A sweeping new well being care regulation is organising a high-stakes battle over prescription drug pricing, company energy, and affected person entry.
The laws targets a controversial a part of the drug provide chain, and it has already prompted warnings of pharmacy closures, job losses, and a looming federal courtroom battle.
In April 2026, the Tennessee Basic Meeting handed the Freedom, Entry, and Integrity in Registered Pharmacy (FAIR Rx) Act. The invoice goals to restrict the affect of pharmacy profit managers (PBMs) by prohibiting firms from proudly owning each a PBM and a pharmacy.
If enacted, the regulation would immediately have an effect on CVS Well being (CVS), the one firm in Tennessee working each, and will redefine how prescribed drugs are priced and distributed throughout the state.
What the FAIR Rx Act does
The FAIR Rx Act targets the vertically built-in enterprise mannequin utilized by giant well being care firms.
PBMs act as intermediaries between insurers, employers, and pharmaceutical firms. They negotiate drug costs, decide which drugs are lined, and affect the place sufferers can fill prescriptions and the way a lot they pay out of pocket.
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“As entities in the supply chain that don’t make medicine are increasingly using medicines to subsidize other parts of their business, patients and employers face increasing costs and barriers to accessing care,” mentioned Molly Jenkins, a well being communication knowledgeable with the PBM Accountability Undertaking, which advocates for PBM transparency.
Critics argue that when a single firm controls each the PBM and the pharmacy, it creates conflicts of curiosity that may distort pricing and restrict competitors.
In response to official data reported by Tennessee Lookout, CVS Well being spent round $1.3 million on political ads in Tennessee opposing the invoice.
Why PBMs are below scrutiny
PBMs have confronted rising scrutiny nationwide from policymakers, regulators, and doctor teams. The American Medical Affiliation has raised considerations about their influence on competitors and rising drug prices.
Frequent criticisms embody:
- Excessive service prices charged to insurers
- Incomplete pass-through of negotiated drug rebates to shoppers
- Elevated insurance coverage premiums
- Decrease reimbursement charges for unbiased pharmacies
- Diminished competitors attributable to trade consolidation
Supporters of the FAIR Rx Act say the measure is meant to degree the taking part in subject for unbiased pharmacies whereas bettering affordability for sufferers.
CVS warns of closures and job losses
CVS Well being has strongly opposed the laws, warning of great penalties if it takes impact.
The corporate says the regulation might end in:
- Closure of as much as 134 pharmacies in Tennessee
- Shutdown of 25 MinuteClinic places
- Lack of greater than 2,000 jobs
CVS Well being additionally argues that the invoice fails to handle core drivers of drug pricing, comparable to reimbursement buildings and formulary choices.
In a public assertion, the corporate mentioned the coverage “will not lower drug costs” and will cut back entry to trusted pharmacies and care suppliers. It has additionally indicated it’s ready to problem the regulation in federal courtroom.
State Senator Bobby Harshbarger pushed again on these claims, stating that any closures would finally be a enterprise determination made by the corporate.
If signed into regulation, the FAIR Rx Act would take impact on Jan. 1, 2027.
CVS warns about greater than 100 pharmacy closures attributable to a brand new regulation.
Jeffrey Greenberg/Common Pictures Group through Getty Pictures
Audit findings intensify the controversy
The laws follows heightened regulatory scrutiny of PBM practices in Tennessee.
In February 2026, the Tennessee Division of Commerce and Insurance coverage launched an audit of a CVS-affiliated PBM, figuring out 11 formal findings and 5 extra observations. The report documented considerations associated to:
- Reimbursement disparities, the place affiliated pharmacies had been reimbursed as much as 16,150% greater than unbiased pharmacies, in line with the audit.
- Prohibited “spread pricing,” the place PBMs cost insurers greater than the quantity they reimburse pharmacies
- Failed to supply required dishing out charges to rural and low-volume pharmacies
- Transparency and compliance points
Tennessee Pharmacists Affiliation CEO Dr. Anthony Pudlo mentioned in an announcement that the findings level to “systemic, harmful, and unlawful practices” that would undermine affected person entry and threaten unbiased pharmacies.
What’s at stake for Tennessee sufferers
The broader influence of potential pharmacy closures or shifts in how care is delivered may very well be vital, significantly for weak populations.
In response to U.S. Census information:
- Tennessee’s poverty fee stood at roughly 13.5% in 2024, above the ten.6% nationwide common.
- The state’s inhabitants is about 7.3 million as of 2025.
- Roughly 20% of residents are enrolled in Medicare.
- 11.6% of individuals below 65 stay uninsured.
Analysis printed within the Southern Medical Journal through the Nationwide Library of Medication exhibits that people in higher-income teams dwell 2.5 to 4 years longer on common than these in lower-income teams.
These disparities underscore the stakes of the coverage debate. Supporters argue the regulation will shield native pharmacy entry and cut back prices, whereas opponents warn it might restrict entry to care in underserved areas.
A authorized battle with nationwide implications
Tennessee is now the second state, after Arkansas, to go laws proscribing PBMs from proudly owning pharmacies. With CVS Well being getting ready a authorized problem, the result might affect comparable efforts nationwide.
As lawmakers, well being care suppliers, and firms proceed to conflict over the way forward for drug pricing and entry, the FAIR Rx Act is rising as a possible check case within the broader push to reform the U.S. well being care system.
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