CVS and Express Scripts sue Arkansas over restriction on pharmacy benefit managers

Key Points

• CVS and Express Scripts have asked a federal judge to block Arkansas’ new law barring pharmacy benefit managers (PBMs) from owning or operating pharmacies, marking the first such state restriction on PBMs.
• Express Scripts warned the measure would cause “devastating consequences,” forcing closures and creating “mass confusion” for Arkansans seeking prescriptions, while CVS said it would have to shut its 23 in-state stores.
• CVS argues the law violates principles of “free commerce” and fair-market competition, and had even run TV ads urging Gov. Sarah Huckabee Sanders to veto the legislation before she signed it last month.
• Arkansas Attorney General Tim Griffin defended Act 624 as necessary to curb PBM profits at consumers’ expense, joining other states and attorneys general in pushing for similar PBM regulations.

LITTLE ROCK, Ark. (AP) — CVS and Express Scripts asked a federal judge on Thursday to block a law prohibiting pharmacy benefit managers from owning or operating pharmacies in Arkansas, challenging the first such restriction enacted by a state.

The lawsuits come a little over a month after Gov. Sarah Huckabee Sanders signed the legislation restricting pharmacy benefit managers, also known as PBMs, which run prescription drug coverage for big clients that include health insurers and employers that provide coverage.

Supporters of the Arkansas law have said it's needed because PBMs are forcing independent pharmacies, especially those in rural areas, to close.

But in its lawsuit, Express Scripts said the measure would end up having “devastating consequences” and force pharmacies around the state to close.

“And it will create mass confusion among Arkansans about where and how they can receive needed prescription medications, irreparably breaking bonds that patients have formed over many years with their pharmacists and pharmacy-provided home-visit nurses,” the company's lawsuit said.

In a separate lawsuit, CVS said the new law “represents an assault on free commerce between the states and the foundational principles of fair-market competition that underpin the Union.”

CVS, which ran TV ads urging Sanders to veto the legislation, has said it would have to close its 23 retail pharmacies in the state if the law takes effect.

Attorney General Tim Griffin defended the law on Thursday, saying PBMs' “wield outsized power to reap massive profits at the expense of consumers.”

“Through Act 624, Arkansas is standing up to PBMs on behalf of consumers, and I will vigorously defend our law,” Griffin said in a statement.

Arkansas is among several states where lawmakers have taken up efforts to regulate PBMs, and a group of attorneys general urged Congress last month to pass legislation similar to Arkansas' law.