Imagine being told that the pharmacy handling your prescriptions has to change hands or shut down—not because it has failed its patients, but because lawmakers object to its corporate ownership. That possibility is at the center of restrictions Arkansas and Tennessee have adopted for pharmacies connected to pharmacy benefit managers.
PBMs negotiate drug prices, administer prescription benefits, and build pharmacy networks for insurers and employers. Some are part of corporate groups that also own health insurers, mail-order pharmacies, or retail drugstores. Common ownership can reduce administrative costs and help coordinate care, though it can also concentrate market power.
As an economist, I’m not convinced that banning a particular business structure is the right way to address those concerns. Any reform should be judged by whether it helps patients, rather than by whether it weakens one group of companies.
Arkansas passed Act 624 in 2025, barring PBMs from holding pharmacy permits. A federal judge blocked enforcement before the law took effect, and the state has appealed. Tennessee’s FAIR Rx Act is due to take effect on July 1, 2028. In general, it prevents a corporate group from having more than a 5% stake in a pharmacy while also controlling a PBM and a health insurer. Companies that cannot meet the requirements may have to sell their pharmacy operations.
The states’ worries are understandable. A PBM that decides which pharmacies join its network and what they are paid could have a reason to favor pharmacies affiliated with its own company.
Still, an ownership ban is a blunt response. It targets how a company is organized without first showing that breaking it apart will reduce costs or protect access. When pharmacy operations and a PBM work within the same company, that arrangement may offer logistical benefits, clinical support, and easier coordination for people with complex prescriptions. Those advantages aren’t guaranteed, of course. Consolidation can also obscure costs and put competitors at a disadvantage.
The practical question is what happens to patients if companies are forced to separate. CVS has said Tennessee’s law could require it to sell or close 136 pharmacies and end some mail-order services. That is the company’s estimate, not proof that those locations will close. Even so, lawmakers should have a clear answer to a basic question before ordering a sale: if current providers leave, who will fill those prescriptions?
Access to pharmacies is already fragile in many parts of the country. A 2025 study estimated that 57.1 million Americans live in pharmacy deserts, while another 28.9 million rely on a single pharmacy and may have few nearby alternatives if it disappears. Those estimates don’t show that ownership restrictions will cause closures. They do point to the potential cost of disrupting access, even unintentionally.
Independent pharmacies play an important role in many communities, and their concerns about reimbursement and patient steering deserve attention. But the fact that a local drugstore may struggle to match a national chain’s delivery network or specialty services does not, on its own, show that larger companies should be barred from operating that way. Pharmacies should compete on how well they serve patients, regardless of who owns them.
Lawmakers have alternatives. They can require clearer reimbursement terms, stronger audits, safeguards against steering patients toward affiliated pharmacies, and action against deceptive pricing. Congress has also passed PBM reforms for Medicare Part D, with significant provisions scheduled to begin in 2028. Those measures should have a chance to take effect before lawmakers conclude that broad divestitures are necessary.
Forcing these businesses apart could cost patients useful services. Regulators have sometimes blocked new business practices in ways that protect established competitors and make it harder for new ideas to take hold. That history is worth keeping in mind when trying to reshape a complicated industry.
Arkansas and Tennessee have chosen to separate PBMs from pharmacies, judging that the loss of integration and potential efficiencies will be outweighed by other benefits. That may prove to be the case, but complex markets and supply chains are difficult to redesign through regulation alone. Lawmakers should focus on protecting patients, not deciding in advance which business models are allowed to succeed.
