What Happened: In McKee Foods Corp. v. BFP Inc., decided April 7, 2026, the Sixth Circuit affirmed that ERISA preempts two Tennessee laws intended to prevent pharmacy benefit managers (PBMs) from steering patients to affiliated pharmacies. The court reasoned that the laws constituted impermissible interference with ERISA plan design and administration, a conclusion it reached by distinguishing the Tennessee statutes from the state laws the US Supreme Court found permissible in Rutledge v. PCMA (2020).

Why it Matters: This case raises questions about the enforceability of the growing body of state legislation regulating PBMs. Many states have enacted or are considering laws similar to those at issue here, which aim to prevent PBMs from steering pharmacy business to their affiliates and to protect independent pharmacies.

The Details: The following is a brief summary of the McKee Foods case and the reasoning of the Sixth Circuit.

Background and Tennessee PBM Law

McKee Foods Corporation, the Tennessee-headquartered maker of Little Debbie snack cakes, sponsors a self-funded ERISA plan and contracts with a PBM for certain pharmacy benefit management services. As is typical of many employer plan benefit designs, McKee’s prescription drug benefit offered plan participants more favorable benefits, copays, and coinsurance when using in-network pharmacies, including McKee’s own in-house pharmacy. The dispute underlying this case arose when McKee and its PBM expelled Thrifty MedPlus...

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