Sixth Circuit Holds ERISA Preempts Tennessee PBM Laws Restricting Pharmacy Network Design and Cost-Sharing Arrangements

In McKee Foods Corporation v. BFP Inc., No. 25-5416, — F.4th —-, 2026 WL 936759 (6th Cir. Apr. 7, 2026), the Sixth Circuit Court of Appeals held that ERISA preempts Tennessee’s PBM laws requiring any-willing-provider pharmacy network inclusion and prohibiting differential cost-sharing arrangements, finding both categories of laws have an impermissible connection with self-funded ERISA plans.

McKee Foods Corporation, a national commercial bakery headquartered in Tennessee and the sponsor, administrator, and fiduciary of a self-funded ERISA health plan, contracted with pharmacy benefit manager MedImpact Healthcare Systems, Inc. to administer the plan’s Prescription Drug Program. McKee designed its plan to include tiered pharmacy networks, preferred pharmacy designations with lower copays, and—near its Tennessee headquarters—a company-owned pharmacy offering beneficiaries reduced cost-sharing. Following the Supreme Court’s decision in Rutledge v. PCMA, 592 U.S. 80 (2020), Tennessee enacted Public Chapter 569 (2021) and Public Chapter 1070 (2022), collectively the “PBM laws,” which explicitly extended to ERISA plans. The laws included (1) “any-willing-provider” (AWP) provisions requiring PBMs and covered entities to admit any licensed pharmacy willing to accept network terms and conditions, and (2) “incentive” provisions barring differential copayments and financial inducements designed to steer beneficiaries toward particular pharmacies. After a Tennessee pharmacy removed from McKee’s network for billing irregularities sought reinstatement under the new laws, McKee filed suit seeking declaratory and injunctive relief against the state’s Commissioner of Commerce and Insurance. The district court granted summary judgment to McKee, holding the PBM laws preempted, and permanently enjoined the Commissioner from enforcing them against McKee’s plan or its PBM.

The Sixth Circuit affirmed. The court first addressed several threshold issues. On the question of McKee’s private right of action, the court held that McKee qualified as a plan fiduciary—not merely a plan sponsor—because it exercised discretionary authority over plan management and administration, including forming the pharmacy network and removing pharmacies for cause. As a fiduciary, McKee could bring suit under 29 U.S.C. § 1132(a)(3)(B)(ii) to obtain appropriate equitable relief, including an injunction, to enforce ERISA’s provisions. The court also found standing satisfied under a pre-enforcement challenge framework, noting a credible threat of enforcement based on the history of administrative complaints against McKee’s PBM, the PBM laws’ express applicability to ERISA plans, the Commissioner’s repeated public statements confirming intent to enforce the laws against ERISA plans, and a statutory scheme permitting any member of the public to initiate enforcement proceedings. The court further rejected sovereign immunity and ripeness challenges, finding McKee’s complaint alleged ongoing violations of federal law and sought prospective relief sufficient to satisfy Ex parte Young.

Turning to the merits, the court held that both categories of PBM laws had an impermissible “connection with” ERISA plans under 29 U.S.C. § 1144(a). Applying the framework from Rutledge and Gobeille v. Liberty Mutual Insurance Co., 577 U.S. 312 (2016), the court identified three independent grounds for preemption: the laws (1) required providers to structure benefit plans in a particular way, (2) governed a central matter of plan administration, and (3) interfered with nationally uniform plan administration.

As to the AWP provisions, the court found that requiring PBMs and covered entities to admit any willing pharmacy effectively eliminated a plan’s ability to design a limited or preferred pharmacy network—a core benefit design choice for ERISA plans. The court relied on its earlier decision in Kentucky Ass’n of Health Plans, Inc. v. Nichols, 227 F.3d 352 (6th Cir. 2000), which held similar Kentucky AWP statutes were connected with ERISA plans because they mandated benefit structures, and drew support from the Tenth Circuit’s analogous holding in PCMA v. Mulready, 78 F.4th 1183 (10th Cir. 2023). The court rejected the Commissioner’s argument that the AWP provisions were permissible cost regulations like the Arkansas law upheld in Rutledge, reasoning that unlike reimbursement-rate regulations, the AWP provisions went to the fundamental structure of the pharmacy network rather than merely adjusting its economics.

As to the incentive provisions, the court held that prohibiting differential copays and financial inducements effectively mandated uniform cost-sharing across all network pharmacies—which is functionally equivalent to requiring a specific benefit structure. The court found this went well beyond the kind of indirect cost effect tolerated under Rutledge, characterizing the effect as “so acute” that it “effectively dictate[d] plan choices.” Rutledge, 592 U.S. at 88.

Finally, the court rejected the Commissioner’s argument that ERISA’s saving clause, 29 U.S.C. § 1144(b)(2)(A), rescued the PBM laws. Although the argument was forfeited for failure to raise it below, the court addressed it on the merits and held that even if the PBM laws could be characterized as regulating insurance, ERISA’s deemer clause, 29 U.S.C. § 1144(b)(2)(B), barred their application to McKee’s self-funded plan. Because Tennessee’s PBM laws expressly included ERISA plans within the definition of “covered entity” and “pharmacy benefits manager,” the deemer clause prevented the state from deeming McKee’s self-funded plan to be an insurance company subject to state insurance regulation. Judgment affirmed.