Major PBMs Challenge Groundbreaking Arkansas Legislation
Pharmacy benefit management giants Express Scripts and CVS Health have filed federal lawsuits challenging Arkansas’s unprecedented law that prohibits PBMs from owning retail pharmacies within the state. The litigation, filed Thursday in Arkansas district court, represents a significant escalation in the ongoing battle between state regulators and the powerful pharmacy middlemen that control much of America’s prescription drug market.
The Controversial Arkansas Law Explained
Arkansas Governor Sarah Huckabee Sanders signed the nation’s first-of-its-kind legislation targeting PBM pharmacy ownership, with the ban set to take effect January 1, 2026. The law specifically prohibits pharmacy benefit managers from acquiring stakes in or owning retail pharmacy permits throughout the Natural State.
According to legal analysis from Quarles & Brady, the legislation includes limited exemptions, such as a 90-day permit for pharmacies dispensing orphan drugs or other limited distribution products. However, even this exemption will expire in September 2027, creating a comprehensive prohibition on PBM-owned pharmacy operations.
Express Scripts’ Legal Arguments
In their federal complaint, Express Scripts argues that the legislation is “innocuously — and deceivingly” titled as “An Act To Prohibit A Pharmacy Benefits Manager From Obtaining Certain Pharmacy Permits,” but would effectively force numerous pharmacies to close across Arkansas. The company contends this would harm Arkansas residents by restricting healthcare access and eliminating pharmacy jobs.
“The law will also dangerously limit patient choice and deny access to lifesaving drugs at affordable prices by high-quality pharmacy providers,” Express Scripts states in their filing. The PBM further argues the legislation “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.”
CVS Health’s Discrimination Claims
CVS Health’s lawsuit takes a different approach, arguing that the Arkansas law effectively discriminates against out-of-state pharmacy chains while favoring local competitors. The company notes that the “vast majority” of PBM-affiliated pharmacies are connected to entities based outside Arkansas, including CVS, Express Scripts, and Optum.
“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,” CVS argues in its complaint. “That proxy relationship is no mere happenstance; it is by design.”
The Walmart Exception Controversy
CVS specifically criticizes lawmakers for creating what it characterizes as preferential treatment for Walmart, Arkansas’s largest employer. While the law would have originally applied to Walmart’s pharmacy operations, legislators later modified the legislation to exempt the retail giant.
“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 states. CVS notes that Arkansas lawmakers and interest groups “openly celebrated” the potential for pushing CVS out of the state entirely, while Walmart has announced plans to expand its Arkansas pharmacy offerings.
Implementation Timeline and Enforcement
The Arkansas State Board of Pharmacy will begin analyzing potentially violating pharmacies starting July 1, 2025, with written notices to potential violators required by September 30. Any pharmacies forced to close under the new law must notify patients and prescribers by October 31, 2025.
CVS has already announced it will close 23 Arkansas locations when the law takes effect, while Express Scripts reports multiple affiliate pharmacies will be impacted. The immediate economic consequences include potential job losses and reduced pharmacy access in affected communities.
Industry Opposition and Support
The Pharmaceutical Care Management Association (PCMA), representing PBM interests, strongly opposed the legislation, calling it “dangerous” and predicting significant healthcare disruptions. PCMA warns of over 35 retail pharmacy closures, suspended home delivery programs, and restricted specialty pharmacy access.
Conversely, Governor Sanders positioned the law as protecting Arkansas consumers from “drug middlemen” who “have taken advantage of lax regulations to abuse customers, inflate drug prices, and cut off access to critical medications.” She expressed hope that other states would follow Arkansas’s lead in regulating PBM practices.
Broader PBM Reform Movement
This Arkansas legislation occurs amid growing national scrutiny of PBM practices. In August 2024, Arkansas fined four PBMs $1.5 million for allegedly “skirting” state laws. State Attorney General Tim Griffin joined 38 other attorneys general in urging Congressional action against anticompetitive PBM practices.
The three largest PBMs—CVS Caremark, Express Scripts, and Optum Rx—control approximately 80% of the market and maintain vertical integration with major national insurers Aetna, Cigna, and UnitedHealthcare, respectively. This consolidation has become a primary target for industry reform advocates seeking increased competition and transparency in pharmaceutical benefit management.
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