Conferees debate ERISA exemption and severability while preparing pharmacy reform conference report

Conferees for a legislative pharmacy-practice bill discussed whether to include an ERISA exemption and how to handle repealer language as they considered a strike-all conference report, but they did not reach a final agreement or adopt a report during the meeting.

The discussion centered on differences between a conference draft sent from the Senate and proposed changes the House asked conferees to consider. One senator said the Senate would sign a conference report that is the strike-all to the House bill but asked that a set of agreed changes be included: "Senator Parks and I will sign a conference report that is the strike all to your house bill. All 3 of us are willing to consider any variation or proposal you have to amend the strike all that we sent to you," the senator said.

Why it matters: lawmaking conferees must reconcile competing provisions before the bill can go back to each chamber for final action. Conferees flagged potential federal preemption under the Employee Retirement Income Security Act (ERISA) and debated whether to add an ERISA exemption, limit a statutory repealer to selected sections, or insert a severability clause so unaffected provisions survive a legal challenge.

Most of the parties, one conferee said, had agreed on about four or five specific changes; two provisions remained unresolved. A conferee described the weekend exchange of draft language as "about 75% of what the parties wanted," and asked whether the committee should prepare a conference report reflecting the four agreed changes. The senator who advocated including an ERISA exemption said, "So I'm not prepared to vote for something that's gonna raise costs of prescription drugs on workers in this state," and urged conferees to include either an ERISA exemption or a severability clause to limit the bill's exposure to federal preemption.

Conferees also debated repealer language. One lawmaker said she had difficulty with language that would repeal the entire existing law and proposed narrowing the repealer so it applied only to specific sections. Another conferee said the Senate's position was to send the bill the Senate had already forwarded to the House and that the Senate did not yet have a proposal to backtrack on that position.

Several conferees raised concerns about drug costs and rural access to pharmacies. One senator described constituents in a small town who would have to travel long distances if local pharmacies lost business: "I don't have a CVS in my town... My constituents would have to drive 40 they have to drive 45 miles or they can choose a mail order," the senator said, arguing the bill should protect local independent pharmacies as well as consumers. Other speakers warned that litigation costs or changes in benefit design could raise employer costs for thousands of workers at companies named in the discussion.

Procedural next steps were discussed but no final action was taken. One participant said he would attempt to get a conference report filed that reflected the agreed provisions, and others asked drafting staff to prepare language for the two unresolved issues. The chairman and drafting staff were asked to produce proposed conference language for review; conferees did not vote on any final report during the meeting.

The meeting record shows remaining disagreements over (1) whether to include an ERISA exemption, (2) how broadly to draft repealer language, and (3) whether to insert a severability clause as a fallback if a court finds federal preemption. Conferees asked drafters to prepare text for the outstanding items and indicated they would reconvene if necessary to attempt final reconciliation.