Tennessee recently enacted a law that prevents pharmacy benefit managers from also owning pharmacies in the state. Late last week, CVS Health filed a federal lawsuit challenging the Freedom, Access and Integrity in Registered Pharmacy Act, also known as the Fair Rx Act. CVS Health serves nearly 1.5 million Tennessee residents through 136 pharmacy locations, the company said.
The lawsuit alleges that the law unconstitutionally favors in-state businesses over out-of-state competitors, particularly targeting CVS as the only company in Tennessee with both a PBM and retail pharmacies. It also says the act violates federal law, including the Equal Protection and Supremacy Clauses, by imposing burdens on out-of-state operations.
"This unconstitutional law puts special interests and local politics ahead of patients, restricting their access to lifesaving medications and undermining fair competition," a CVS spokesperson said in a statement to Fierce Healthcare. "S.B. 2040 is designed to target CVS Health, not to protect patients. Tennessee lawmakers crafted the law to exclude CVS Health's pharmacy operations while protecting instate pharmacy businesses. There's no way around the fact that this legislation will limit patients' options and increase the cost of their medicines."
The Fair Rx Act specifically targets national companies but will have no impact on independent pharmacies, the lawsuit contends. As a result, CVS said, it will have to close its pharmacies in the state, adding that the law ultimately will lead to the closure of more than 160 pharmacy locations and could 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," the spokesperson said, "while downplaying the devastating impact it will have on patient care."
The Tennessee Pharmacists Association, however, countered 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, health care providers and the pharmacies that care for their communities," CEO Anthony Pudlo said in a statement.
A federal judge last year blocked similar legislation in Arkansas, citing federal preemption of state regulations on out-of-state businesses.
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