Third federal lawsuit challenges Arkansas' restrictions on pharmacy benefit managers
A woman shops at a Walmart pharmacy in Illinois. ()
A third federal lawsuit, filed Monday, challenges Arkansas' first-in-the-nation law restricting the activity of pharmacy benefit managers in the state, arguing that it limits both a competitive pharmacy market and patients' access to prescription drugs.
Pharmacy benefit managers (PBMs) negotiate prescription benefits among drug manufacturers, distributors, pharmacies and health insurance providers, and the biggest ones also own pharmacies and insurers. Navitus Health Solutions, one of the plaintiffs in Monday's lawsuit, urged lawmakers in April not to pass the bill that became Act 624 of 2025. The law bans pharmacy benefit managers from holding a permit to operate a drug store in Arkansas after Jan. 1, 2026.
In Monday's complaint, Navitus and the Pharmaceutical Care Management Association (PCMA) allege that Act 624 will unfairly prevent out-of-state companies from doing business in Arkansas in the name of keeping local independent pharmacies afloat.
'Not only does Act 624 set out to protect local businesses from competition by out-of-state businesses, but it also aims to punish a discrete population of companies for perceived misconduct,' the complaint states.
The Arkansas Insurance Department received thousands of complaints in 2024, claiming PBMs either illegally paid them below, at or just above the national average of what drugstores pay wholesalers for drugs, independent pharmacists and the department's general counsel told lawmakers last year.
Arkansas governor signs first-in-the-nation ban on drug middlemen owning pharmacies
Act 900 of 2015 required pharmacy benefit managers to pay pharmacies this average price at minimum, and the U.S. Supreme Court reviewed and upheld the law in 2020 after PCMA challenged it.
Lawmakers and the Arkansas Pharmacists Association have claimed PBMs also routinely violate two 2018 laws that prohibit them from reimbursing their affiliated pharmacies in Arkansas at a higher rate than their locally owned competitors. The plaintiffs in Monday's lawsuit claim this allegation is false.
'Arkansas has never formally alleged in any judicial proceeding that PCMA's members or Navitus has violated these laws, and such allegations would not hold up in court if ever it did,' the complaint states.
The Federal Trade Commission released an interim report in July 2024 saying PBMs are eliminating competition and increasing drug prices at the expense of patients. The report also states that three pharmacy benefit managers — OptumRx, Express Scripts and CVS Caremark — manage 79% of prescription drug insurance claims for approximately 270 million people. Lawmakers of both political parties frequently cited the FTC report when expressing support for Act 624.
CVS Pharmacy Inc., Caremark's parent company, and Express Scripts each challenged Act 624 in federal court on May 29. Similarly to Monday's lawsuit, the other two argue that the law violates the U.S. Constitution by interfering with interstate commerce. The three complaints also allege that federal law preempts state laws that affect employee health plans and Medicare coverage.
All three suits take issue with Act 624's exemption of the state's largest employer, Walmart, from the ban on PBMs owning pharmacy permits. They also claim Arkansans will lose access to mail-order and specialty pharmacy services, which are the only means of obtaining specific drugs.
The lawsuits all ask the U.S. District Court of the Eastern District of Arkansas to bar enforcement of the law as well as declare it unconstitutional.
Similarly to the CVS complaint, PCMA and Navitus' complaint calls Act 624 'unconstitutional economic protectionism, violating the foundational constitutional rule that states may not enact laws to benefit in-state economic interests by burdening out-of-state competitors.'
PCMA and Navitus complaint
'This discrimination is not justified by any legitimate, non-protectionist local interest. Even if the state could articulate such an interest, the means chosen — categorically excluding out-of-state PBM-affiliated pharmacies — are not substantially related to the achievement of that interest and are far more restrictive than necessary,' PCMA and Navitus' complaint states.
The complaint also calls Act 624 an unconstitutional bill of attainder, meaning it imposes a legislative punishment 'without the benefits and procedural safeguards of a judicial proceeding.'
PCMA and Navitus' lawsuit claims that more than 40 pharmacies that cumulatively employ more than 600 Arkansans will lose their permits and be forced to close by the end of the year. CVS claims in its lawsuit that it will be forced to close 23 pharmacies that served more than 340,000 patients and filled over 2.4 million prescriptions in 2024.
Express Scripts' complaint states that Act 624 'imperils the health' of the 50,000 Arkansans it serves, including members of the military, their families and veterans because the PBM is the primary mail-order pharmacy provider for Tricare, the military's health insurance program.
Act 624 allows the state pharmacy board to issue limited permits to PBMs if they provide 'drugs that are otherwise unavailable in the market to a patient or a pharmacy that would otherwise be prohibited' under the law.
Attorney General Tim Griffin reiterated a previous statement that he will defend Act 624 from its challengers.
'PBMs leverage their affiliated pharmacies to manipulate prices, corrupt the market, and destroy competition,' Griffin said, echoing the talking points of the law's supporters in the Legislature.
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