Can pharmacy benefits managers or insulin manufacturers be sued under Arkansas's Unfair Practices Act over insulin rebates?
Plain-English summary
State Representative John Payton asked the AG whether pharmacy benefits managers (PBMs) or pharmaceutical manufacturers might be violating the Arkansas Unfair Practices Act through insulin rebates, and whether such rebates count as "unearned discounts" under A.C.A. § 4-75-208(a).
The AG declined to answer.
The reason: The office had already filed State of Arkansas ex rel. Rutledge v. Eli Lilly and Co. in May 2022 raising similar Unfair Practices Act claims related to insulin pricing. The case was pending in federal court (E.D. Ark., No. 4:22-CV-00549, originally filed in Pulaski Cir., 17th Div.). Issuing an AG opinion that took a position on the legal questions would prejudice the office's own litigation.
The AG cited the office's "long-standing policy" of declining to opine on matters pending before the courts. The policy serves two purposes:
- Avoiding interference with judicial resolution.
- Preserving the AG's litigation posture (the AG has the burden of proving claims in court; an opinion that pre-judged the legal questions would weaken litigation strategy).
This is a procedural rather than substantive ruling. The opinion does not say insulin rebates are or are not unfair practices. It says the AG cannot opine while the litigation is pending.
For substantive answers, the path forward is the litigation itself. State of Arkansas ex rel. Rutledge v. Eli Lilly and Co. and any related case will produce binding judicial determinations on the legal questions. Subsequent legislative action can also clarify the rules.
What this means for you
State legislators monitoring drug pricing issues
The decline-to-opine policy means the AG cannot give you a legal roadmap for legislative response while the case is pending. Track the litigation docket. When the case is resolved, the AG may issue a follow-up opinion or the legislature can build on the court's holding.
If you want statutory clarity sooner than the case timeline allows, the path is direct legislation amending § 4-75-201 et seq. or adding pharmacy-specific provisions. Legislative drafters should coordinate with the AG's office to avoid undercutting the litigation.
Pharmacy benefits managers and pharmaceutical manufacturers
The case is the live forum. The AG opinion is silent. Continue to monitor the litigation and consult with your antitrust counsel on the Arkansas Unfair Practices Act exposure. The Eli Lilly case will likely produce holdings that shape Arkansas law on this question for years.
Insulin consumers and patient advocacy groups
Substantive relief on insulin pricing through the Unfair Practices Act lies in the litigation, not in the AG opinion. Patient advocates can submit amicus briefs in the federal case if the procedural posture allows. Other paths include legislative caps on insulin prices (some states have enacted these), Medicaid coverage decisions, and federal regulation.
Antitrust attorneys with Arkansas matters
The decline-to-opine policy is normal practice. When an AG case is pending on the same legal question, expect an AG opinion request to fail. For litigation strategy purposes, this means the AG's pre-litigation views are not in the public record; opposing counsel cannot cite to a prior AG opinion taking a contrary position.
General readers asking about insulin pricing
This opinion is not a substantive ruling. The AG did not say insulin rebates are or are not unfair practices. The AG just said it could not opine while litigating. Track the litigation for the actual answer.
Common questions
Why does the AG decline to opine on pending litigation?
The office is part of the executive branch and litigates on behalf of the state. Opining publicly while litigating could prejudice the case (revealing legal strategy, creating estoppel issues, or interfering with judicial resolution). The decline-to-opine policy is well-established.
What is the Eli Lilly case about?
State of Arkansas ex rel. Rutledge v. Eli Lilly and Co., No. 4:22-CV-00549, was filed by the AG against insulin manufacturers and pharmacy benefits managers, raising claims related to insulin pricing and rebate practices. Specific allegations and the procedural posture are in the case docket.
What is the Arkansas Unfair Practices Act?
A.C.A. § 4-75-201 et seq. is Arkansas's anti-unfair-competition statute. § 4-75-208(a) addresses unearned discounts.
What is an "unearned discount"?
The statutory term is undefined and contested. The general concept is a discount given without corresponding services or value, used as a competitive advantage. The Eli Lilly case may produce judicial interpretation.
Can an AG opinion be re-requested after the litigation ends?
Yes. Once the case is resolved, the AG can opine on similar legal questions without prejudicing the (then-completed) litigation. The legislator could resubmit the opinion request.
Does the decline-to-opine policy bind future AGs?
The policy is consistent across administrations as a matter of executive-branch practice. Future AGs typically follow it.
Can private parties bring Unfair Practices Act claims?
The statute provides private rights of action in some contexts. Specific procedural and standing rules apply. Antitrust counsel can advise on private claims separately from any AG action.
Background and statutory framework
Statutory framework:
- A.C.A. § 4-75-201 et seq.: Arkansas Unfair Practices Act.
- A.C.A. § 4-75-208(a): unearned discounts provision.
Litigation:
- State of Arkansas ex rel. Rutledge v. Eli Lilly and Co., No. 4:22-CV-00549 (E.D. Ark.), originally filed in Pulaski Cir., 17th Div., May 11, 2022.
Office policy:
- The Arkansas AG has a long-standing policy of declining to opine on matters pending before the courts. The policy is grounded in separation-of-powers principles and litigation-strategy preservation.
Citations
- A.C.A. § 4-75-201 et seq. (Arkansas Unfair Practices Act)
- A.C.A. § 4-75-208(a) (unearned discounts)
- State of Ark. ex rel. Rutledge v. Eli Lilly and Co., No. 4:22-CV-00549 (E.D. Ark.)
Source
Original opinion text
Opinion No. 2021-082
August 4, 2022
The Honorable John Payton
State Representative
P.O. Box 181
Wilburn, AR 72179-0181
Dear Representative Payton:
This is in response to your request for an opinion from this office concerning the Arkansas Unfair Practices Act, codified at Ark. Code Ann. § 4-75-201, et seq. (Repl. 2011 and Supp. 2021), as it relates to pharmacy benefits managers, pharmaceutical manufacturers, and insulin rebates. In this regard, you have asked the following questions:
1) Can a pharmacy benefits manager or a pharmaceutical manufacturer be in violation of the Unfair Practices Act due to the insulin rebates received in this state?
2) Are insulin rebates offered by pharmaceutical manufacturers "unearned discounts" under § 4-75-208(a)?
RESPONSE
I must respectfully decline to issue an opinion on your questions because of pending litigation, the outcome of which could directly affect the issues you have raised. It is the long-standing policy of the Attorney General's office, as a member of the executive branch, to decline to issue opinions on matters that are pending before the courts for resolution. I regret that I cannot be of assistance in this matter. Please do not hesitate to contact me if I may be of future assistance in some other respect.
[Footnote: See State of Ark. ex rel. Rutledge v. Eli Lilly and Co., et al., No. 4:22-CV-00549 (E.D. Ark. originally filed in Pulaski Cir., 17th Div., May 11, 2022).]
Sincerely,
LESLIE RUTLEDGE
Attorney General