CVS sues to challenge Tennessee’s new PBM law

CVS has filed suit to challenge a Tennessee law that would bar pharmacy benefit managers from owning pharmacies in the state.

Republican Gov. Bill Lee signed the Freedom, Access and Integrity in Registered Pharmacy, or FAIR Rx, Act into law last week, making the Volunteer State the latest to enact a law in this manner. In a statement, the Tennessee Pharmacists Association argues that the law brings greater transparency and fairness to the market.

“We are grateful to Gov. Bill Lee and our General Assembly for taking a stand against the greedy corporate interests of PBMs and helping to restore a system that protects patients, healthcare providers and the pharmacies that care for their communities,” the association’s CEO, Anthony Pudlo, said in the statement.

However, in the lawsuit, CVS argues that the law is designed to target out-of-state players like them while privileging in-state organizations.

The company said that close to 1.5 million people in the state lean on CVS to fill their prescriptions across 136 pharmacy locations. But, instead of competing directly to win customer share, CVS said in the lawsuit that independent pharmacies and Tennessee lawmakers “have complained about this lawful competition.”

In a statement to Fierce Healthcare, CVS said that it will “exhaust all options we can to continue to provide pharmacy and healthcare services” to customers in Tennessee.

“This unconstitutional law puts special interests and local politics ahead of patients, restricting their access to life-saving medications and undermining fair competition,” a company spokesperson said.

“S.B. 2040 is designed to target CVS Health, not to protect patients,” they said. “Tennessee lawmakers crafted the law to exclude CVS Health’s pharmacy operations while protecting in-state pharmacy businesses. There’s no way around the fact that this legislation will limit patients’ options and increase the cost of their medicines.”

In the lawsuit, CVS argues that the law exclusively targets national companies, while it will have no negative impact on “favored independent pharmacies.” For example, under the law, CVS said it will have to close its 136 pharmacies in the state, and the law would ultimately lead to the closure of more than 160 pharmacy locations in total.

The stated goal of the law, though, is to improve rural and community pharmacy access and allow for more patient choice. CVS counters that closing dozens of facilities would likely have the opposite effect, and adds that the law could also increase drug costs for employers in Tennessee by more than $180 million each year.

“Proponents of the bill have consistently made misleading claims about the need and rationale for this legislation, while downplaying the devastating impact it will have on patient care,” the spokesperson said.