Tennessee passes FAIR Rx Act
- Tennessee lawmakers passed the FAIR Rx Act banning pharmacies from owning pharmacy benefit managers, explicitly targeting CVS. - The bill advances to Governor Lee while CVS warns of closures, litigation, and plans to sue the law's constitutionality. - Reports say this could disrupt local medication access and push independent providers to tighten coordination with local pharmacies and employers. (timesfreepress.com)
Tennessee lawmakers sent the FAIR Rx Act to Gov. Bill Lee this week, setting up a direct fight with CVS over who can control the state’s prescription pipeline. (wpln.org) The bill is Senate Bill 2040 and House Bill 1959, and it passed the Senate 24-9 on April 20 and the House 86-7 on April 21, according to the Tennessee General Assembly’s bill tracker. (wapp.capitol.tn.gov) If Lee signs it, the law takes effect Jan. 1, 2027, and would bar a company from owning both a pharmacy benefit manager and a pharmacy in Tennessee. (wkrn.com) A pharmacy benefit manager is the middleman in the drug business: it negotiates prices with drugmakers, decides which drugs insurers cover, and helps determine where patients can fill prescriptions and what pharmacies get paid. (wkrn.com) Supporters wrote the bill after Tennessee regulators audited CVS Caremark, the pharmacy benefit manager owned by CVS Health, and said they found unfair reimbursement and spread-pricing problems in its 2024 Tennessee operations. (tn.gov) Lawmakers backing the bill say that structure lets one company act as referee and player at the same time: CVS owns insurer Aetna, the CVS pharmacy chain, CVS Caremark, mail-order and specialty pharmacies, and MinuteClinic sites inside stores. (wpln.org) CVS says the law would not lower drug prices or fix reimbursement rules, and it says it does not steer patients to its own pharmacies. The company says it is prepared to challenge the law in federal court if Lee signs it. (wkrn.com) CVS has also warned the fallout could be immediate for access points patients already use. In statements reported this week, the company said the law could force the closure of 25 MinuteClinic locations, eliminate more than 2,000 jobs, and put 134 Tennessee pharmacies at risk. (wpln.org; wkrn.com) Tennessee is not moving alone. Arkansas passed a similar law last year, and a federal court has paused enforcement there while the case is litigated, a path CVS has pointed to in Tennessee. (wpln.org) The immediate question is whether Lee signs the bill and whether CVS follows through on its lawsuit threat. The longer fight is over whether states can break apart the companies that now negotiate, insure, dispense and sometimes prescribe the same prescription drug. (wpln.org; wapp.capitol.tn.gov)
