On April 16, Arkansas Governor Sarah Huckabee Sanders signed into law HB1150 and HB1531, two significant pieces of legislation affecting pharmacy benefit managers (PBMs) and pharmaceutical manufacturers operating within the state. These new laws prohibit PBMs from owning or operating retail pharmacies in Arkansas and restrict pharmaceutical manufacturers' ability to establish and maintain limited distribution networks.
Restrictions on PBM Ownership of Retail Pharmacies
HB1150, effective January 1, 2026, and engrossed as Act 624, prohibits PBMs, their subsidiaries and managed entities, as well as their parent entities, from acquiring an interest in or otherwise holding, directly or indirectly, a permit for the retail sale of drugs or medicine, including mail-order operations, in Arkansas. This law, the first of its kind nationwide, marks a significant shift in the state's approach to PBMs and is effective January 1, 2026.
The legislation includes a narrow exception for pharmacies that dispense certain rare, orphan, or limited-distribution drugs. PBMs may continue to operate these pharmacies by obtaining a "limited use permit." A limited use permit may be issued to a PBM-owned pharmacy following an assessment by the Arkansas State Board of Pharmacy (Board) that a rare, orphan, or limited distribution drug would otherwise be unavailable in a patient's market should the PBM-owned pharmacy's permit be revoked. The legislation requires the Board to establish a written policy by which a pharmacy may request a limited use permit, the timeline in which the Board must render a decision on such a request, and the process for issuing emergency determinations due to patient need. This limited use permit exception, however, is set to expire on September 1, 2027.
The law directly addresses the ability of a PBM-owned pharmacy to operate if it is in the process of being sold. At its discretion, the Board may extend the use of a retail pharmacy permit or issue a renewal of such a permit for a pharmacy that offers same-day patient access to pharmacy services, mental health services, or other critical patient healthcare services for a period of time determined by the Board, if there is a pending sale of the pharmacy to an eligible buyer.
The law does not apply to a pharmacy employer or pharmacy if each of the following criteria is fulfilled:
- The pharmacy employer or pharmacy has a direct or indirect interest in a PBM.
- The pharmacy employer is the sole Arkansas client of the PBM that the pharmacy employer has a direct or indirect interest in.
- The pharmacy exclusively services the employees and dependents of the pharmacy employer while utilizing the affiliated PBM in Arkansas.
The Board will conduct an initial assessment of each active retail pharmacy permit in the state and, at least 90 days prior to January 1, 2026, must send written notice to each pharmacy permit holder that the Board reasonably believes will violate the provisions of this new law. Upon receipt of such notice, and no later than November 1, 2025, a pharmacy must notify each patient and each patient's healthcare provider that the pharmacy can no longer dispense retail drugs to the patient on or after January 1, 2026.
Limitations on Limited Distribution Networks
HB1531, effective September 1, 2026, and engrossed as Act 630, prohibits pharmaceutical manufacturers that seek payment from certain payors in the state from restricting or limiting the distribution of prescription medications to a limited network of pharmacies unless they can demonstrate that such limitations support patient health and safety. While this prohibition is intended to equal the playing field for smaller, in-state industry stakeholders, the scope of the law could impede patient access to certain rare, orphan, and specialty drugs where it is not practical to demonstrate that limited networks support patient safety or may result in manufacturers expanding their limited networks to include in-state pharmacy coverage to satisfy the requirements of HB1531.
The prohibition applies to any pharmaceutical manufacturer that expects to receive payment for their prescription drugs from an employer sponsor of a health benefit plan that is established or maintained by the following entities:
- The Arkansas Municipal League.
- A public two-year or four-year institution of higher education, including a community college or technical college.
- The Division of Arkansas State Police.
- A municipality.
- A county.
- Any other plan or program that is funded by a state appropriation to furnish, covers the cost of or otherwise provides for pharmacist services to an individual who resides in or is employed in Arkansas.
These pharmaceutical manufacturers must hold an active wholesale distributor permit, and they may not impose limited distribution networks more than three months after launching a new product without having similar access, upon request or application by a pharmacy, to at least the following:
- A local network of public institution academic medical center access.
- Geographic diversity of access within Arkansas.
- Diverse access for local for-profit and nonprofit pharmacies that have experience or accreditation in managing expensive specialty or limited distribution drugs; and
- Pharmacies meeting FDA requirements for proper and safe storage, handling, monitoring and drug delivery; patient or medication data collection monitoring or reporting, and patient management services.
In order to maintain a limited distribution network for six months or longer, a pharmaceutical manufacturer must submit a detailed justification to the Board, explaining that the restriction aligns with the Board's mission to promote, preserve, and protect the public health, safety, and welfare of citizens in the state. Such a request will not be effective until the date approved by the Board. In evaluating such requests, the Board may consider a range of factors, including the costs, logistics, patient caseload, the rarity of the drug, the rarity of the disease or condition, and any other factors unique or relevant to the drug or disease.
An approved limited network must allow some pharmacies in Arkansas, upon request or application, to participate and access the medications to meet the needs of patients with same-day access in the state without requiring patients to use out-of-state or in-state mail carriers for access.
While this law contemplates the ability of a pharmaceutical manufacturer to receive an exception, as described above, the process of doing so is likely to present significant hurdles for rare, orphan, and specialty drug manufacturers operating in Arkansas. The law does not expressly condition Medicaid coverage on providing in-state pharmacy access, given that the specified payor programs are employer sponsors of health benefit plans, but the law could result in these manufacturers considering whether to opt out of the specified payor programs or expand their limited networks to include in-state pharmacies, in order to meet the law's requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
