Washington, D.C. — Following the passage of the Freedom, Access, and Integrity in Registered Pharmacy (FAIR Rx) Act through both chambers of the Tennessee General Assembly, the American Economic Liberties Project released the following statement urging Governor Bill Lee to sign the bill into law.

“Tennessee just sent a message to every pharmacy benefit manager in the country: the fox can no longer guard the henhouse,” said Benjamin Jolley, Senior Fellow for Health Care at Economic Liberties. “The FAIR Rx Act prohibits PBMs from owning or controlling pharmacies in Tennessee, ending a conflict of interest that lets these companies unfairly set different drug reimbursement rates for their own pharmacies and their competitors and then pocket the difference at their own pharmacies. This bill’s passage is a key step in the fight to Break Up Big Medicine. CVS and Express Scripts spent millions and hired lobbyists to kill this bill. Tennessee legislators passed it 86-7 in the House and 24-9 in the Senate. Governor Lee should sign it without hesitation.”

BACKGROUND

Tennessee becomes the second state, after Arkansas, to pass legislation barring PBMs from owning or controlling pharmacies. The bill addresses a core conflict of interest in the pharmacy supply chain: PBMs negotiate drug prices and reimbursement rates on behalf of insurers and employers, while simultaneously owning the pharmacies that fill those prescriptions. This structure allows PBMs to steer patients to their own pharmacies and reimburse themselves at higher rates than they pay independent competitors.
PBM-owned pharmacies dominate the prescription dispensing market, particularly in the high cost specialty pharmaceuticals market, where they capture more than ⅔ of total dispensing revenues, forcing patients with complex disease states to use their mail order pharmacies as the only option for coverage in many cases.

A Tennessee Department of Commerce and Insurance audit found that a CVS-affiliated PBM paid its own pharmacies as much as 16,150% more than unaffiliated drugstores, confirming what independent pharmacists have reported for years. In response to the bill, CVS threatened to close all 134 of its Tennessee pharmacies, a claim lawmakers on both sides of the aisle rejected. An analysis of the Tennessee market found that more than 95 percent of CVS’s pharmacies are within at least 2 miles of another pharmacy.
If signed, the FAIR Rx Act will take effect January 1, 2028, giving PBM-affiliated pharmacies time to divest. The bill also requires detailed ownership disclosures, creates a limited-use license for rare and orphan drugs, and authorizes the Board of Pharmacy to enforce compliance through civil penalties and injunctive relief.

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

Learn more about Economic Liberties here.