In the rapidly changing landscape of healthcare, pharmacy benefit managers (PBMs) are increasingly under scrutiny for their significant influence on prescription drug pricing and patient access. The three largest PBMs in the United States—CVS Caremark, Express Scripts, and OptumRx—are not just middlemen between pharmaceutical manufacturers and pharmacies; they are owned by companies that operate their own pharmacy operations at various levels, including retail and mail order pharmacy operations (affiliated pharmacies). PBMs like CVS Caremark, OptumRx and Express Scripts manage most prescription drug claims in the U.S. and have frequently been accused of steering patients to their own affiliated pharmacies. This dual role raises critical questions and concerns about fair competition, pricing, and patient care.
Moreover, recent interim reports from the Federal Trade Commission (FTC) brought these issues to the forefront. Released in July 2024, the report indicated that PBMs are stifling competition and driving up drug prices, ultimately impacting patients' access to necessary medications. According to the FTC (and other sources), these three PBMs manage approximately 80% of prescription drug insurance claims for approximately 270 million Americans. This concentration of power raises concerns about the fairness of the healthcare system and the potential for conflicts of interest.
In response to these and other similar concerns and challenges, the State of Arkansas previously passed Act 624, which sought to ban PBMs from holding pharmacy permits within the state, ultimately meaning that PBMs could not operate affiliated pharmacies in Arkansas. This law was one of the first of its kind. It was designed with the goal of protecting independent pharmacies from practices that could stifle competition. By becoming the first state to challenge these practices, Arkansas set a precedent that could result in similar actions nationwide.
More recently however, the PBMs challenged this law from taking effect, arguing that the law unfairly discriminates against out-of-state pharmacies and violates the Commerce Clause of the Constitution. The federal judge overseeing the case recently blocked the law, citing potential violations of the U.S. Constitution's Commerce Clause and stating that it is likely to conflict with TRICARE, a healthcare program for military personnel and their families. The state has since appealed the ruling, with Attorney General Tim Griffin advocating for the law's reinstatement to safeguard local pharmacies and prevent PBMs unfair practices.
The ongoing debate surrounding PBMs and their impact on drug pricing and competition is a complex issue that requires careful consideration. While the FTC's findings underscore the need for reform, the legal challenges faced by Arkansas's Act 624 illustrate the difficulties of enacting laws to address such issues and the legal complexities of intersecting federal and state laws. As stakeholders navigate this complex and intricate landscape, it is important to remain aware of these legal developments.
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