(The Center Square) – A bill that would require pharmacies to divest their pharmacy benefit managers passed the Tennessee House of Representatives on Tuesday morning amid threats of a lawsuit from pharmacy chain CVS.
The Senate passed Senate Bill 2040 on Monday and the bill now goes to Gov. Bill Lee for his signature. CVS Health, owner of CVS Pharmacy and pharmacy benefit manager CVS Caremark, ran an advertising campaign that said the bill could force the company to close its Tennessee stores. It takes effect on July 1, 2028.
“This misguided policy will lead to serious consequences for the state, including the closure of 25 MinuteClinic locations, where Tennesseans get acute and primary care, and the loss of more than 2,000 jobs,” CVS Health said in an email response to The Center Square. We’re prepared to challenge the constitutionality of this law in federal court, as we did in Arkansas.”
The Tennessee Pharmacists Association supported the bill. Anthony Pudlo, the association’s CEO, previously told The Center Square that the legislation could keep independent pharmacies in business.
“If you talk to any independently owned pharmacy, they struggle to have any level of negotiation with the big PBMs,” Pudlo said. “They’re also being audited by that company and then they can see everything that they’re doing and then they can control how much that pharmacy wants to get paid. I even refer to it as you have a PBM that ends up being the judge, jury and executioner of a local, independent pharmacy because they control the contracts as well as they audit their competition and then change the rules to make it work for their own pharmacies.”
A federal judge issued an injunction stopping the Arkansas bill from taking effect, saying it “likely violates the Commerce Clause.”
Congress could also take up similar legislation. A bipartisan bill filed by Massachusetts Democrat Elizabeth Warren and Arkansas Democrat Josh Hawley in the U.S. Senate would ban companies from owning a medical provider or management services organization, a PBM or an insurer. The bill is assigned to the Senate Judiciary Committee.
