Gov. Bill Lee has signed the Freedom, Access and Integrity in Registered Pharmacy Act into law, making Tennessee the second state to prohibit pharmacy benefit managers from owning or operating pharmacies.
The legislation passed despite an aggressive opposition campaign. PBMs and their allies reportedly spent more than $7 million and deployed more than 60 lobbyists to fight the bill, according to a May 22 National Community Pharmacists Association news release.
The law gives affected companies until Jan. 1, 2027, to divest or restructure. CVS Health, which owns both pharmacy locations and PBM Caremark, warned lawmakers that the bill could force the closure of all 134 of its Tennessee pharmacies and eliminate roughly 2,000 jobs — claims bill sponsors disputed. A 2024 audit from the Tennessee Department of Commerce and Insurance had found CVS Caremark used spread pricing, charging some plans more for medications than pharmacies were reimbursed.
The Tennessee Pharmacists Association and National Community Pharmacists Association both championed the legislation. “An enormous conflict of interest exists when a giant corporate PBM or insurance plan owns and operates its own pharmacy,” said NCPA CEO B. Douglas Hoey. “This legislation simply gives these health care giants a choice — you can be a PBM or you can be a pharmacy but you can’t be both.”
Tennessee follows Arkansas, which became the first state to pass a similar ownership ban — though that law remains tied up in federal court after CVS Caremark, Express Scripts and OptumRx sued to block it on Commerce Clause grounds. The case is currently before the 8th Circuit Court of Appeals. Tennessee’s law is similarly expected to face a legal challenge.
The state-level momentum comes as PBM reform accelerates on multiple fronts. A federal bill that would require companies owning health insurers or PBMs to divest their pharmacy businesses was reintroduced in Congress May 13, and the Consolidated Appropriations Act of 2026 — signed in February — included the first major PBM reforms to Medicare Part D in nearly 20 years.
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