UPDATED: June 9 at 5:24 p.m. ET
The leading organization representing pharmacy benefit manager companies is now also suing Arkansas officials over its new law banning PBMs from owning pharmacies.
Joining the Pharmaceutical Care Management Association (PCMA) in the lawsuit as a plaintiff is alternative PBM and founding member of TransparencyRx, Navitus Health Solutions. The lawsuit was filed in the Eastern District of Arkansas against the Arkansas State Board of Pharmacy.
Express Scripts and CVS Health had sued state officials at the end of May.
"If implemented, the Arkansas legislation mandating forced closures of pharmacies would have a devastating impact on patient access to critical medications and pharmacy services," the PCMA said in a statement. "Implementation of the law could eliminate convenient home delivery options for Arkansas patients, including seniors and veterans, severely jeopardize access to treatment for specialty pharmacy patients managing complex and serious conditions, like cancer, and close local retail pharmacies in the state, eliminating high-quality health care jobs and preventing patients from keeping their pharmacist."
The group said the law would discriminate against "certain types" of pharmacies, leading to 40 pharmacy closures, and cause increased costs for patients, employers and health plan sponsors.
Independent pharmacies pay more to acquire drugs at wholesale despite fewer resources to compete, but pharmacies opt to pressure lawmakers rather than innovate, the plaintiffs argue. Arkansas' legislation stops PBMs from holding interests managing pharmacies, and the plaintiffs say the effects of this law is "mind-spinning."
"In form and effect, it wrongly concludes that PBMs and PBM pharmacies have committed undefined antitrust and other administrative violations, imposing a traditional punishment (revocation of a permit to conduct business in the state) as a result," the lawsuit reads.
Attorneys for the plaintiffs are asking for a preliminary injunction.
UPDATED: June 5 at 2:30 p.m. ET
Arkansas Gov. Sarah Huckabee Sanders said her administration is not deterred on the state's new law governing pharmacy benefit managers despite legal challenges from two of the industry's "Big Three."
In an interview with the Daily Wire, Sanders took aim at CVS Health in particular, saying that closing stores in Arkansas proves its priorities are misaligned.
“They would rather own the PBM than keep their pharmacy open and provide care to the patients they claim to care about," she told the outlet. "I think it tells us everything that we need to know, that they care more about their bottom line.”
She added that there are other pharmacies who will be willing to take CVS' place in this space should the healthcare giant choose to "take their ball and go home."
Sanders signed into a law in April a bill that would bar pharmacy benefit managers from owning or being under the same umbrella as retail pharmacies. CVS Health and Express Scripts filed suit last week to challenge the legislation, with CVS saying it would have to close 23 locations under the law.
CVS said in it suit that while Arkansas officials have argued that the law will benefit independent pharmacies that are underpaid by PBMs, it also offers a windfall to retail giant Walmart, which has already announced plans to expand its pharmacy offerings in the state.
UPDATED: May 29 at 6 p.m. ET
Pharmacy benefit management giants Express Scripts and CVS Health are suing Arkansas officials to challenge a law that bars PBMs in the state from owning pharmacies.
In the lawsuit, filed Thursday in Arkansas district court, Express Scripts argues that the bill is "innocuously — and deceivingly" titled as "An Act To Prohibit A Pharmacy Benefits Manager From Obtaining Certain Pharmacy Permits," but it would have the effect of shutting down many pharmacies across the Natural State.
This would harm Arkansas residents by restricting access to care as well as costing jobs at pharmacies that shutter under the law, according to the complaint.
"The law will also dangerously limit patient choice and deny access to lifesaving drugs at affordable prices by high-quality pharmacy providers," Express Scripts argues in the filing. "And it will create mass confusion among Arkansans about where and how they can receive needed prescription medications, irreparably breaking bonds that patients have formed over many years with their pharmacists and pharmacy-provided home-visit nurses."
Express Scripts is bringing the suit to prevent this harms and because it believes "the law violates multiple provisions of federal law," the PBM said in the complaint.
CVS said in its lawsuit that the "vast majority" of pharmacies affiliated with PBMs are connected to entities based out-of-state, including CVS, Express Scripts and the third member of the industry's "Big Three," Optum.
As such, the law effectively shuts out larger pharmacy chains in favor of locally-owned pharmacies.
"As a result, HB 1150’s ban on PBM-affiliated pharmacies turns out to be a nearly perfect proxy for banning only out-of-state pharmacies," the company said in its complaint. "That proxy relationship is no mere happenstance; it is by design."
While the law is billed as benefitting smaller, independent pharmacies, CVS also argues that the law would also have applied to Walmart, which also operates pharmacies, as it was originally written. As Walmart is the largest employer in the state, however, lawmakers later made changes that would exempt the retail giant from its requirements.
"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," the company said in its lawsuit.
CVS noted that Arkansas lawmakers and other interest groups "openly celebrated" that the law could push CVS out of the state entirely. The company said that Walmart has announced plans to expand its pharmacy offerings in Arkansas, while CVS has already experienced negative effects.
Express Scripts said that the law impacts multiple of its affiliate pharmacies. CVS said in a statement that it would be forced to close 23 locations in the state when the law goes into effect.
PUBLISHED: April 21 at 3:37 p.m. ET
Arkansas Gov. Sarah Huckabee Sanders has signed into law a piece of legislation that bars pharmacy benefit managers operating in the state from owning pharmacies.
In an announcement from the governor's office, state officials note that PBMs have been known to purchase pharmacies, and argue that doing so allows them "to take advantage of the convoluted healthcare landscape, inflate pharmaceutical prices, and push competitors out of business."
The law is the first of its kind in the nation, and Sanders said she hopes other states follow in Arkansas' footsteps.
“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,” she said. “These massive corporations are attacking our state because we will be the first in the country to hold them accountable for their anticompetitive actions, but Arkansas has never been afraid to be a conservative leader for America.”
The ban kicks in Jan. 1, 2026, and bars a PBM from acquiring a stake in or owning a retail pharmacy permit in the Natural State, per an analysis from legal firm Quarles & Brady. There are some exemptions, including a 90-day permit that allows for pharmacies that dispense orphan drugs or other limited distribution products.
However, that exemption will no longer be available after September 2027, according to Quarles.
The Arkansas State Board of Pharmacy can issue or renew a permit after a review for pharmacies that are providing critical health services such as substance abuse treatment or behavioral health care. However, the pharmacy must be pending sale to an eligible buyer without PBM involvement.
The board will begin an analysis of pharmacies that may be in violation of the law July 1, according to Quarles. It will send written notices to potential violators by Sept. 30. Any pharmacies that will be going out of business under the law are required to submit notice to each patient and prescriber who has used its services on or before Oct. 31.
In August, Arkansas issued $1.5 million in fines against four PBMs it said were "skirting" state laws. State Attorney General Tim Griffin is one of 39 attorneys general who signed on to a letter last week urging Congress to take action against PBMs for anticompetitive practices.
Consolidation, particularly of the vertical variety, in the PBM market has been central to the conversation among critics looking to reform the industry. The three largest companies operating in this space—CVS Caremark, Express Scripts and Optum Rx—collectively control about 80% of the market.
Each is also integrated with a major national insurer: Caremark with Aetna, Express Scripts with Cigna and Optum Rx with UnitedHealthcare.
The Pharmaceutical Care Management Association (PCMA), the main lobbying organization representing PBMs, opposed the legislation. The organization said in a statement ahead of its full passage that state leaders should reject a "dangerous" proposal.
"The immediate, known impact of the bill includes the closure of over 35 retail pharmacies, suspension of home delivery prescription drug programs, and restricted access to specialty pharmacies," the group said. "Specialty pharmacies are a vital part of treatment for Arkansas patients with complex medical conditions. Patients taking specialty drugs require active clinical management and expertise to properly take these drugs. Without specialty pharmacy management programs, support systems, and monitoring tools in place patents’ health is at risk."
"Further, this bill attempts to ban consumers and employers from using convenient mail order pharmacies, severely diminishing options for home delivery in Arkansas, including patients living in rural areas who depend on being able to receive their medications by mail," the PCMA said. "The result would be increased health care costs for Arkansas employers."