TN and AR lawmakers target pharmacy benefit managers over drug costs

State Lawmakers Target Pharmacy Benefit Managers Over Drug Costs

Republicans and Democrats in Tennessee and Arkansas are advancing new regulations against pharmacy benefit managers, targeting corporate consolidation in the prescription drug supply chain as frustration over rising medication costs mounts. Amye Joseph says America’s political polarization has made it an “interesting time” in her Tennessee household. She and her husband, Charlie, have been married 35 years. She’s a Republican, and her husband is a Democrat.

Key Clinical Takeaways:
• State lawmakers in Tennessee and Arkansas have moved to restrict pharmacy benefit managers (PBMs), with Tennessee enacting a ban on companies owning both a PBM and retail pharmacies.
• Patients and lawmakers across the political spectrum report that consolidation among insurers, PBMs, and retail pharmacy chains has reduced accessibility and increased out-of-pocket prescription expenses.
• Industry representatives maintain that PBMs lower overall drug costs, though independent pharmacists and policy researchers argue that market competition has been compromised.

Consolidation in the Prescription Drug Market

Pharmacy benefit managers handle the administrative aspects of health insurance related to prescription drugs, originally operating as intermediaries designed to negotiate lower prices with drug manufacturers. Over time, major PBMs have merged with large health insurance companies and retail pharmacy chains. NPR reported that CVS Health, which recorded $400 billion in revenue, operates a large health insurer, a dominant PBM named CVS Caremark, and a national retail pharmacy network. This integration has drawn intense criticism from consumers and state legislators who argue that the structure prioritizes corporate profit over patient affordability. Amye Joseph stated, We hate CVS. I’m going to be straight-up. She laments the lack of face-to-face interaction with pharmacists, prices that seem to rise without explanation, and pressure from the couple’s CVS Caremark drug plan to use CVS stores instead of their local pharmacy, adding, They’re not even a middleman. They’re a money grab for CVS. Charlie Joseph, a retired fire captain who now works as a custodian, was miffed when he realized he could save money on his blood pressure medication if he paid cash at his local pharmacy rather than using his CVS Caremark drug plan, and he now buys a 90-day supply for the same price he would have paid for a 30-day supply through the CVS plan. He remarked, Right now, it’s more of an inconvenience than anything else as far as it goes, but there’s no consistency, and added, The whole healthcare thing is just frustrating, on a good day. CVS spokesperson Phil Blando said in a statement, Looking at the price of a single prescription does not reflect the value of a comprehensive pharmacy benefit, and maintained, Our focus remains delivering the lowest possible total cost and the greatest overall value for members and plan sponsors.

Tennessee Lawmakers Curb PBM Market Power

State lawmakers have increasingly sought to curb the market power of large PBM conglomerates. Tennessee legislators approved a measure making it illegal for a single corporate entity to own both a PBM and retail brick-and-mortar pharmacies, despite a multimillion-dollar television advertising campaign opposing the legislation. The legislative push aligned conservative, business-friendly Republicans with Democrats traditionally more open to government regulation. This legislative push reflects a feeling even in the GOP that the market for prescription drugs is being gamed, according to Antonio Ciaccia, CEO of 46brooklyn Research, a nonprofit think tank that tracks drug pricing. Ciaccia noted, Republicans are looking at this issue, saying, We know what competition is supposed to do, and it isn’t happening. This is not a free market. State Representative Antonio Parkinson, a Democrat from Memphis, stated that if there is a benefit to his constituents, he will support it. Tennessee State Senator Bobby Harshbarger sponsored the pharmacy ownership ban, and his mother, also a pharmacist, has proposed a similar ban on PBMs owning pharmacies at the federal level in the U.S. Congress. That bill has bipartisan sponsors and has created unlikely bedfellows of Senators Elizabeth Warren and Josh Hawley.

Conflicting Industry Perspectives on Drug Pricing

Industry advocates defend the operational model of pharmacy benefit managers against mounting state and federal scrutiny. Dave Marin, president and CEO of the Pharmaceutical Care Management Association, told Congress in February that drug prices remain high but that PBMs function as the primary defense against even steeper costs. Conversely, independent pharmacists and policy researchers argue that the corporate integration of insurance plans and pharmacy networks stifles genuine market competition, leaving consumers with fewer choices and higher costs.