Arizona Joins The Growing Movement To Separate PBMs From Pharmacy Ownership

Arizona lawmakers have introduced legislation that could significantly reshape the pharmacy marketplace and add momentum to a growing national movement aimed at separating pharmacy benefit managers (PBMs) from pharmacy ownership.

Senate Bill 1545, introduced on June 12, 2026, would prohibit PBMs from owning or holding permits for the retail sale of prescription drugs in Arizona beginning January 1, 2027. While the bill remains in the early stages of the legislative process, it has already attracted attention because it goes beyond traditional PBM reform measures and directly targets vertical integration and follows a growing trend of similar bills.

For years, debates surrounding PBMs have focused on reimbursement methodologies, patient steering, network adequacy, spread pricing, and pharmacy audits. Arizona’s proposal takes a different approach by asking a more fundamental question: Should a company that manages prescription drug benefits also be permitted to own the pharmacies competing in that exact same marketplace?

A Direct Challenge to Vertical Integration

It is well established that over the last decade, the pharmacy industry has undergone substantial consolidation. Many PBMs are now affiliated with organizations that own health plans, specialty pharmacies, mail-order pharmacies, and retail pharmacy operations.

Supporters argue that integration can create efficiencies and improve care coordination. Independent pharmacies, however, have consistently expressed concern that these arrangements create inherent conflicts of interest. After all, PBMs often determine pharmacy network participation, reimbursement methodologies and amounts, and formulary administration while competing against independent pharmacies.

Arizona’s SB 1545 seeks to directly addresses this concern.

If enacted, the legislation would prohibit PBMs from holding retail pharmacy permits in Arizona. The Arizona State Board of Pharmacy would be required to deny permit renewals or revoke permits that do not comply with the law.

Rather than regulating a particular PBM practice, the bill focuses on ownership and control themselves. This makes it one of the more consequential PBM reform proposals introduced this year.
Why Independent Pharmacies Are Watching Closely

Independent pharmacy owners have spent years navigating rapidly declining reimbursement, increasing administrative burdens, retroactive fees, and complex contracting arrangements that often leave little room for meaningful negotiation.

At the same time, many community pharmacies find themselves competing directly against pharmacy operations directly affiliated with the PBMs administering their contracts.

Whether lawmakers ultimately conclude that those concerns justify ownership restrictions remains to be seen. What is clear, however, is that policymakers are becoming increasingly willing to examine the competitive implications of vertical integration within healthcare.

If PBM-owned retail pharmacies are forced to divest, restructure, or exit portions of the Arizona market, independent pharmacies could begin to see a more level competitive landscape and potentially increased prescription volume.

For many pharmacy owners, this possibility alone makes this legislation worth following.

Arizona Is Not Alone

Arizona’s proposal does not exist in a vacuum.

Earlier this year, Arkansas enacted landmark legislation restricting PBM ownership of pharmacies within the state, becoming one of the first jurisdictions in the country to directly challenge vertical integration in the pharmacy marketplace. More recently, Tennessee adopted legislation that similarly seeks to separate PBMs from pharmacy ownership interests, prompting immediate legal challenges and intense industry scrutiny.

Taken together, these developments suggest a broader shift in how states are approaching PBM regulation.

Historically, most PBM reform efforts focused on reimbursement transparency, audit protections, patient steering restrictions, or spread pricing. Arizona joins a growing list of states that are beginning to look beyond those issues and examine whether the ownership structure itself presents competitive concerns.

As a result, SB 1545 is likely to be viewed not simply as an Arizona bill, but as part of a larger national conversation and trend regarding PBM influence, market consolidation, and patient access.

An Important Exception for Specialty Medications

The legislation recognizes that not all pharmacy services fit neatly within the traditional retail model.

To address concerns regarding patient access, the bill would allow the Arizona State Board of Pharmacy to issue limited-service pharmacy permits for pharmacies dispensing rare, orphan, or limited-distribution medications that would otherwise be unavailable to Arizona patients.

This exception is important because certain specialty therapies can only be obtained through highly restricted distribution networks. Eliminating patient access to those medications would create significant practical and legal concerns.

Even so, questions remain regarding how broadly the exception will be interpreted and which pharmacies may ultimately qualify.

Litigation Appears Likely

If SB 1545 advances, legal challenges are almost certain to follow.

The PBM industry has consistently challenged state laws that significantly affect business operations, particularly those involving network requirements, reimbursement regulation, and ownership restrictions.

Potential challenges could involve ERISA preemption, Commerce Clause arguments, due process claims, and questions regarding the scope of state authority to regulate pharmacy ownership.

At the same time, states have enjoyed notable success defending PBM reform measures in recent years. Courts have increasingly recognized the authority of states to regulate healthcare and pharmacy practices occurring within their borders dating back 2020 with the Supreme Court’s ruling in favor of Arkansas in the Rutledge v. PCMA decision.

Arizona could become another important test case in the ongoing effort to define the limits of state PBM regulation.

Looking Ahead

Whether SB 1545 ultimately becomes law remains uncertain. The legislative process is still in its early stages, and amendments are likely.

What is certain is that Arizona has joined a growing group of states willing to challenge long-standing assumptions about the role of PBMs in the pharmacy marketplace.

With Arkansas and Tennessee already pushing the national conversation forward, Arizona could become the next major battleground in the debate over PBM ownership, competition, and patient access.

For independent pharmacies, healthcare providers, and organizations committed to preserving community-based pharmacy care, this is legislation worth watching closely. If enacted, SB 1545 could become one of the most significant PBM reform measures adopted in recent years and may provide a roadmap for similar efforts across the country.

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