Cigna's headquarters in Bloomfield, Connecticut. Credit: JHVEPhoto
Express Scripts by Evernorth, the pharmacy benefits manager business of The Cigna Group, late last week filed a federal lawsuit challenging a Tennessee law that prevents PBMs from also owning pharmacies in the state. The Freedom, Access and Integrity in Registered Pharmacy (FAIR Rx) Act became law in April.
Under the law, which is set to take effect in July 2028, the state will not allow a company to own more than 5% of a pharmacy as well as a health insurance issuer and PBM. If a company falls in this category, the pharmacy can continue operating through the end of 2028 but must show the state that it is planning a sale to a separate entity.
Cigna disagrees with state lawmakers, who said the law is meant to curb anti-competitive practices while reducing prices and discouraging companies from steering patients toward more expensive medications. More than 180,000 Tennesseans rely on Express Scripts pharmacies, according to Cigna.
"If this misguided law takes effect, hundreds of thousands of patients could be left scrambling to navigate pharmacy closures and find new ways to access their medications and essential clinical support," Susan Peppers, the company's vice president of pharmacy practice, said in a news release. "Tennesseans deserve convenient, affordable care, and we are doing everything we can to ensure their access to this care continues."
The lawsuit asserts that the FAIR Rx Act unconstitutionally protects businesses from out-of-state competition and is preempted by TRICARE, Medicare Part D and the Employee Retirement Income Security Act. It also alleges that the law could affect its Accredo pharmacy operation in Memphis, which it said distributed 2.3 million prescriptions nationwide last year.
"We owe it to our patients and our colleagues across the state who are proud to call Tennessee home to do everything in our power to stop this unconstitutional law," said Andrea Nelson, general counsel and corporate secretary of The Cigna Group.
CVS Health filed a similar lawsuit last month.
"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 at the time. "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 Tennessee Pharmacists Association, however, supports the act.
"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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