Is Arkansas’ New PBM Law the Right Path Forward for Reform? No One Knows Yet

A first-of-its-kind state law could have huge repercussions for the pharmacy benefit manager industry. In April, Arkansas Governor Sarah Huckabee Sanders signed HB1150, legislation that bans PBMs from owning pharmacies. The new law is effective Jan. 1, 2026.

Pharmacist groups have long criticized the vertically integrated PBMs that also own pharmacies as being anticompetitive and having conflicts of interest. They claim the larger PBMs direct patients to their own pharmacies and away from community pharmacies, have excessive clawbacks, provide below-cost reimbursements, and have punitive audit practices.

The Arkansas law, they say, will improve local access, lower prescription drug prices, and reduce delays in care for patients.

“HB 1150 is a structural change that gets to the heart of the problem—the conflicts of interest inherent in vertical integration that PBMs have been manipulating to the detriment of patients, taxpayers, and pharmacies,” Anne Cassity, senior vice president of government affairs at the National Community Pharmacists Association, said in a news release.

Arkansas’s decoupling of the retail pharmacy from the PBM is going to be a “big game changer,” David Blair, CEO of LucyRx, said in a recent interview. LucyRx is a fee-based, fiduciary PBM. “There is sufficient momentum at the state level that’s already happening, and it’s what our clients are demanding.”

Since the introduction of HB 1150, similar provisions were introduced or amended into bills in Indiana, New York, Texas, and Vermont.

Theresa C. Carnegie

“I don’t think anyone thought this would actually happen, and so it’s been pretty jarring that it happened,” Theresa C. Carnegie, an attorney with Mintz who works with health plans and PBMs, said in an interview. “By virtue of it happening, it gives potential momentum for it to happen in other states. I'm sure all the constituents that have an interest in this are working hard to figure out the right path forward for any kind of future legislation.”

Carnegie said if other states pass similar laws barring PBMs from owning pharmacies, it could have a widespread impact. “New York and Texas are big states that are very populous and have a lot of pharmacies. There would be job losses. There would be a significant impact on access. And there would be restructuring to find a different way to perform the services that patients need in an efficient and cost-effective manner.”

Additionally, on April 14, a bipartisan coalition of 39 state and territory attorneys general sent a letter to congressional leaders urging them to pass legislation prohibiting PBMs from owning or operating pharmacies.

A bill to do so was introduced late last year by Sens. Josh Hawley (a Republican from Missouri) and Elizabeth Warren (a Democrat from Massachusetts) and Reps. Diana Harshbarger (Republican from Tennessee) and Jake Auchincloss (a Democrat from Massachusetts).

Potential Impact of Arkansas Law

David Joyner

The larger, integrated PBMs are calling Arkansas’ law short-sighted and bad policy and say it puts patients at risk. “The Arkansas government took unjustified actions that will leave hundreds of thousands of patients without their community pharmacy, severely limiting access to critical drugs and increasing costs for employers and consumers,” David Joyner, CEO of CVS Health, said in a call with investors last week.

David M. Cordani, chairman and CEO of The Cigna Group, said the Arkansas limits constrict patients’ choice. “The posture of the bill picks and chooses winners in the state and uses inappropriately, from our point of view, licensure capabilities to limit choice, commerce, and free market,” he said during an investor call last week. “The result is going to be a decrease in access, a reduction in choice, an erosion in quality and continuity of care, and ultimately, an increase in place and cost for citizens.”

Employer groups are also weighing in. The American Benefits Council, a Washington, D.C.-based employee benefits public policy organization, said in a letter to Arkansas Governor Sanders that the new law will affect employers’ ability to design and contract for a broad range of pharmacy access.

“Reducing choice in contracting options for more efficient delivery models limits access to pharmacy care, raises the costs of drugs for Arkansas businesses, and, in turn, could increase the health premiums and out-of-pocket costs borne by your residents,” Katy Johnson, president of the American Benefits Council, said in the letter.

So far, CVS has said it plans to close up to 23 of its pharmacy locations and more than 100 mail-order pharmacies in Arkansas as a result of the new law.

Carnegie said a lot of press around the Arkansas law has been related to the closing of retail pharmacies.

“I interpret the legislation that all of the big PBMs that own mail and specialty pharmacies that may not be physically domiciled and located in Arkansas, but ship prescriptions to members into Arkansas won’t have their license renewed going forward.

CVS’s Joyner said in his earnings call that more than 10,000 people in Arkansas who have complex conditions will be impacted. “These patients require specialized care and close coordination with the specialty pharmacists. Independent pharmacies will not be able to fill the void this legislation creates in Arkansas,” he said. “These patients will have disrupted and/or potentially have access-to-care issues.”

Carnegie expects there to be lobbying efforts to amend the law or create exceptions for drugs and therapies with limited distribution or for those drugs that only come from certain pharmacies.