CVS sues Tennessee over pharmacy benefit manager monopoly law

CVS Health sued Tennessee lawmakers on Friday hours after Gov. Bill Lee signed a law banning a pharmacy benefit manager from also owning a pharmacy.

The suit is filed in U.S. District Court for the Middle District of Tennessee.

Lee signed the bill about a month after the bill made its way through the state legislature. State lawmakers have called the legislation pharmacy benefit manager, or PBM, reform. PBMs are the intermediaries between pharmacies and insurance companies, negotiating drug prices.

For nearly a decade, lawmakers have been trying to rein in PBMs to benefit independent pharmacies. A recent state audit found that all the state’s PBMs reimbursed drugs at their affiliated pharmacies at higher rates than at non-affiliated stores, in some cases up to 160 times higher.

The law effectively targets CVS Health, which is the only company in Tennessee to own both brick and mortarpharmacy locations and a PBM. CVS Health, United Health/Optum, and Cigna/Express Scripts are the three largest PBMs controlling almost 80% of the market, according to KFF Health, an independent policy research organization.

“We will exhaust all options we can to continue to provide pharmacy and health care services to our 1.5 million Tennessee pharmacy patients and will be filing a lawsuit this afternoon challenging the constitutionality of this law in federal court,” Amy Thibault, a CVS spokesperson, said in a news release. “This unconstitutional law puts special interests and local politics ahead of patients, restricting their access to life-saving medications and undermining fair competition.

CVS blankets Tennessee airwaves, enlists mass texts to fight Pharmacy Benefit Manager bill

In 2025, Arkansas lawmakers passed legislation similar to Tennessee’s, with CVS threatening to close its nearly two dozen pharmacies in that state. CVS and several other PBMs sued, and a federal judge blocked the law from taking effect, citing federal laws that prevent states from enacting excessive regulations on out-of-state businesses. The case is ongoing.

When the bill was first introduced, CVS threatened to close its 136 pharmacies in Tennessee. The company spent millions of dollars on an advertising campaign throughout the spring to unsuccessfully defeat the legislation before its passage.

Tennessee’s top lawmakers enjoy a close relationship with independent pharmacies and the group’s trade organization, the Tennessee Pharmacists Association.

The bill’s Senate sponsor, Bobby Harshbarger, a Kingston Republican, owns a pharmacy. The bill was also co-sponsored by Lt. Gov. Randy McNally of Oak Ridge and Sens. Shane Reeves of Murfreesboro and Ferrell Haile of Gallatin, all pharmacists by trade. In the House, Speaker Cameron Sexton, a Crossville Republican, also co-sponsored the legislation, and his wife is a pharmacist.

Over the past five years, the Tennessee Pharmacists Association political action committee has donated over $230,000 to state lawmakers, while CVS has given less than $10,000.

The lawsuit