CVS Sues Tennessee Over New Law Banning Pharmacy Benefit Manager Monopolies
CVS Health filed a federal lawsuit challenging Tennessee’s new law that bans pharmacy benefit managers from owning pharmacies, threatening to close 136 stores statewide.
NASHVILLE, TENNESSEE — CVS Health filed a federal lawsuit against Tennessee on Friday, just hours after Governor Bill Lee signed legislation that prohibits pharmacy benefit managers from owning pharmacies.
The company filed the suit in U.S. District Court for the Middle District of Tennessee, challenging what it calls an unconstitutional law that targets its business model.
New Law Targets Pharmacy Benefit Manager Practices
Lee signed the pharmacy benefit manager reform bill approximately one month after it passed through the state legislature. The legislation specifically addresses pharmacy benefit managers, or PBMs, which serve as intermediaries between pharmacies and insurance companies to negotiate drug prices.
State lawmakers have spent nearly a decade attempting to regulate PBMs to benefit independent pharmacies. A recent state audit revealed that all of Tennessee’s PBMs reimbursed drugs at their affiliated pharmacies at significantly higher rates than at non-affiliated stores, with some cases showing reimbursement rates up to 160 times higher.
CVS Threatens Legal Action and Store Closures
The law effectively singles out CVS Health, which is the only company in Tennessee that owns both brick-and-mortar pharmacy locations and a PBM. According to KFF Health, an independent policy research organization, CVS Health, United Health/Optum, and Cigna/Express Scripts are the three largest PBMs controlling almost 80 percent of the market.
“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,” said Amy Thibault, a CVS spokesperson, 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.”
When the bill was first introduced, CVS threatened to close its 136 pharmacies in Tennessee. The company invested millions of dollars in an advertising campaign throughout the spring in an unsuccessful attempt to defeat the legislation before its passage.
Arkansas Case Sets Precedent for Legal Challenge
Tennessee’s legislation mirrors similar law passed by Arkansas lawmakers in 2025. CVS threatened to close its nearly two dozen pharmacies in Arkansas following that state’s action.
CVS and several other PBMs sued Arkansas over its law, and a federal judge blocked the legislation from taking effect. The judge cited federal laws that prevent states from enacting excessive regulations on out-of-state businesses. That case remains ongoing.
The Tennessee lawsuit represents the latest escalation in the ongoing battle between state legislators seeking to reform pharmacy benefit manager practices and major healthcare corporations defending their integrated business models. The outcome could influence how other states approach similar regulatory measures affecting the pharmaceutical industry.
