On April 7, 2026, the Sixth Circuit affirmed an injunction blocking Tennessee from enforcing pharmacy benefit manager rules against McKee Foods’ self-funded health plan and its PBM for actions taken on the plan’s behalf. The GovInfo docket record lists the case, McKee Foods Corp. v. BFP Inc., No. 25-5416, as decided with the judgment affirmed.
McKee Foods sponsors a self-funded plan governed by the Employee Retirement Income Security Act of 1974 (ERISA). The district court record describes McKee as a food products manufacturer with about 6,800 employees across the continental United States, and says the plan includes prescription drug benefits designed by McKee as sponsor, administrator, and fiduciary. Tennessee’s challenged provisions would have affected any-willing-pharmacy access and cost-sharing incentives, including the plan’s ability to steer members toward preferred pharmacy arrangements.
The Sixth Circuit held that the laws had an impermissible connection with ERISA plans because they required particular plan structures, governed central matters of plan administration, and interfered with uniform national administration. The opinion leaned on the Tenth Circuit’s PCMA v. Mulready reasoning for the same reserve-relevant point: a state rule that fixes network access or cost-sharing can move from cost regulation into plan design.
Who It Affects
The affected readers are self-insured employers, public-entity health plans, hospital systems, Taft-Hartley funds, and captives or trusts that retain pharmacy risk below stop-loss. Multi-state plans have the most immediate modeling issue because one state may preserve network steering while another state may restrict it, depending on the law and the circuit.
This is not just a legal-caption problem. CMS reported that retail prescription drug spending increased 7.9% to $467.0 billion in 2024, after 10.8% growth in 2023. In a pharmacy book that large, small changes in channel mix, mail-order use, specialty routing, rebates, and member cost sharing can move the current-year expected claim ratio used in self-funded health plan IBNR.
The Reserve Mechanism
The reserve levers are expected claim ratio and paid completion. If the plan can keep preferred pharmacy networks, mail-order incentives, and specialty-channel rules, pharmacy severity and runoff timing remain tied to the plan design reflected in prior claims. If a state law survives preemption and forces broader network access or identical cost sharing, the plan may need a separate pharmacy expected claim ratio and completion pattern for that jurisdiction.
The practical signal usually appears first in pharmacy channel mix and paid lag, not in the court caption. A shift from preferred or mail channels to nonpreferred retail can change allowed cost, rebate timing, and the speed with which claims clear the PBM file. That is the same operating surface finance teams are already watching in GLP-1 pharmacy and stop-loss planning and in the broader ERISA fiduciary wave for self-funded health plan sponsors.
What This Means for Your Next Review
Put one concrete item on the next reserve-study agenda: ask whether pharmacy completion factors and expected claim ratios are still blended nationally, or whether state PBM rules justify a jurisdiction split. Then quantify how much of the plan’s current expected claim ratio assumes retained savings from preferred networks, mail order, specialty pharmacy routing, or differential cost sharing. The watch item is rehearing activity, a cert petition, and state rewrites that target PBM pricing or ownership instead of directly mandating ERISA plan network design.
Sources
- Sixth Circuit opinion, McKee Foods Corp. v. BFP Inc., No. 25-5416
- GovInfo docket record, McKee Foods Corp. v. BFP Inc., No. 25-5416
- Eastern District of Tennessee memorandum opinion and order, McKee Foods Corp. v. BFP Inc., No. 1:21-cv-279
- Tenth Circuit opinion, Pharmaceutical Care Management Association v. Mulready
- NAIC ERISA preemption guidance materials, March 3, 2026
- CMS National Health Expenditure Fact Sheet, 2024