Vanderbilt Law Review

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This Article analyzes the preemptive effect of ERISA on state third party prescription drug program legislation. It argues that such laws do not "relate to employee benefit plans" and that even if the courts were to view them as relating to employee benefit plans, the laws meet the statutory exception to preemption for state laws that "regulate . . . insurance."

The Article contends that third party prescription drug program statutes represent a type of "borderline preemption problem, and it offers a functional approach to resolve the problem. If a state law affects employee benefit plans without infringing on their terms and conditions, a court should balance the state's interest in the regulation against the extent of the legislation's effect on employee benefit plans. Third party prescription drug program legislation serves important state interests in promoting the health and welfare of its citizenry and has an insignificant economic and administrative effect on employee benefit plans. Therefore, such regulation should not be preempted.