Key facts
- States are enacting laws to regulate pharmacy benefit managers (PBMs) and lower prescription drug costs.
- Legislation in at least 26 states introduced over 120 bills targeting PBMs.
- Measures include limiting PBM compensation, mandating minimum pharmacist payments, and increasing transparency.
- A Tennessee law aims to prevent PBMs from owning retail pharmacies by July 2028.
- CVS Health Corp. is actively fighting these regulations through lawsuits and advertising.
- Independent pharmacies report financial struggles due to low PBM reimbursements.
States across the U.S. are implementing new laws aimed at controlling prescription drug costs by regulating pharmacy benefit managers (PBMs), companies that manage prescription drug coverage for health insurers. These legislative efforts come as a significant portion of Americans express concern about their ability to afford medications. The new laws seek to limit PBM compensation, establish minimum payments to pharmacists, and mandate greater transparency regarding their operations and negotiations with drug manufacturers.
In Tennessee, a law set to take effect in July 2028 will prohibit PBMs from owning retail pharmacies. However, CVS Health Corp. has filed a federal lawsuit challenging this regulation, arguing it constitutes "naked protectionism" by lawmakers who may have ties to independent pharmacies. CVS has also faced legal challenges and settled lawsuits in other states, such as Arkansas and Louisiana, over its practices and opposition to similar legislation. The company argues that PBMs are essential for driving down costs and increasing the use of generics, which now account for 90% of prescriptions.
Independent pharmacies, however, report that they are struggling financially due to low reimbursement rates from PBMs. Some owners, like Lisa Gales in Kansas, state they lose money on a majority of prescriptions filled. New laws in Kansas and Louisiana mandating dispensing fees are seen as a potential lifeline by some independent pharmacists, though critics argue these fees could increase overall consumer costs. The debate centers on whether PBMs pass on negotiated discounts to health plans and consumers or retain a portion for themselves.
Consumers, particularly those in rural areas, worry that the financial pressure on independent pharmacies could lead to closures, making it harder to access necessary medications. Some lawmakers also question the efficacy of state-level regulation, suggesting that federal intervention might be more appropriate for overseeing PBMs.