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Nashville state Rep. Aftyn Behn, a Democrat.
Nashville Democratic Rep. Aftyn Behn has asked Tennessee’s Attorney General to investigate CVS over potentially deceptive advertisements related to the company’s marketing campaign against legislation that could force it to decouple its pharmacy and pharmacy benefit manager companies in the state.
The legislation, HB1959/SB2040, bans a pharmacy from also owning a pharmacy benefit manager, or PBM, which negotiates drug reimbursement rates between insurance companies and pharmacies, essentially serving as a middleman. CVS Health is the only company in the state that owns both physical pharmacy locations and a PBM (CVS Caremark).
The company has been blanketing the state’s airwaves with a seven-figure advertisement purchase warning that “special interests” are pushing the bill, and asking viewers to text a number that then sends an email to their state lawmakers.
Behn said she’s received hundreds of emails related to the legislation as part of the company’s advertising strategy, and wants the attorney general to investigate whether the campaign is “potentially anti-competitive.”
“They are pummeling people with misinformation,” Behn said.
The Tennessee Pharmacy Association, which represents independent and locally owned pharmacies, has been a strong advocate of the legislation. The trade group has given around $225,000 to lawmakers and their political action committees, PACs, since 2020, compared to CVS Health’s $50,000. Behn has not taken money from either group.
CVS says bill will force closure of 134 pharmacies in Tennessee. Lawmaker calls it ‘fear-mongering.’
CVS released a letter its CEO David Joyner sent to state lawmakers Friday, warning that the bill, under its current format, leaves the company “with only one way to comply,” and that’s “ending pharmacy operations in Tennessee.”
“In Tennessee, as in most states, Caremark doesn’t only contract with CVS Pharmacy, but with other chains, grocers, independents, almost anywhere people can get their medication,” Joyner said in the letter. “It is simply not feasible to cease a nationwide network in one state.”
Tennessee has around 3,000 pharmacies, according to the National Association of Boards of Pharmacy. The largest chain is Walgreens with over 250 stores. CVS operates 134 pharmacies.
State Republican lawmakers have been trying to rein in PBMs for years, led by a group of state Senators that are pharmacists by trade.
In 2022, Tennessee lawmakers passed legislation requiring the Tennessee Department of Commerce and Insurance to audit PBMs. Last year, the department found that CVS, Express Scripts (owned by Cigna) and Optum (owned by UnitedHealth) all had similar violations related to reimbursing affiliated pharmacies at higher amounts for certain drugs than non-affiliated stores.
Those three companies own about 80% of the PBM market.
In CVS’s case, the department found the company reimbursed its stores up to 16,500% more for certain drugs than non-affiliated locations.
Tennessee’s legislation is similar to a bill passed in Arkansas, which CVS warned would lead to the closure of its 23 pharmacies in that state. Instead, the company sued to stop the law from going into effect and so far, the law is on hold as part of the ongoing lawsuit.
Behn’s letter
Joyner’s letter to lawmakers
To the Members of the TN General Assembly,
I am writing today as the CEO and Chairman of the Board of CVS Health, a position that I have held for a little over a year. CVS Health supports over 1.5 million Tennesseans every year, in their communities, helping families struggling with an often confusing, disconnected system and the rising cost of health care. Over the last several weeks this legislature has debated how to improve health care costs, access and competition in Tennessee. I am deeply committed to working with policymakers to improve the health care system, protect access to pharmacies, and lower health care costs for the patients we see every day.
It is in that spirit that I ask you to oppose SB2040/HB1959. As it is currently written it would force the closure of our pharmacies across Tennessee, not only our home delivery and specialty operations, but also 134 community pharmacies.
These pharmacies are vital community health care anchors. Every day, our pharmacists and colleagues serve as the most accessible point of care: dispensing prescriptions, conducting health screenings, and providing medication therapy management. Our stores are open seven days a week, nights, and weekends with several stores open 24 hours. Patients already struggling with chronic conditions such as diabetes, heart disease, hypertension, and cancer may face longer travel distances, delayed refills, and increased risk of non-adherence. Research consistently shows that reduced pharmacy access correlates with poorer health outcomes, higher emergency room visits, and elevated health care costs for everyone.
We employ over 6,000 colleagues across Tennessee. Independent economic analysis finds we support 17,000 jobs; contribute $299 million in state and local taxes; we account for $2.4 billion in direct spending in the state’s economy which generates another $889 million through supply chains and induces another $942.5 million in household spending. All told we provide $4.2 billion in economic impact for the state. Our colleagues are proud to work for CVS and proud to call Tennessee home.
Throughout this process and in my meetings with legislators, the PBM is regularly a topic of conversation. I understand that many of your constituents have raised concerns about the way PBMs operate, including our own PBM. I would welcome the opportunity to discuss policy solutions that improve that system, benefitting pharmacists and patients. But this bill does not address those business practices. This legislation does not change the way a PBM operates or reimburses pharmacies.
It has been argued by some that we are making a choice, choosing one business over another. What I want to make sure you understand is the complexity of that proposition in this legislation. Caremark provides a nationwide prescription benefit to over 87 million Americans, in all 50 states. I must maintain that nationwide network to meet the commitments made in contracts with national employers and the federal government itself.
In Tennessee, as in most states, Caremark doesn’t only contract with CVS Pharmacy, but with other chains, grocers, independents, almost anywhere people can get their medication. It is simply not feasible to cease a nationwide network in one state. That leaves me with only one way to comply with this legislation, ending pharmacy operations in Tennessee.
In state after state when large chains leave the market, the reality is a small portion of their pharmacies may be acquired, but the vast majority are not, and pharmacy access is lost, and patients experience the consequences. The result will be enormous disruption to patients in Tennessee.
Our company is proud to be a part of Tennessee, a place where we continue to invest. I believe we can work together to address your concerns while also keeping our pharmacies serving their communities.
Sincerely,
J. David Joyner
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