Tennessee Lawmakers Pass Bill Targeting Pharmacy Benefit Managers; CVS Threatens Lawsuit
Why It Matters
Tennessee has become the latest battleground in a growing national fight over pharmacy benefit managers, or PBMs — the powerful middlemen that negotiate drug prices between insurance companies and pharmacies. The outcome of this legislation could reshape how prescription drugs are priced and accessed across the state, affecting millions of Tennessee patients and hundreds of pharmacies.
Independent pharmacies argue that PBMs have used their market dominance to steer profits toward affiliated chains at the expense of community-based providers, driving up costs for consumers and threatening local healthcare access.
What Happened
The Tennessee General Assembly passed legislation banning a pharmacy from owning a pharmacy benefit manager, a move that effectively targets CVS Health — the only company in Tennessee that owns both physical pharmacy locations and a PBM. The bill cleared the state House by a vote of 86–7 and the state Senate 24–9, reflecting broad bipartisan support.
CVS Health has responded by threatening to file a lawsuit against the state, mirroring legal action it took after Arkansas passed similar legislation in 2025. A federal judge in that case blocked the Arkansas law from taking effect, citing federal statutes that limit excessive state regulation of out-of-state businesses. That case remains ongoing.
The primary sponsor of the Tennessee measure is Republican state Sen. Bobby Harshbarger of Kingsport, a pharmacist by trade. He was joined by fellow pharmacist-lawmakers, including Republican Lt. Gov. Randy McNally of Oak Ridge and GOP state Sens. Ferrell Haile of Gallatin and Shane Reeves of Murfreesboro.
By the Numbers
86–7: The margin by which the Tennessee House passed the legislation, signaling overwhelming support among elected representatives.
24–9: The Senate vote count, also reflecting a strong majority in favor of the measure.
134: The number of CVS pharmacy locations in Tennessee that the company claims could face closure if the law takes effect — a threat that bill sponsors have called “fear-mongering.”
~80%: The share of the PBM market controlled by just three companies — CVS Caremark, Cigna’s Express Scripts, and UnitedHealth’s OptumRx — according to health policy research organization KFF.
~24: The number of CVS pharmacies in Arkansas that the company threatened to close following that state’s similar legislation in 2025.
Zoom Out
Tennessee’s legislation is part of a broader national reckoning with the PBM industry, which critics across the political spectrum say has exploited its position as a middleman to enrich large healthcare conglomerates at the expense of patients and independent pharmacies. A Tennessee Department of Commerce and Insurance audit found that CVS and other PBMs reimbursed partner pharmacies for drugs at significantly higher rates than non-affiliated pharmacies — a disparity that state lawmakers cited as a key driver of the legislation.
CVS Health’s unique market position — it owns insurer Aetna, PBM CVS Caremark, and hundreds of retail pharmacy locations — makes it the singular target of Tennessee’s new law. The concentration of power within a single company raises questions about conflicts of interest that legislators across the country are beginning to scrutinize. Looming Medicaid cuts are already straining healthcare access for vulnerable populations in states like New Jersey, and further consolidation in the pharmacy sector could worsen conditions for patients who rely on local providers.
The Arkansas legal precedent, where a federal judge sided with CVS in blocking a comparable state law, presents a significant hurdle for Tennessee’s enforcement efforts. States are increasingly testing the limits of their regulatory authority over national healthcare giants, with mixed results in the courts. Similar pressures are playing out in states like Montana, where Medicaid funding uncertainty is already complicating healthcare delivery.
What’s Next
CVS spokesperson Amy Thibault confirmed the company plans to file a lawsuit against Tennessee, as it did in Arkansas. If CVS proceeds, a federal court will likely determine whether the law conflicts with federal statutes governing interstate commerce and regulation.
In the meantime, state officials and independent pharmacy advocates will watch closely to see whether CVS follows through on its closure threats or whether, as Sen. Harshbarger contends, those warnings amount to a business ultimatum rather than a genuine policy consequence. The outcome of the ongoing Arkansas case will likely influence how Tennessee’s legal fight unfolds.