{"id":137489,"date":"2025-06-08T16:37:24","date_gmt":"2025-06-08T20:37:24","guid":{"rendered":"https:\/\/medcitynews.com\/?p=137489"},"modified":"2025-06-09T19:00:17","modified_gmt":"2025-06-09T23:00:17","slug":"cvs-express-scripts-pbm-arkansas","status":"publish","type":"post","link":"https:\/\/medcitynews.com\/2025\/06\/cvs-express-scripts-pbm-arkansas\/","title":{"rendered":"Why CVS, Express Scripts Are Suing Over the Arkansas PBM Law"},"content":{"rendered":"\n<p>There have been several recent efforts to crack down on pharmacy benefit managers, from <a href=\"https:\/\/medcitynews.com\/2024\/12\/senators-representatives-pbm-bill\/\">bills in Congress<\/a> to an <a href=\"https:\/\/medcitynews.com\/2025\/01\/ftc-pbms-markups-drug-costs\/\">investigation<\/a> by the Federal Trade Commission.<\/p>\n\n\n\n<p>But the state of Arkansas has been the one to actually take definitive action.<\/p>\n\n\n\n<p>In April, Republican Governor Sarah Huckabee Sanders <a href=\"https:\/\/governor.arkansas.gov\/news_post\/sanders-signs-legislation-to-ban-anti-competitive-pbm-practices\/\">signed legislation<\/a> that states that starting January 1, 2026, no PBMs can own and operate pharmacies in the state. PBMs have <a href=\"https:\/\/www.drugchannels.net\/2024\/05\/mapping-vertical-integration-of.html\">increasingly<\/a> bought up pharmacies in recent years, which allows them to increase drug prices and put competitors out of business, the governor\u2019s office stated in the announcement.&nbsp;<\/p>\n\n\n\n<p>The law was likely intended to check the influence of<strong> <\/strong>the three largest PBMs \u2014 CVS Caremark, Express Scripts and Optum Rx \u2014 that cumulatively process 80% of all prescriptions in the U.S. But it should come as no surprise that some of the PBMs are fighting back. Last week, CVS Caremark and Express Scripts filed separate lawsuits challenging the law, arguing that it is unconstitutional, will force pharmacies to close, eliminate hundreds of jobs and actually increase costs.<\/p>\n\n\n\n<p>\u201cWith Act 624 signed into law, the Arkansas legislature and governor are forcing 23 community pharmacies to close by January 1, 2026, including some of the very few that are open 24 hours; fire more than 500 local healthcare workers; erode access to specialized pharmacy care for the 10,000 Arkansas patients with serious conditions who rely on additional support; and increase the cost of Arkansas health benefits by millions of dollars each year,\u201d argued Amy Thibault, executive director of corporate communications at CVS Health, in an email.<\/p>\n\n\n\n<p>Express Scripts echoed these comments.<\/p>\n\n\n\n<p>\u201cIf this law takes effect in January, hundreds of thousands of Arkansans will be left scrambling to navigate the forced closure of pharmacies and finding new ways to get their medicines and critical clinical support,\u201d said Susan Peppers, RPh, vice president of pharmacy practice at Evernorth Health Services, in a statement.<\/p>\n\n\n\n<p>The decision to sue is just out of fear that they will lose marketshare, said a Sanders spokesperson.<\/p>\n\n\n\n<p>\u201cGovernor Sanders is proud that Arkansas is the first state in the nation to hold PBMs accountable for their anticompetitive practices,\u201d Sam Dubke, Sanders\u2019 communications director, told MedCity News in an email. \u201cThese big drug middlemen are only attacking Arkansas in the courts because they\u2019re worried other states will join Governor Sanders in fighting for patient access and affordable prescriptions.\u201d<\/p>\n\n\n\n<p><strong>The lawsuits<\/strong><\/p>\n\n\n\n<p>In their separate lawsuits against Act 624, CVS Health and Express Scripts both argue that the new law is intended to protect in-state pharmacy businesses, which they argue charge higher prices, while punishing out-of-state competitors.<\/p>\n\n\n\n<p>\u201cAct 624\u2019s text, context, and legislative history make abundantly clear that the statute\u2019s purpose and effect is to protect local pharmacies domiciled in Arkansas from out-of-state competition, and to do so by punishing specific out-of-state competitors,\u201d according to Express Scripts\u2019 <a href=\"https:\/\/talkbusiness.net\/wp-content\/uploads\/2025\/05\/Express-Scripts-STAMPED-Complaint-for-Declaratory-and-Injunctive.pdf\">complaint<\/a>.<\/p>\n\n\n\n<p>The company noted that the purpose of Act 624 is to eliminate certain anticompetitive business tactics. However, these tactics are already prohibited in current Arkansas law, Express Scripts argued. It gave the example of one statute that prohibits PBMs from reimbursing a pharmacy or pharmacist in the state less than what it reimburses an affiliate for the same services.&nbsp;<\/p>\n\n\n\n<p>CVS also noted the same <a href=\"https:\/\/talkbusiness.net\/wp-content\/uploads\/2025\/05\/HB-1150-Complaint-5-29-2025.pdf\">in its complaint<\/a>, and added that it actually reimburses non-affiliated pharmacies at a higher rate than its own pharmacies.<\/p>\n\n\n\n<p>In addition, CVS argued that the law unfairly exempts Walmart, one of Arkansas\u2019 largest employers, which the company said \u201ceffectively operates PBM-affiliated pharmacies.\u201d The original draft of the bill would have applied to Walmart, but it \u201calmost died\u201d in committee because of this, the complaint stated. The complaint noted that one senator said he couldn\u2019t vote for the original bill because it would have prevented Walmart from having pharmacies. But the bill\u2019s \u201carchitects devised a fix,\u201d CVS charged.<\/p>\n\n\n\n<p>\u201cNotwithstanding the legislature\u2019s putative concern that PBMs act as \u2018fox[es] guarding the henhouse\u2019 when they serve as \u2018a price setter and price taker,\u2019 HB 1150 was amended to include an exemption for PBM-affiliated pharmacies if the PBM serves only the pharmacy\u2019s own employee benefit plan,\u201d CVS argued in its complaint. \u201cThat exemption covers Walmart. So while Walmart could continue to operate its pharmacies, one of its biggest out-of-state competitors \u2014 CVS \u2014 would be forced to leave Arkansas altogether.\u201d<\/p>\n\n\n\n<p>It\u2019s important to note that Walmart is not a PBM. However, the company provides PBM services, according to CVS. The CVS spokesperson pointed this MedCity News reporter to an article that announced that the Purchaser Business Group on Health, an employer coalition that includes Walmart, <a href=\"https:\/\/www.reuters.com\/business\/healthcare-pharmaceuticals\/large-employer-group-launches-new-pharmacy-benefit-management-business-2021-10-25\/\">launched<\/a> a firm called EmsanaRx in 2021 that provides PBM services for employers.\u00a0PBGH no longer owns EmsanaRx, which has since changed its name to AffirmedRx.<\/p>\n\n\n\n<p>CVS noted in the complaint that Walmart has announced plans to expand its pharmacy offerings in Arkansas and has seen an increase in prescription orders since the law.<\/p>\n\n\n\n<p>CVS and Express Scripts argue that this law violates the constitution in several ways. However, according to one healthcare legal expert, their strongest case is on the Dormant Commerce Clause, which says that states cannot pass laws that unfairly hurt or discriminate against businesses from other states. Both CVS and Express Scripts have this same claim. Other than that, they have different arguments for ways this law is unconstitutional, noted Jesse C. Dresser, partner in Frier Levitt\u2019s Life Sciences Department.<\/p>\n\n\n\n<p>In addition, even if the law is justified, it will hurt out-of-state PBM affiliated pharmacies in favor of Arkansas-based pharmacies, which could be viewed as discriminatory, he said.<\/p>\n\n\n\n<p>\u201cThat all being said, I do not think that the PBMs\u2019 lawsuit will be successful,\u201d Dresser added. \u201cStates have broad authority to regulate pharmacies under the general police powers, and recent cases have shown that the Dormant Commerce Clause does not prohibit all state regulation that affects interstate commerce.\u201d<\/p>\n\n\n\n<p><strong>What could come next?<\/strong><\/p>\n\n\n\n<p>Like Arkansas, several other states are considering similar efforts, including Vermont and New York. And the results of these lawsuits in Arkansas could spur them into action.<\/p>\n\n\n\n<p>\u201cIt may be that once we see how these cases shake out with Express Scripts and CVS, that these other states might pick up the mantle and try to do something similar as well,\u201d Dresser said.<\/p>\n\n\n\n<p>A major reason for why Arkansas was the first state to pass this law could be that it has a smaller concentration of some of these PBM-affiliated pharmacies, meaning it wouldn\u2019t take as big of a hit of pharmacies closing compared to some other states, according to Dresser.&nbsp;<\/p>\n\n\n\n<p>He added that he was surprised when CVS said that it will only have to close 23 pharmacies, expecting the company to have a much bigger presence.&nbsp;<\/p>\n\n\n\n<p>For Express Scripts, the company doesn\u2019t operate brick &amp; mortar pharmacies in Arkansas, but it does have 25 non-resident pharmacy licenses in Arkansas that would be affected by the law. The company would not be able to provide care to 50,000 Arkansans who fill prescriptions or receive in-home nursing care through an Evernorth Pharmacy, which is a subsidiary of Cigna.&nbsp;<\/p>\n\n\n\n<p>Several advocacy organizations have come out in support of Arkansas\u2019 law. This includes the National Community Pharmacists Association, who said the legislation is groundbreaking because it tackles vertical integration itself instead of creating laws to deal with its downstream effects.<\/p>\n\n\n\n<p>\u201cHB 1150 removes many of the bad actors who have massive conflicts of interest, actors who have not complied with \u2013 or have found ways to work around \u2013 previously enacted laws,\u201d said Joel Kurzman, director of state government affairs at the National Community Pharmacists Association. \u201cThe legislation levels the playing field for a more competitive pharmacy environment that is ultimately more friendly to patients.\u201d<\/p>\n\n\n\n<p>NCPA gave the <a href=\"https:\/\/ncpa.org\/newsroom\/qam\/2025\/04\/15\/esi-audit-tennessee-dci-shocks\">example<\/a> of an audit by the Tennessee Department of Commerce and Insurance, which found that Express Scripts reimbursed its owned or affiliated pharmacies at higher rates than those not owned or affiliated by the PBM, which is against the state\u2019s law.<\/p>\n\n\n\n<p>Patients for Affordable Drugs Now echoed the issues around vertical integration.<\/p>\n\n\n\n<p><strong>\u201c<\/strong>Vertical integration allows PBMs to control which drugs are covered and where prescriptions are filled \u2014 steering patients toward their own pharmacies, favoring higher-priced drugs that increase their profits, and squeezing out independent pharmacies that many patients, particularly in rural areas, rely on,\u201d said Merith Basey, executive director of Patients For Affordable Drugs Now.&nbsp;<\/p>\n\n\n\n<p>There are also efforts at the federal level to ban PBMs from owning pharmacies, such as the <a href=\"https:\/\/www.warren.senate.gov\/newsroom\/press-releases\/warren-hawley-harshbarger-auchincloss-introduce-bipartisan-bill-to-cut-drug-costs-rein-in-pharmacy-benefit-managers-pbms\">Patients Before Monopolies Act<\/a>. This was a bipartisan bill introduced by Senators Elizabeth Warren (D-Massachusetts) and Josh Hawley (R-Missouri) in December. However, Dresser finds it unlikely that this would be the first significant PBM reform to come at the federal level. Instead, there will probably be legislation that requires more transparency from PBMs first.<\/p>\n\n\n\n<p><em>Photo: bong hyunjung, Getty Images<\/em><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Arkansas became the first state to pass a law banning pharmacy benefit managers from owning pharmacies, aiming to curb their market power and reduce drug costs. But major PBMs like CVS and Express Scripts are suing, claiming the law is unconstitutional.<\/p>\n","protected":false},"author":31767,"featured_media":7803,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"featured_image_focal_point":[],"homepage_placement":"top","homepage_placements":{"top":true,"featured":true,"sidebar":false},"homepage_alternative_layout":false,"featured_categories":[123],"hide_from_feed":false,"footnotes":""},"categories":[156,123,75,36,24],"tags":[372,2229,52069,51996,49217,40137],"class_list":["post-137489","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-consumer-employer","category-legal","category-payers","category-syn","category-top-story","tag-cvs-caremark","tag-express-scripts","tag-frier-levitt","tag-ncpa","tag-patients-for-affordable-drugs","tag-pbms"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Why CVS, Express Scripts Are Suing Over the Arkansas PBM Law - MedCity News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/medcitynews.com\/2025\/06\/cvs-express-scripts-pbm-arkansas\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why CVS, Express Scripts Are Suing Over the Arkansas PBM Law - MedCity News\" \/>\n<meta property=\"og:description\" content=\"Arkansas became the first state to pass a law banning pharmacy benefit managers from owning pharmacies, aiming to curb their market power and reduce drug costs. 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