CVS, Express Scripts sue to block ‘protectionist’ Arkansas PBM law

CVS and Express Scripts filed separate lawsuits recently challenging a new Arkansas law they say aims to put them out of business in the state.

Act 624, which takes effect in January, bars PBMs from receiving permits to dispense prescription medication and revokes PBMs' existing permits. CVS and Express Scripts, two of the largest pharmacy benefit managers in the United States, claim the law is protectionism and violates their constitutional right to do business in Arkansas.

“This unconstitutional law puts local politics ahead of patients, restricting their access to life-saving medications and undermining fair competition,” said Amy Thibault, executive director of corporate communications for CVS.

Both lawsuits seek a court order barring enforcement of the law.

Sam Dubke, communications director for Gov. Sarah Huckabee Sanders, sent InsuranceNewsNet the following statement:

"Governor Sanders is proud that Arkansas is the first state in the nation to hold PBMs accountable for their anticompetitive practices. These big drug middlemen are only attacking Arkansas in the courts because they’re worried other states will join Governor Sanders in fighting for patient access and affordable prescriptions."

The lawsuits name the executive director and members of the Arkansas State Board of Pharmacy, which regulates the state's pharmacies, as defendants.

Targeting PBMs?

Act 624 was signed into law on April 16, 2025, by Huckabee Sanders, making Arkansas the first state to prohibit pharmacy benefit managers from owning retail or mail-order pharmacies. The law prohibits PBMs from acquiring or holding a direct or indirect interest in a pharmacy.

Specifically forbidding out-of-state pharmacies from operating in Arkansas would be a clear-cut constitutional violation, the CVS lawsuit says. So lawmakers got around that by targeting PBMs, the plaintiff claims.

PBMs are third-party administrators that manage prescription drug benefits on behalf of health insurers, large employers, unions, and government programs. They act as intermediaries between insurers, drug manufacturers, pharmacies, and patients.

The largest PBMs are affiliated with major health insurers. Express Scripts is a Cigna subsidiary, for example. Critics say PBMs operate in a shadowy middle ground, have conflict-of-interest issues and keep profit margins hidden.

A Federal Trade Commission report from earlier this year found that the ‘Big 3 PBMs’—Caremark Rx, Express Scripts, and OptumRx —marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent, and many others by hundreds of percent.

Such significant markups allowed the Big 3 PBMs and their affiliated specialty pharmacies to generate more than $7.3 billion in revenue from dispensing drugs in excess of the drugs’ estimated acquisition costs from 2017-2022.

“PBMs play a valuable role because they can use their purchasing power and networks to negotiate lower drug prices from pharmaceutical manufacturers and lower reimbursement rates from pharmacies, which in tum reduces the cost of drugs for patients,” CVS says in its lawsuit.

According to the CVS lawsuit, lawmakers nearly scuttled Act 624 once they realized it would apply to Walmart, the state’s largest employer. Instead, an exemption was added “for PBM-affiliated pharmacies if the PBM serves only the pharmacy's own employee benefit plan.”

Already laws that apply

If Act 624 takes effect, CVS will have to shut down not only its 23 retail pharmacies across Arkansas, but also its mail-order and specialty-pharmacy services, the lawsuit says.

“CVS Caremark reimburses independent pharmacies in Arkansas more than it does CVS pharmacies,” Thibault said. “Small businesses, employers, health plans and others are going to have to pay more for prescription drugs starting next year because of this new law.”

In its lawsuit, Express Scripts said it delivered more than 700,000 prescriptions to more than 45,000 patients throughout Arkansas in 2024.

The “anticompetitive business tactics” the state claims are already covered under other Arkansas laws, Express Scripts says. For example, one state statute prohibits PBMs from reimbursing a pharmacy or pharmacist in the state “an amount less than the amount that the [PBM] reimburses a [PBM] affiliate for providing the same pharmacist services."

© Entire contents copyright 2025 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.