Dive Brief:
Arkansas Governor Sarah Huckabee Sanders signed a first-of-its-kind law last week preventing pharmacy benefit managers from owning or operating pharmacies, as states increasingly move to restrict controversial business practices of the powerful drug middlemen.
The legislation was decried by PBMs, which say it will impede pharmaceutical access in the state.
Yet, other states could follow suit. Bills with similar provisions were recently introduced in Vermont, Texas and New York, according to the National Community Pharmacists Association.
Dive Insight:
The push among regulators and legislators to lower sky-high drug prices in America has recently focused on PBMs, companies that negotiate drug discounts with pharmaceutical manufacturers in return for favorable placement on plans’ formularies and pay pharmacies for dispensing medication.
In particular, legislators have targeted the “Big Three PBMs” operated by healthcare conglomerates CVS, UnitedHealth and Cigna, which jointly control 80% of the U.S. prescription drug market,
Despite momentum in Congress at the close of last year, PBM reform legislation failed to make it across the finish line, leaving a gap that states appear increasingly willing to step into. Arkansas’ legislation, for one, is meant to prevent a conflict of interest that comes when PBMs own pharmacies that was highlighted by the Federal Trade Commission in a pair of damaging reports on the PBM industry released late last year and early this year.
The FTC found the Big Three — CVS’ Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx — generally paid independent pharmacies lower rates than in-house pharmacies, directed business to their owned subsidiaries and pressured independent pharmacies to accept coercive and damaging fees.
“For far too long, drug middlemen called PBMs have taken advantage of lax regulations to abuse customers, inflate drug prices, and cut off access to critical medications. Not anymore,” Sanders, a Republican, said in a statement after signing the legislation, named HB1150.
However, HB1150 — which goes into effect Jan. 1, 2026 — will hurt patients, PBMs say.
CVS, which operates a major network of retail pharmacies along with its PBM Caremark, may have to close its 23 pharmacies in the state, disrupting services for hundreds of thousands of customers and costing hundreds of Arkansans their jobs, according to the company.
The law was driven by “special interest rhetoric that cherrypicked data and ignored inconvenient facts,” a spokesperson for CVS said, noting that the number of independent pharmacies in Arkansas has increased in the last few years.
“CVS Health welcomes a good-faith discussion with policy makers in Arkansas and across the country on ways to make medicine more affordable and accessible. Unfortunately, HB1150 is bad policy that accomplishes just the opposite,” the spokesperson said.
UnitedHealth oversees an extensive pharmacy network with a smaller footprint of retail locations. But its Genoa subsidiary may have to close its 11 pharmacies in Arkansas, cutting off in particular integrated mental and behavioral healthcare for patients with conditions like schizophrenia and depression, UnitedHealth CEO Andrew Witty said during a call with investors last week.
Arkansas’ law could also impede specialty medicine, home infusions and home delivery services provided by UnitedHealth’s health services division Optum, according to the executive.
“We’re significantly concerned about this. We’ll work with the state in the regulatory process post-legislation to try to address those populations and maintain access,” Witty said.
Cigna, which owns PBM Express Scripts and specialty pharmacy business Accredo, did not respond to a request for comment on how Arkansas’ law would affect its operations.
Along with the Big Three PBMs, the legislation will also affect other insurers that operate pharmacies like Elevance and Humana, both of which have specialty pharmacy arms.
Arkansas law mirrors bipartisan legislation introduced in Congress in December that would have forced PBMs to sell pharmacy businesses.
Experts said at the time that the reform would lessen revenue and market impact of the biggest PBMs and help independent pharmacies but would have unclear impacts on patients. Legislators in Congress have also floated forcing more transparency around PBMs’ business practices and preventing PBMs from spread pricing, a practice wherein PBMs charge insurers a higher price for a drug than what they reimburse to the pharmacy.
Still, a coalition of 39 state and territory attorneys general urged Congress to follow Arkansas’ example and prevent PBMs from owning pharmacies in a letter sent to House and Senate leadership last week.
“The passage of such a law would foster competition in the marketplace and give consumers more access to pharmaceutical care, more choice as to their healthcare providers, and more affordable prices,” the attorneys general wrote.
Absent congressional legislation, all 50 states have enacted laws targeting PBMs in an effort to lower prescription drug pricing, according to the National Academy for State Health Policy.
The 186 pieces of legislation include laws forbidding PBMs from stopping pharmacies from telling patients about cheaper drug alternatives or charging pharmacies extra fees, prohibiting PBMs from spread pricing and requiring PBMs to share more information about rebates and fees with the state.
