Washington, D.C. — Following Tennessee Governor Bill Lee’s signing of the Freedom, Access, and Integrity in Registered Pharmacy (FAIR Rx) Act, which would prohibit pharmacy benefit managers (PBMs) from running pharmacies, the American Economic Liberties Project released the following statement.

“Tennessee just became a national leader in the effort to restore fairness and accountability to the prescription drug market,” said Benjamin Jolley, Senior Fellow for Healthcare at the American Economic Liberties Project. “For too long, vertically integrated PBMs have held far too much power over pharmaceuticals and their prices. No one should be in the position of controlling reimbursements to pharmacies AND operating pharmacies. We don’t let auto insurers run auto-body shops, and we shouldn’t allow pharmacy insurers to run pharmacies for the same reasons. Governor Lee and Tennessee lawmakers recognized that this conflict of interest is unsustainable and acted decisively to put patients first. The FAIR Rx Act is an important step toward rebuilding a pharmacy system that competes on care, access, and value and not corporate leverage. CVS may claim that Tennessee already has sufficient laws on the books to address these conflicts, but their repeated alleged violations of those laws makes structural separation crucial.” 

The FAIR Rx Act bans PBMs from owning or controlling pharmacies in Tennessee and requires divestiture of existing ownership structures over a transition period. The legislation passed with bipartisan support in the Tennessee General Assembly and makes Tennessee only the second state in the country to move to separate pharmacy ownership from pharmacy benefit management functions. 

Following Governor Lee’s signature, CVS Health filed suit in federal court challenging the law and seeking to block it from taking effect. This follows a Tennessee Department of Commerce and Insurance audit finding that a CVS-affiliated PBM paid its own pharmacies as much as 16,150% more than unaffiliated drugstores, contrary to previously enacted Tennessee law. It also comes after a litany of lawsuits from the FTC, state attorneys generals, and multiple businesses accusing CVS, as well as other Big Medicine corporations, of anticompetitive practices that raise prices for consumers and squeeze out independent pharmacies.

Learn more about Economic Liberties’ Break Up Big Medicine initiative here.

Learn more about Economic Liberties here.