CVS, Express Scripts sue to block Arkansas law barring PBM ownership of pharmacies

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By Diana Novak Jones

CHICAGO (Reuters) – CVS and Express Scripts filed lawsuits on Thursday seeking to overturn an Arkansas state law set to go into effect next year that would ban pharmacy benefit managers from owning pharmacies.

The law puts an unconstitutional restriction on interstate commerce by burdening out-of-state companies like Express Scripts, which is based in St. Louis, and CVS, which is based in Rhode Island, the companies said in separate lawsuits filed in Little Rock federal court.

Express and CVS, which are among the nation’s largest pharmacy benefit managers, both seek a declaration that the law is unconstitutional and an order barring its enforcement.

Sam Dubke, a spokesperson for Arkansas Governor Sarah Huckabee Sanders, a Republican, who signed the law in April, said in a statement, “these big drug middlemen are only attacking Arkansas in the courts because they’re worried other states will join Governor Sanders in fighting for patient access and affordable prescriptions.”

The lawsuits name the executive director and members of the Arkansas State Board of Pharmacy, which regulates the state’s pharmacies, as defendants. 

In a statement, Express Scripts, which is a unit of Cigna Group, said the law will likely bar it from mailing prescriptions to thousands of Arkansas residents through its mail-order pharmacy business.

“While Arkansas politicians claim this law was designed to lower drug prices and increase access to medications, it will do just the opposite,” said Andrea Nelson, Cigna’s chief legal officer.

CVS, which operates 23 pharmacies in Arkansas, said it is exploring all possible options to keep them open, including the lawsuit.

Pharmacy benefit managers serve as intermediaries, negotiating prescription drug prices with drugmakers on behalf of employers and health plans. They also often manage pharmacy networks and operate mail-order pharmacies.

Arkansas’ law, which is set to go into effect in January, bars PBMs from receiving permits to dispense prescription medication and revokes PBMs’ existing permits, according to the legislation. 

The law is meant to cut down on anticompetitive behavior by the PBMs, which set the prices for the drugs they dispense through their pharmacies, according to the governor’s office.

PBMs’ business practices have drawn increasing scrutiny in recent years from U.S. lawmakers looking to lower drug prices, state attorneys general and from the Federal Trade Commission, which accused the three largest PBMs of driving up the cost of insulin drugs.

Michigan Attorney General Dana Nessel, a Democrat, sued Express Scripts and another PBM, Prime Therapeutics, last month over claims they conspired to reduce reimbursement rates for independent pharmacies. That litigation is ongoing, court records show.

Representatives for the PBMs did not immediately respond to requests for comment about the Michigan allegations.

(Additional reporting by Amina Niasse in New York; Editing by Leigh Jones, Bill Berkrot and Sonali Paul)