There
have
been
several
recent
efforts
to
crack
down
on
pharmacy
benefit
managers,
from
bills
in
Congress
to
an
investigation
by
the
Federal
Trade
Commission.
But
the
state
of
Arkansas
has
been
the
one
to
actually
take
definitive
action.
In
April,
Republican
Governor
Sarah
Huckabee
Sanders
signed
legislation
that
states
that
starting
January
1,
2026,
no
PBMs
can
own
and
operate
pharmacies
in
the
state.
PBMs
have
increasingly
bought
up
pharmacies
in
recent
years,
which
allows
them
to
increase
drug
prices
and
put
competitors
out
of
business,
the
governor’s
office
stated
in
the
announcement.
The
law
was
likely
intended
to
check
the
influence
of
the
three
largest
PBMs
—
CVS
Caremark,
Express
Scripts
and
Optum
Rx
—
that
cumulatively
process
80%
of
all
prescriptions
in
the
U.S.
But
it
should
come
as
no
surprise
that
some
of
the
PBMs
are
fighting
back.
Last
week,
CVS
Caremark
and
Express
Scripts
filed
separate
lawsuits
challenging
the
law,
arguing
that
it
is
unconstitutional,
will
force
pharmacies
to
close,
eliminate
hundreds
of
jobs
and
actually
increase
costs.
“With
Act
624
signed
into
law,
the
Arkansas
legislature
and
governor
are
forcing
23
community
pharmacies
to
close
by
January
1,
2026,
including
some
of
the
very
few
that
are
open
24
hours;
fire
more
than
500
local
healthcare
workers;
erode
access
to
specialized
pharmacy
care
for
the
10,000
Arkansas
patients
with
serious
conditions
who
rely
on
additional
support;
and
increase
the
cost
of
Arkansas
health
benefits
by
millions
of
dollars
each
year,”
argued
Amy
Thibault,
executive
director
of
corporate
communications
at
CVS
Health,
in
an
email.
Express
Scripts
echoed
these
comments.
“If
this
law
takes
effect
in
January,
hundreds
of
thousands
of
Arkansans
will
be
left
scrambling
to
navigate
the
forced
closure
of
pharmacies
and
finding
new
ways
to
get
their
medicines
and
critical
clinical
support,”
said
Susan
Peppers,
RPh,
vice
president
of
pharmacy
practice
at
Evernorth
Health
Services,
in
a
statement.
The
decision
to
sue
is
just
out
of
fear
that
they
will
lose
marketshare,
said
a
Sanders
spokesperson.
“Governor
Sanders
is
proud
that
Arkansas
is
the
first
state
in
the
nation
to
hold
PBMs
accountable
for
their
anticompetitive
practices,”
Sam
Dubke,
Sanders’
communications
director,
told
MedCity
News
in
an
email.
“These
big
drug
middlemen
are
only
attacking
Arkansas
in
the
courts
because
they’re
worried
other
states
will
join
Governor
Sanders
in
fighting
for
patient
access
and
affordable
prescriptions.”
The
lawsuits
In
their
separate
lawsuits
against
Act
624,
CVS
Health
and
Express
Scripts
both
argue
that
the
new
law
is
intended
to
protect
in-state
pharmacy
businesses,
which
they
argue
charge
higher
prices,
while
punishing
out-of-state
competitors.
“Act
624’s
text,
context,
and
legislative
history
make
abundantly
clear
that
the
statute’s
purpose
and
effect
is
to
protect
local
pharmacies
domiciled
in
Arkansas
from
out-of-state
competition,
and
to
do
so
by
punishing
specific
out-of-state
competitors,”
according
to
Express
Scripts’
complaint.
The
company
noted
that
the
purpose
of
Act
624
is
to
eliminate
certain
anticompetitive
business
tactics.
However,
these
tactics
are
already
prohibited
in
current
Arkansas
law,
Express
Scripts
argued.
It
gave
the
example
of
one
statute
that
prohibits
PBMs
from
reimbursing
a
pharmacy
or
pharmacist
in
the
state
less
than
what
it
reimburses
an
affiliate
for
the
same
services.
CVS
also
noted
the
same
in
its
complaint,
and
added
that
it
actually
reimburses
non-affiliated
pharmacies
at
a
higher
rate
than
its
own
pharmacies.
In
addition,
CVS
argued
that
the
law
unfairly
exempts
Walmart,
one
of
Arkansas’
largest
employers,
which
the
company
said
“effectively
operates
PBM-affiliated
pharmacies.”
The
original
draft
of
the
bill
would
have
applied
to
Walmart,
but
it
“almost
died”
in
committee
because
of
this,
the
complaint
stated.
The
complaint
noted
that
one
senator
said
he
couldn’t
vote
for
the
original
bill
because
it
would
have
prevented
Walmart
from
having
pharmacies.
But
the
bill’s
“architects
devised
a
fix,”
CVS
charged.
“Notwithstanding
the
legislature’s
putative
concern
that
PBMs
act
as
‘fox[es]
guarding
the
henhouse’
when
they
serve
as
‘a
price
setter
and
price
taker,’
HB
1150
was
amended
to
include
an
exemption
for
PBM-affiliated
pharmacies
if
the
PBM
serves
only
the
pharmacy’s
own
employee
benefit
plan,”
CVS
argued
in
its
complaint.
“That
exemption
covers
Walmart.
So
while
Walmart
could
continue
to
operate
its
pharmacies,
one
of
its
biggest
out-of-state
competitors
—
CVS
—
would
be
forced
to
leave
Arkansas
altogether.”
It’s
important
to
note
that
Walmart
is
not
a
PBM.
However,
the
company
provides
PBM
services,
according
to
CVS.
The
CVS
spokesperson
pointed
this
MedCity
News
reporter
to
an
article
that
announced
that
the
Purchaser
Business
Group
on
Health,
an
employer
coalition
that
includes
Walmart,
launched
a
firm
called
EmsanaRx
in
2021
that
provides
PBM
services
for
employers. PBGH
no
longer
owns
EmsanaRx,
which
has
since
changed
its
name
to
AffirmedRx.
CVS
noted
in
the
complaint
that
Walmart
has
announced
plans
to
expand
its
pharmacy
offerings
in
Arkansas
and
has
seen
an
increase
in
prescription
orders
since
the
law.
CVS
and
Express
Scripts
argue
that
this
law
violates
the
constitution
in
several
ways.
However,
according
to
one
healthcare
legal
expert,
their
strongest
case
is
on
the
Dormant
Commerce
Clause,
which
says
that
states
cannot
pass
laws
that
unfairly
hurt
or
discriminate
against
businesses
from
other
states.
Both
CVS
and
Express
Scripts
have
this
same
claim.
Other
than
that,
they
have
different
arguments
for
ways
this
law
is
unconstitutional,
noted
Jesse
C.
Dresser,
partner
in
Frier
Levitt’s
Life
Sciences
Department.
In
addition,
even
if
the
law
is
justified,
it
will
hurt
out-of-state
PBM
affiliated
pharmacies
in
favor
of
Arkansas-based
pharmacies,
which
could
be
viewed
as
discriminatory,
he
said.
“That
all
being
said,
I
do
not
think
that
the
PBMs’
lawsuit
will
be
successful,”
Dresser
added.
“States
have
broad
authority
to
regulate
pharmacies
under
the
general
police
powers,
and
recent
cases
have
shown
that
the
Dormant
Commerce
Clause
does
not
prohibit
all
state
regulation
that
affects
interstate
commerce.”
What
could
come
next?
Like
Arkansas,
several
other
states
are
considering
similar
efforts,
including
Vermont
and
New
York.
And
the
results
of
these
lawsuits
in
Arkansas
could
spur
them
into
action.
“It
may
be
that
once
we
see
how
these
cases
shake
out
with
Express
Scripts
and
CVS,
that
these
other
states
might
pick
up
the
mantle
and
try
to
do
something
similar
as
well,”
Dresser
said.
A
major
reason
for
why
Arkansas
was
the
first
state
to
pass
this
law
could
be
that
it
has
a
smaller
concentration
of
some
of
these
PBM-affiliated
pharmacies,
meaning
it
wouldn’t
take
as
big
of
a
hit
of
pharmacies
closing
compared
to
some
other
states,
according
to
Dresser.
He
added
that
he
was
surprised
when
CVS
said
that
it
will
only
have
to
close
23
pharmacies,
expecting
the
company
to
have
a
much
bigger
presence.
For
Express
Scripts,
the
company
doesn’t
operate
brick
&
mortar
pharmacies
in
Arkansas,
but
it
does
have
25
non-resident
pharmacy
licenses
in
Arkansas
that
would
be
affected
by
the
law.
The
company
would
not
be
able
to
provide
care
to
50,000
Arkansans
who
fill
prescriptions
or
receive
in-home
nursing
care
through
an
Evernorth
Pharmacy,
which
is
a
subsidiary
of
Cigna.
Several
advocacy
organizations
have
come
out
in
support
of
Arkansas’
law.
This
includes
the
National
Community
Pharmacists
Association,
who
said
the
legislation
is
groundbreaking
because
it
tackles
vertical
integration
itself
instead
of
creating
laws
to
deal
with
its
downstream
effects.
“HB
1150
removes
many
of
the
bad
actors
who
have
massive
conflicts
of
interest,
actors
who
have
not
complied
with
–
or
have
found
ways
to
work
around
–
previously
enacted
laws,”
said
Joel
Kurzman,
director
of
state
government
affairs
at
the
National
Community
Pharmacists
Association.
“The
legislation
levels
the
playing
field
for
a
more
competitive
pharmacy
environment
that
is
ultimately
more
friendly
to
patients.”
NCPA
gave
the
example
of
an
audit
by
the
Tennessee
Department
of
Commerce
and
Insurance,
which
found
that
Express
Scripts
reimbursed
its
owned
or
affiliated
pharmacies
at
higher
rates
than
those
not
owned
or
affiliated
by
the
PBM,
which
is
against
the
state’s
law.
Patients
for
Affordable
Drugs
Now
echoed
the
issues
around
vertical
integration.
“Vertical
integration
allows
PBMs
to
control
which
drugs
are
covered
and
where
prescriptions
are
filled
—
steering
patients
toward
their
own
pharmacies,
favoring
higher-priced
drugs
that
increase
their
profits,
and
squeezing
out
independent
pharmacies
that
many
patients,
particularly
in
rural
areas,
rely
on,”
said
Merith
Basey,
executive
director
of
Patients
For
Affordable
Drugs
Now.
There
are
also
efforts
at
the
federal
level
to
ban
PBMs
from
owning
pharmacies,
such
as
the
Patients
Before
Monopolies
Act.
This
was
a
bipartisan
bill
introduced
by
Senators
Elizabeth
Warren
(D-Massachusetts)
and
Josh
Hawley
(R-Missouri)
in
December.
However,
Dresser
finds
it
unlikely
that
this
would
be
the
first
significant
PBM
reform
to
come
at
the
federal
level.
Instead,
there
will
probably
be
legislation
that
requires
more
transparency
from
PBMs
first.
Photo:
bong
hyunjung,
Getty
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