Key Points

  • The Sixth Circuit held that PBMs administering FEHBA, TRICARE, and VHA pharmacy benefits act 'under' federal officers within the meaning of Section 1442.
  • Kentucky's formulary and rebate allegations relate to federally supervised conduct because PBMs conduct unified negotiations for all clients without distinguishing federal from commercial plans.
  • The PBMs' Boyle immunity defense and preemption defenses under FEHBA, TRICARE, ERISA, and Medicare Part D are colorable, satisfying the third prong of the removal analysis.
  • A state plaintiff's disclaimer of intent to hold PBMs liable for federal conduct does not defeat removal when the underlying conduct is indivisible.
  • The decision aligns the Sixth Circuit with the First, Second, Fourth, and Eighth Circuits, creating a uniform wall against state-court PBM opioid litigation.

The U.S. Court of Appeals for the Sixth Circuit ruled Friday that Kentucky's opioid lawsuit against Express Scripts and Optum must proceed in federal court, holding that the pharmacy benefit managers' work for federal health programs makes their challenged conduct inseparable from federally supervised activity. The decision adds the Sixth Circuit to a growing consensus that state opioid claims against PBMs cannot escape federal jurisdiction.

Chief Judge Sutton, writing for a unanimous panel that included Judges Gibbons and Davis, reversed a district court order that had sent Kentucky's case back to state court. The ruling applies the court's earlier decision this year in Ohio ex rel. Yost v. Ascent Health Services, which established that PBMs' unified negotiations on behalf of federal and commercial clients constitute indivisible federal conduct.

The practical consequence is stark: Kentucky cannot pursue its consumer protection and public nuisance claims in its own courts and must instead litigate in a federal forum where preemption defenses stand between the Commonwealth and any recovery.

Kentucky, through Attorney General Russell Coleman, sued Express Scripts and OptumRx in state court in 2024. The complaint alleged the PBMs contributed to Kentucky's opioid crisis by negotiating with drug manufacturers to give opioids "preferred placement on national formularies" in exchange for rebates. The Commonwealth sought civil penalties, an injunction, and abatement of a public nuisance.

Express Scripts and Optum removed the case under 28 U.S.C. Section 1442(a)(1), the federal officer removal statute. District Judge Karen K. Caldwell granted Kentucky's motion to remand, accepting the Commonwealth's argument that its complaint disclaimed liability for federal conduct. The Sixth Circuit reversed.

The court's analysis turned on three statutory requirements: whether the PBMs acted under federal officers, whether Kentucky's claims relate to that federally supervised conduct, and whether the PBMs raised colorable federal defenses.

On the first element, Sutton traced the PBMs' federal contracts. Express Scripts contracts with carriers participating in the Federal Employees Health Benefits Act and provides services for the Defense Department's TRICARE program. Optum contracts with the Veterans Health Administration. These arrangements subject the PBMs to agency oversight, audits, and compliance monitoring that place them within the removal statute's scope.

The more contested question was whether Kentucky's allegations related to this federal activity. The Commonwealth argued it had carved out federal conduct through its pleading, targeting only commercial activities. The Sixth Circuit rejected that theory.

"As the PBMs point out, there is little to no daylight between their federal and non-federal conduct as it pertains to negotiations with drug manufacturers," Sutton wrote. The PBMs "deliberately conduct[] a single negotiation on behalf of all of their clients" without distinguishing between federal and commercial plans. The resulting agreements govern all rebates paid by drug manufacturers regardless of whether the plan sponsor is federal or commercial.

The court applied the Supreme Court's 2026 decision in Chevron USA Inc. v. Plaquemines Parish: a lawsuit relates to federally supervised acts even where the defendant's federal duties neither "specifically required" nor "strictly caused" the challenged conduct. What matters is whether the connection is more than "tenuous, remote, or peripheral." Kentucky's allegations cleared that threshold.

"Kentucky seeks to impose liability based on the PBMs' indivisible federal conduct, just as Ohio did in Yost," Sutton wrote. "The Commonwealth's claims as a result straightforwardly 'relat[e] to' the work that the PBMs perform for federal agencies."

On colorable defenses, the PBMs claimed immunity under Boyle v. United Technologies Corp. and preemption under FEHBA, TRICARE, ERISA, and Medicare Part D. The court found these defenses plausible enough to satisfy the statutory standard without ruling on their ultimate merit.

The decision places the Sixth Circuit in agreement with every other circuit to address the issue. Sutton catalogued the consensus: the First Circuit ruled for PBMs in Puerto Rico v. Express Scripts in 2024; the Fourth Circuit in County Board of Arlington County v. Express Scripts Pharmacy in 2021 and West Virginia ex rel. Hunt v. CaremarkPCS Health in 2025; the Eighth Circuit in Griffin v. Optum this year; and the Second Circuit in County of Westchester v. Express Scripts in September 2026.

"Five circuits have concluded that a complaint targeting PBM services performed holistically for federal and non-federal clients necessarily targets federal conduct," Sutton wrote. "Five circuits have rejected a like-situated government's efforts to sidestep ยง 1442 by disclaiming reliance on the federally controlled aspects of PBMs' indivisible federal conduct."

Kentucky urged the court to remand because the Ohio decision came after the district court's ruling. The court declined. Kentucky also suggested it could amend its complaint to excise the problematic allegations, but the court found that possibility did not change the current analysis.

The case returns to the Eastern District of Kentucky, where the PBMs will press their preemption and immunity defenses on the merits. Christopher G. Michel of Quinn Emanuel Urquhart & Sullivan, LLP represented the appellants; Matthew F. Kuhn of the Office of the Kentucky Attorney General represented the Commonwealth.

The decision was filed September 18, 2026. Kentucky may seek further review.