISA generally allows employers to administer employee benefit plans under a uniform federal framework, which can override (or preempt) state laws that interfere with plan design or administration. In practice, however, preemption questions are often difficult because many state PBM laws regulate entities that work with ERISA plans, rather than the plans directly. This can leave employers and their service providers facing a threshold question before applying a state requirement: does the law apply to the plan arrangement, or is it displaced by ERISA?
This decision reinforces that state PBM laws are more likely to face preemption when they affect plan design, network structure, or nationally uniform plan administration, rather than merely regulating reimbursement rates or other cost-related terms. Because the ruling comes from a federal appellate court, it carries more weight than a district court decision, particularly within the Eighth Circuit, where it may be cited in future challenges to state PBM laws. For more information on ERISA preemption, please ask your broker or consultant for a copy of the NFP publication ERISA Compliance Considerations for Health and Welfare Benefit Plans.
Employers should monitor state PBM developments, coordinate with PBMs and other service providers, and consult with counsel, as necessary, to assess whether state requirements could affect plan operations or participant access to prescription drug benefits.
Read the Eighth Circuit’s opinion in Flowers v. Caremark PCS Health, LLC.