On April 16, Arkansas became the first state to ban pharmacy benefit managers (PBMs) from acquiring an interest in – or otherwise directly or indirectly holding a permit for the retail sale of – prescription drugs, including mail-order operations. The ban aims to address long-standing concerns about market consolidation and conflicts in the prescription drug supply chain.
While there are limited exceptions for pharmacies that dispense certain rare, orphan, or limited-distributions drugs, the law specifically targets PBM-owned pharmacies, and such exceptions are permitted only for a limited time.
“For far too long, drug middlemen called PBMs have taken advantage of lax regulations to abuse customers, inflate drug prices, and cut off access to critical medications. Not anymore,” said Arkansas Governor Sarah Huckabee Sanders after signing House Bill 1150 into law.
This bold step is part of a growing national trend. Similar legislation has recently been introduced in Vermont, Texas, and New York… and two days before Alabama passed its legislation, a coalition of 39 state attorneys general sent a letter to Congress urging federal legislation to prohibit PBMs and their parent companies from owning pharmacies.
“PBMs’ use of affiliated pharmacies – pharmacies owned by either the PBM itself or the PBM’s parent company – has exacerbated the problem of manipulated prices and unavailability of certain prescription medications,” the letter said.
As the table from Drug Channels below shows, all of the major PBMs have a vertical business relationship with a specialty, mail order, and/or retail pharmacy.
In a statement, CVS Health protested the ban. “CVS Health welcomes a good faith discussion with policy makers in Arkansas and across the country on ways to make medicine more affordable and accessible. Unfortunately, HB1150 is a bad policy that accomplishes just the opposite: it will take away access to pharmacy care in local communities, hike prescription drug spending across the state by millions of dollars each year, and cost hundreds of Arkansans their jobs,” the statement said.
CVS Health, UnitedHealth and Cigna jointly control 80% of the U.S. prescription drug market.