Dive Brief:
A federal judge has granted a preliminary injunction halting an Arkansas law that would prevent pharmacy benefit managers from owning pharmacies, in an early win for PBMs in the case.
Major PBMs and the trade association representing the drug middlemen all sued Arkansas after the state passed the law in April, arguing it was unconstitutional. The suits have since been consolidated in an Arkansas district court.
The judge’s Monday order, which agrees the law is anticompetitive and may violate the Constituion, suggests the PBMs may be successful in getting the law overturned.
Dive Insight:
Four PBMs — including CVS Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx, the so-called “Big Three” PBMs that jointly control 80% of all U.S. prescriptions — all challenged Arkansas’ law in court between May and June. The Pharmaceutical Care Management Association also filed suit seeking to overturn the law, which would ban PBMs from operating drug stores in Arkansas after the start of 2026
The lawsuits contest that the state’s law, called Act 624, violates the Constitution — an argument that appears to have an ally in U.S. District Judge Brian Miller.
In his order granting PBMs’ request for a preliminary injunction, Miller said that Act 624 appears to violate the Commerce Clause by unfairly discriminating against the PBMs as out-of-state businesses in order to protect local operations.
“Act 624 appears to overtly discriminate against plaintiffs as out of state companies and the state has failed to show that it has no other means to advance its interests,” Miller wrote in his decision.
The legislation may also run afoul of the Constitution’s Supremacy Clause — which says that federal law supersedes state law — because it would prevent medication delivery in TRICARE, the healthcare program for military members and their families, Miller ruled. TRICARE contracts with some of the PBMs that would be affected by the law.
“While only a preliminary injunction, this is a positive for PBMs and is consistent w/ our view that the PBMs have strong arguments in their favor when this gets to trial,” TD Cowen analyst Charles Rhyee wrote in a note Monday.
When signing Act 624 in April, Gov. Sarah Huckabee Sanders said the law was necessary to curb anticompetitive behavior among major PBMs that threaten Arkansas’ independent pharmacies.
However, PBMs argue that Arkansas’ law will cause dozens of PBM-owned pharmacies to close, along with eliminating home delivery options and jeopardizing access to specialty drugs for patients managing complex conditions. Act 624 will also lead to job losses and reduce market competition, which could cause costs to to rise for patients, the drug middlemen argue.
The outcome of the suits could have significant ramifications for the PBM industry, as other states considering similar legislation could be deterred or spurred on by the court’s eventual decision. Bills with similar provisions were recently introduced in Vermont, Texas and New York as states look to crack down on PBMs in the absence of nationwide action from Congress.
