Pharmacy
benefit
manager
reform
is
not
isolated
to
Congressional
action.
Even
states
such
as
Tennessee
are
wading
in.
Last
year,
Arkansas
became
the
first
state
to
sign
a
law
that
would
have
prevented
PBMs
from
owning
and
operating
pharmacies
in
the
state.
However,
CVS
Caremark,
Express
Scripts
and
lobbying
group
Pharmaceutical
Care
Management
Association
quickly
challenged
the
law,
leading
to
a
judge
blocking
it
from
being
enacted.
The
judge
stated
that
the
law
violates
the
Commerce
Clause,
which
says
that
states
cannot
pass
laws
that
unfairly
hurt
or
discriminate
against
businesses
from
other
states.
Arkansas
appealed
this
decision.
Now,
Tennessee
is
taking
a
stab
at
a
similar
type
of
PBM
reform.
Tennessee
lawmakers
passed
the
FAIR
Rx
Act
last
week,
which
also
prohibits
a
PBM
from
owning
a
pharmacy.
It
passed
in
the
Senate
with
a
24-9
vote
and
in
the
House
with
an
86-7
vote.
It
is
now
awaiting
a
decision
from
Republican
Governor
Bill
Lee.
If
signed
into
law,
will
it
fare
as
poorly
as
its
counterpart
in
Arkansas?
CVS
Health
has
already
said
that
it’s
prepared
to
challenge
the
constitutionality
of
this
potential
law
like
it
did
in
Arkansas.
And
one
legal
expert
believes
it
could
be
difficult
for
the
state
to
defend
the
bill.
“I
do
think
that
it
may
be
an
uphill
battle
to
convince
a
court
that
it
does
not
violate
the
Commerce
Clause,”
said
Eric
Knowles,
partner
at
Frier
Levitt.
Tennessee’s
bill
There
are
minor
differences
between
the
Tennessee
bill
and
the
Arkansas
law.
One
is
that
Tennessee’s
bill
does
not
apply
to
pharmacy
services
provided
under
contracts
with
the
federal
government,
according
to
Knowles.
This
is
partially
why
the
judge
issued
a
preliminary
injunction
on
the
Arkansas
law,
arguing
that
it
conflicts
with
the
federal
TRICARE
program,
which
is
a
healthcare
program
for
active
duty
service
members.
Separately,
the
Tennessee
bill
also
has
a
two-year
implementation
lag,
compared
with
the
Arkansas
law.
If
the
Tennessee
Governor
signs
it
into
law,
companies
impacted
by
the
bill
would
have
until
July
1,
2028,
to
make
changes,
according
to
Anthony
Pudlo,
CEO
of
the
Tennessee
Pharmacists
Association,
which
supports
the
bill
passed
by
the
state
legislature.
By
contrast,
the
Arkansas
law
would
have
gone
into
effect
January
1,
2026,
about
nine
months
after
it
was
passed.
Pudlo
noted
that
due
to
the
vertical
integration
of
PBMs,
numerous
pharmacies
have
closed
in
the
state.
In
2024
alone,
62
pharmacies
closed.
“We
have
seen
the
impact
of
those
closures
in
terms
of
access
for
patients,
reduced
choice,
even
reduced
hours
for
those
pharmacies
that
have
been
able
to
stay
open,”
he
said.
He
added
that
there
have
also
been
cases
of
PBMs
paying
their
own
affiliated
pharmacies
at
a
much
higher
rate
than
other
pharmacies,
sometimes
upwards
of
16,000%
more.
The
major
PBMs,
meanwhile,
argued
that
this
bill
will
harm
patient
care
if
it’s
signed
into
law.
CVS
said
that
it
will
lead
to
the
closure
of
25
MinuteClinic
locations
and
the
loss
of
2,000
jobs.
“It’s
up
to
[Governor
Lee]
to
ensure
1.5M+
Tennesseans
can
continue
to
be
cared
for
by
their
trusted
CVS
pharmacist,
25
MinuteClinic
retail
medical
clinics
continue
to
provide
acute
and
primary
care
for
patients,
and
2,000+
Tennesseans
can
keep
their
jobs,”
said
Amy
Thibault,
executive
director
of
corporate
communications
at
CVS.
“A
veto
will
protect
Tennessee
communities,
ensuring
pharmacy
and
health
care
is
not
disrupted
and
Tennesseans
can
continue
to
get
the
medicines
and
care
they
need.”
A
spokesperson
for
Optum
Rx
echoed
this.
“This
law
would
force
some
pharmacies
to
close
and
take
options
away
from
patients,”
the
spokesperson
said.
“Many
patients—especially
those
with
cancer,
HIV,
neurological
conditions,
or
serious
mental
health
needs—depend
on
specialized
pharmacy
care
and
pharmacists
who
know
their
treatment
well.
Disrupting
that
care
can
make
it
harder
for
patients
to
get
the
medications
and
support
they
rely
on,
including
seniors
and
people
on
Medicaid.”
The
road
ahead
It’s
difficult
to
predict
whether
the
governor
will
pass
or
veto
the
bill,
but
the
fact
that
it
passed
with
overwhelming
bipartisan
support
in
the
House
and
Senate
may
be
a
good
omen
for
the
bill,
according
to
Knowles.
That
said,
the
likelihood
of
a
lawsuit
from
the
PBMs
may
influence
his
decision,
Knowles
added.
However,
even
if
the
governor
vetoes
the
bill,
the
veto
can
be
overridden
by
a
majority
vote
of
the
membership,
according
to
the
Tennessee
General
Assembly.
If
it
becomes
law,
it’s
not
a
question
of
if
PBMs
will
challenge
it,
but
when.
The
PBMs
may
sue
right
away,
or
wait
until
closer
to
the
implementation
date,
according
to
Knowles.
And
Tennessee
may
have
a
very
difficult
time
arguing
against
the
Commerce
Clause,
which
led
to
Arkansas’
preliminary
injunction.
However,
Tennessee
is
in
a
different
appeals
district
than
Arkansas,
meaning
it
could
face
a
different
outcome,
noted
Shawn
Gremminger,
president
and
CEO
of
the
National
Alliance
of
Healthcare
Purchaser
Coalitions,
an
employer
advocacy
organization.
The
judge
for
Tennessee’s
potential
case
could
have
a
differing
opinion
from
the
judge
for
Arkansas’
case,
he
said.
Even
if
the
PBM
reform
bill
does
get
blocked
in
Tennessee,
Gremminger
expects
to
see
more
state
efforts
like
this
in
the
future.
“Once
an
idea
catches
on,
it
seems
like
it’s
hard
to
stanch
out,”
he
said.
“My
expectation
is
they
would
look
at,
why
did
Arkansas
fail,
why
did
Tennessee
fail?
And
they
would
continue
to
refine
the
statute
until
they
could
find
a
way
to
break
through.
I
don’t
think
that
people
are
just
going
to
throw
their
hands
up
and
be
like,
‘Oh,
well,
it
looks
like
we
can’t
force
the
divestiture
of
these
gigantic
companies.’
Like
they’ve
lost
the
goodwill
that
they
may
have
previously
had
within
state
legislators.”
In
fact,
there
have
been
other
states
to
introduce
bills
banning
PBMs
from
owning
pharmacies,
including
New
York,
Texas,
Vermont,
Oklahoma,
Indiana
and
Louisiana.
However,
most
of
these
bills
have
stalled,
failed
to
advance
or
remain
under
consideration.
On
a
federal
level,
Senators
Elizabeth
Warren
(D-Massachusetts)
and
Josh
Hawley
(R-Missouri)
introduced
the
Break
Up
Big
Medicine
Act
earlier
this
year.
It
would
ban
a
parent
company
from
owning
a
medical
provider
or
management
services
organization
and
a
PBM
or
an
insurer.
However,
experts
previously
told
MedCity
News
that
they
don’t
see
this
one
passing
anytime
soon.
In
other
words,
once
the
genie
of
vertical
integration
is
out
of
the
bottle,
it
might
be
hard
to
put
it
back
in.
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bong
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