Removal under the federal officer removal statute (28 USC § 1442(a)(1)); Motion to remand to state court; Whether defendants were persons who acted under a federal officer & could invoke the statute; The Federal Employee Health Benefits Act (FEHBA)

The court held that defendants-Pharmacy Benefit Managers (PBMs) were entitled to have plaintiff-State of Ohio’s claims relating to prescription drug pricing practices removed to federal court under the federal officer removal statute. Ohio sued several healthcare firms under Ohio law for allegedly conspiring to drive up prescription drug prices, engaging in unlawful pharmaceutical clawbacks and fee adjustments, and for violating the state’s antitrust statute. Defendants removed the case to federal court under § 1442(a)(1), but the district court remanded the case to state court. On appeal, the court first held that defendants were entitled to invoke the statute because they were persons “acting under an officer of the United States.” The Office of Personnel Management has broad administrative and rulemaking authority over the health insurance program for federal employees created by the FEHBA. “The Office mandates many of the terms in” PBM subcontracts with private carriers “and controls the PBMs’ conduct as a result.” The court concluded that this “contractual control satisfies the statute’s ‘act[ing] under’ prong when the PBMs negotiate with drug manufacturers.” While Ohio contended its complaint challenged “only the PBMs’ conduct with respect to non-federal clients[,]” the court noted that “when the PBMs bargain with drug manufacturers and pharmacies, they conduct a single negotiation on behalf of all of their clients.” The court found that because “the targeted negotiations were handled holistically . . . the complaint necessarily targets federal conduct.” It also determined that the complaint challenged “conduct ‘for or relating to’ an ‘act under color of [federal] office.’” The conduct Ohio sought to regulate “has a straightforward ‘connection or association’ with the work that the PBMs perform for the carriers and the Office of Personnel Management to further the agency’s FEHBA duties.” In addition, the court found that defendants offered “a pair of plausible federal preemption defenses.” Reversed and remanded.