CVS says bill will force closure of 134 pharmacies in Tennessee. Lawmaker calls it ‘fear-mongering.’

A coalition of Tennessee lawmakers, including Republican leaders in the state House and Senate, is sponsoring legislation to rein in what it sees as unfair business practices by companies such as healthcare giant CVS. 

At the same time, CVS warned in a news release that the legislation, HB1959/SB2040, “threatens pharmacy access for patients” by forcing it to close all Tennessee pharmacies and eliminate 2,000 jobs.

The bill bans a pharmacy company from also owning a pharmacy benefit manager, or PBM, which negotiates drug reimbursement rates between insurance companies and pharmacies, essentially serving as a middleman. The legislation is sponsored by state Sen. Bobby Harshbarger, a Kingsport Republican, and state Rep. Rick Scarbrough, an Oak Ridge Republican.

“I think that’s fearmongering, or even as far as misinformation,” Harshbarger said. “This bill says you have to divest. Divestment does not equal closure. The fact that if they were to, in a worst-case scenario, decide to close, that would be a corporate business decision, not because of this bill.”

CVS is a target of the legislation because the company’s structure is commonly referred to as vertical integration, a situation in which it owns a health insurance company (Aetna), a PBM (CVS Caremark) and pharmacies.

Harshbarger, a pharmacist for a small independent company, and the Tennessee Department of Commerce and Insurance have alleged this market power allows it to favor its pharmacies in transactions, hurting locally-owned pharmacies. 

The Tennessee Department of Commerce and Insurance found in an audit released in February that CVS reimbursed its own pharmacies nearly 16 times more for a drug used for chronic kidney disease and 10 times more for an erectile dysfunction drug than other pharmacies. 

Amy Thibault, a spokesperson for CVS, said the company is working with the state to address the audit. 

“We continue to be focused on serving people in Tennessee and are actively looking to work with legislators to protect access to life-saving pharmacy care, to ensure pharmacies can serve their patients, and to support a robust competitive marketplace,” Thibault said by email. “Proposed laws like SB 2040 — which target pharmacies — are not the answer. Closing pharmacies is simply not in the interest of patients.”

The legislation also focuses on other PBMs, such as Express Scripts owned by health insurer Cigna, and Optum owned by UnitedHealth, which had similar problems in audits conducted by the Commerce and Insurance Department. Those two companies don’t own any physical pharmacy stores, preferring to sell online.

CVS, Cigna and UnitedHealth managed nearly 79% of prescription drug claims in 2023, according to an analysis by KFF, a health policy research organization. In 2024 the Federal Trade Commission under President Joe Biden sued the three companies for artificially inflating insulin drug prices.

Local pharmacies have given more to lawmakers’ campaign accounts, PACs than CVS 

The bill is similar to one passed by Arkansas lawmakers in 2025 that triggered the same response from CVS, arguing passage would force it to close all 23 pharmacies it operated in the state. CVS and the other PBMs sued, and a federal judge agreed to temporarily block the law from taking effect in July 2025, claiming the bill likely violated the U.S. Constitution’s Commerce Clause by preventing states from enforcing legislation that discriminates against out-of-state companies. The lawsuit is ongoing, and as of publication no trial date has been set.

Tennessee’s PBM pharmacy co-ownership ban is part of a slate of nearly a dozen bills state lawmakers are proposing as part of a package to regulate the health insurance industry. The ownership ban is co-sponsored by Republican Lt. Gov. Randy McNally of Oak Ridge and Republican House Speaker Cameron Sexton of Crossville. 

The Tennessee Pharmacists Association has been at the forefront of pushing for the legislation, touting the CVS audit on its website. The organization’s political action committee has donated around $225,000 to lawmakers and their PACs since 2020. Republicans McNally, Sexton, state Sen. Ferrell Haile of Gallatin and state Sen. Shane Reeves of Murfreesboro all received more than $20,000 from the PAC over that period. They are all co-sponsors of the legislation.

McNally, Haile and Reeves are pharmacists by trade. 

CVS has donated around $50,000 to lawmakers since 2020 but has not given money to any individual lawmakers or their PACs since that year. All the recent donations have gone to the state Republican caucus PAC.

The Tennessee Chamber of Commerce is also opposing the legislation. Chamber CEO Josh Brown said in a letter sent to lawmakers that the bill was against “free-market” business practices and that it set a “troubling precedent by allowing the state to dictate corporate structure.”

“[The bill] represents an unnecessary expansion of government control over a certain sector of Tennessee’s economy,” said Brown in the letter.

Reporter Sam Stockard contributed to this article.