Bipartisan PBM Crackdown Gains Ground in Tennessee, Arkansas

In an era of deep political polarization, Republicans and Democrats have found a rare point of agreement: pharmacy benefit managers, the powerful middlemen accused of inflating prescription drug costs. Across the country, states are moving to break up the conglomerates that own both the companies that set drug reimbursement rates and the pharmacies that collect them—a direct challenge to the vertical integration championed by CVS Health and its rivals.

The push is advancing fastest in Republican-dominated states, where free-market arguments have collided with evidence that competition in the prescription drug supply chain is not working as intended. Tennessee this year became one of the latest states to pass a law banning companies that own pharmacy benefit managers, or PBMs, from also owning brick-and-mortar pharmacies, according to reporting by NPR and WPLN News.

A Unifying Target

At the center of the frustration is CVS Health, whose conglomerate structure bundles a major health insurer (Aetna), a dominant PBM (CVS Caremark), and the largest retail pharmacy chain in the country (CVS Pharmacy). The company reported $400 billion in revenue last year.

The dynamic is on vivid display in Elizabethton, Tennessee, where a Republican wife and her Democratic husband, married for 35 years, share a mutual disdain for CVS. “We hate CVS. I’m going to be straight-up,” Amye Joseph told NPR. “They’re not even a middleman. They’re a money grab for CVS.”

Her husband, Charlie Joseph, a retired fire captain who now works as a custodian, discovered he could save money on his blood pressure medication by paying cash at a local pharmacy rather than using his CVS Caremark drug plan. He now buys a 90-day supply for the same price the plan once charged for a 30-day supply.

“The whole healthcare thing is just frustrating, on a good day,” he said.

The couple’s frustration reflects a broader view that PBMs, created decades ago to manage prescriptions and hold down costs, have instead become engines for extracting profit at the expense of employers, governments, and patients.

States Move Against Vertical Integration

Every state has imposed some restrictions on PBMs in recent years. But a growing number are now attacking the ownership structures themselves. Tennessee’s law, the FAIR Rx Act, was signed by Republican Governor Bill Lee and takes effect in January 2028. Arkansas passed a similar ban in 2025 through Act 624, though it is being held up in court.

The argument that has won over conservative lawmakers is grounded in economics rather than regulation. “Republicans are looking at this issue, saying, We know what competition is supposed to do, and it isn’t happening,” said Antonio Ciaccia, CEO of 46brooklyn Research, a nonprofit think tank that tracks drug pricing. “This is not a free market.”

Independent pharmacies, which have little choice but to contract with major PBMs while competing against conglomerate-owned rivals, have been among the most vocal supporters. Tennessee state Senator Bobby Harshbarger, a Republican and a pharmacist, put the case bluntly at a February hearing: “If a corporation argues that its pharmacy cannot survive unless it is owned by the same entity that sets the reimbursement rate, then we’re not talking about a free market. We’re talking about control.”

The bill drew support across party lines. State Representative Antonio Parkinson, a Democrat from Memphis, said he felt he was voting for lower drug prices and to support small businesses. “If there’s a benefit to my people, I’m supporting it,” he said.

Market Power and Federal Momentum

The concentration of the PBM industry has alarmed regulators and attorneys general alike. The three largest PBMs—CVS Caremark, Express Scripts, and OptumRx—control roughly 80% of U.S. prescription claims, while an American Medical Association analysis found that the four largest PBMs hold about 75% of the market.

Attorneys general from nearly 40 states and U.S. territories wrote to congressional leaders, arguing that “horizontal consolidation and vertical integration have transformed PBMs from useful administrative service providers into market-dominating behemoths,” according to the letter.

The issue has also found uncommon allies in Washington. A federal PBM ownership ban, the Patients Before Monopolies Act, has been introduced by Representative Diana Harshbarger, a Tennessee Republican and pharmacist, with a Senate companion bringing together progressive Senator Elizabeth Warren of Massachusetts and conservative Senator Josh Hawley of Missouri, as her office announced.

Not everyone sees a clean left-right issue. Barak Richman, a lawyer and economist at George Washington University who studies healthcare competition, characterized the fight between drugmakers and PBMs as a corporate “cage match.” “We have wildly passionate partisan divides on a lot of healthcare,” he said. “But there’s a lot of healthcare policy that I don’t think is obviously partisan.”

CVS Fights Back, In Court and on the Air

CVS has mounted an aggressive defense. It launched a $7 million television advertising campaign in Tennessee warning that the law would force it to close all 134 of its pharmacies in the state, and it sent text messages to customers urging them to contact lawmakers. Similar tactics were used in Arkansas, where a judge has agreed to consider the law’s constitutionality after CVS challenged it; Arkansas enacted its ban through Act 624 in 2025.

CVS spokesperson Phil Blando defended the company’s integrated model. “Looking at the price of a single prescription does not reflect the value of a comprehensive pharmacy benefit,” he said. “Our focus remains delivering the lowest possible total cost and the greatest overall value for members and plan sponsors.”

PBM representatives argue the industry is being scapegoated. “PBMs are the only part of the prescription drug supply chain working to lower drug costs, which makes PBMs the target of powerful groups, Big Pharma and pharmacists,” said Greg Lopes of the Pharmaceutical Care Management Association.

Notably, CVS has not divested or closed pharmacies in states that passed ownership bans, because none of those laws have taken effect yet. Tennessee lawmakers pointed out that closure is not the only option; the company could instead divest either its stores or its PBM.

An Uncertain Path Forward

Even proponents acknowledge the policy’s effects are not fully known. An analysis by Tennessee’s legislature concluded the bill could raise healthcare costs in the short term, a conclusion that cuts against the promise of lower drug prices. The long-term impact remains unclear.

The bigger question may be legal. The constitutionality of state PBM ownership bans is unresolved, with Arkansas’ law currently enjoined and Tennessee’s facing a pending challenge that will not be tested until the law takes effect in 2028. Courts must weigh whether states can regulate the business structures of national companies without running afoul of the Commerce Clause and federal preemption rules.

What is clear is that the politics of drug pricing have shifted. A fight once framed as a narrow technical dispute over rebates and formularies has become a bipartisan cause, one that pits a Washington gridlocked on almost everything else against a shared target that few politicians are willing to defend.

As states and the federal government press forward, the coming years will determine whether breaking up the PBM-pharmacy conglomerates delivers the lower costs their critics promise, or creates new complications in a healthcare system already straining under their weight.