ARTICLE
29 April 2025

States Ask Congress To Curb Anticompetitive PBM Practices, Arkansas Adopts Sweeping Bill

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On April 14, 39 State Attorneys General sent a letter to House and Senate leadership calling on Congress to pass legislation prohibiting pharmacy benefit managers (PBMs)...
United States Arkansas Food, Drugs, Healthcare, Life Sciences

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On April 14, 39 State Attorneys General sent a letter to House and Senate leadership calling on Congress to pass legislation prohibiting pharmacy benefit managers (PBMs), their parent companies, or affiliates from owning or operating pharmacies. The letter asserts that horizontal and vertical integration have enabled PBMs to dominate the prescription drug market. They cite, as evidence of this, that each of the six largest PBMs operate their own affiliated pharmacies and that three of the five largest pharmacies in the U.S. by revenue are affiliated with PBMs. Beyond this, PBMs also contract with nonaffiliated pharmacies to create pharmacy networks. The State Attorneys General claim that PBMs then use their position as intermediaries to force independent pharmacies to accept contract terms that are "confusing, unfair, arbitrary, and harmful" while favoring their own pharmacies, forcing their competition out of business.

Two days later, Arkansas' Republican Governor, Sarah Huckabee Sanders, signed a first-in-the-nation bill (HB1150) banning PBMs from owning pharmacies in the state, beginning January 1, 2026. The bill specifically prohibits PBMs from either directly or indirectly holding an Arkansas pharmacy license, including those for mail-order pharmacies. The Arkansas State Board of Pharmacy will conduct an initial assessment of each active retail pharmacy license and send a written notice to holders that the Board believes are in violation of law by October 3. The Board will then either revoke or not renew licenses for these entities on or after January 1, 2026.

The new Arkansas law may be subject to litigation that could assert that the law should be invalidated because it would regulate interstate commerce, something that only Congress can do. Other states are considering similar legislation, so the Arkansas precedent, if it survives the challenge and is imitated by other states, could have significant ramifications for the PBM industry.

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