Dive Brief:
- The main lobby representing pharmacy benefit managers is suing Arkansas in a bid to stop the state’s law preventing the drug middlemen from owning pharmacies.
- The Pharmaceutical Care Management Association’s lawsuit filed Monday in a federal court argues that Arkansas’ law — the first of its kind — is unconstitutional and would result in pharmacies closing and medications becoming more difficult for Arkansans to access.
- It’s the latest legal challenge from the PBM industry as it hustles to halt the law and set a precedent that might dissuade other states from passing similar legislation.
Dive Insight:
Arkansas’ legislation, called Act 624, is meant to protect local community pharmacies from larger, more diversified chains by requiring companies that own both PBMs and pharmacies to shutter their operations in the state. When signing Act 624 in April, Gov. Sarah Huckabee Sanders said the law was necessary to curb anticompetitive behavior among major PBMs that threatens Arkansas’ independent pharmacies.
However, PBMs — powerful middlemen that shape interactions and payments between drugmakers, payers and pharmacies — decried the law, arguing it eliminates a significant source of efficiency in the pharmacy supply chain by forcing them to sell off their brick-and-mortar stores and halt mail-order pharmacy operations in the state.
The policy would unfairly benefit Arkansas-owned pharmacies at their expense, major PBMs said.
Now, the PCMA — which represents 20 PBMs, including the so-called “Big Three” that control an outsized share of the market — is taking to the courts in an attempt to stop the law before it kicks in at the start of 2026.
Arkansas’ law will cause roughly 40 PBM-owned pharmacies to close, along with eliminating home delivery options and jeopardizing access to specialty drugs for patients managing complex conditions, according to the PCMA’s complaint.
Act 624 will also lead to job losses and reduce market competition, which could cause costs to to rise for patients and their payers, the association argues.
“We will continue to fight to protect patients’ access to health care and educate policymakers and stakeholders about the severe consequences of harmful legislation threatening patient access to pharmacy services,” the PCMA said in an emailed statement.
The lobby’s lawsuit argues that Act 624 violates the Constitution’s Dormant Commerce clause and Privileges and Immunities clause by penalizing out-of-state operators to protect local businesses.
The law also violates the Bill of Attainder clause, which forbids states from enacting punishments — in this case, revoking an actor’s permit to conduct business — without a court proceeding, according to the complaint.
The complaint makes similar legal arguments as prior lawsuits filed against Arkansas’ law by CVS and Cigna, which operate two of the largest PBMs in the country: Caremark and Express Scripts, respectively.
“PCMA does not bring this suit because Act 624 is bad policy, although it very certainly is. Rather PCMA brings this suit because Act 624 is as clear an example of unconstitutional state legislation as the Court is likely ever to see,” the complaint reads.
The PCMA’s suit, which was filed in Arkansas’ eastern district against the state’s pharmacy board, seeks a preliminary injunction barring enforcement of the law while the lawsuit proceeds.
Navitus Health Solutions is also a plaintiff in the suit. The Wisconsin-based PBM, which operates on a pass-through model — meaning it makes money only through administrative fees and not by retaining rebates — is not a member of the PCMA.
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.
States are stepping into a gap left by Congress as lawmakers scramble to make prescription drugs more affordable. Despite numerous proposals to rein in controversial PBM business practices over the past few years — including a bill that would force PBMs to sell pharmacy businesses nationwide — Congress has yet to pass significant federal reform.
However, lawmakers on both sides of the aisle in Washington have expressed anger over PBMs’ business practices in recent hearings.
And, the GOP megabill currently being considered by the Senate includes some PBM provisions, including banning spread pricing in Medicaid, preventing PBMs from being paid based on a drug’s list price and requiring more transparency about PBMs’ business practices.
