Cigna, CVS sue to block Arkansas' PBM regulation
A new law in Arkansas that bans pharmacy benefit managers (PBMs) from operating pharmacies is being challenged in court by two of the largest companies: CVS Health’s Caremark and Cigna, the parent company of Express Scripts.
The two PBMs are seeking to block the law, which has been signed by Gov. Sarah Huckabee Sanders, from going into effect. The companies filed separate lawsuits on Thursday, arguing that the regulation violates the U.S. Constitution—specifically the Dormant Commerce Clause, the Equal Protection Clause and the Supremacy Clause.
The Dormant Commerce Clause forbids states from enacting laws that burden out-of-state businesses while prioritizing local ones. The Equal Protection Clause ensures all entities are treated fairly under the law, and the Supremacy Clause reinforces the principle that if state and federal laws conflict, the latter takes precedence.
Ostensibly, the lawsuits contend that the state is overstepping its regulatory authority by banning PBMs from owning pharmacy locations, as CVS runs 23 stores in the state.
Cigna owns Evernorth Health, a pharmacy and managed care group that also operates in Arkansas. Its business would similarly be threatened by the new law.
Proponents of the legislation, labeled Act 264, argue it is meant to protect local pharmacies from the anticompetitive business practices of PBMs, which operate as middlemen in drug distribution.
Regulators worry that PBM ownership and control of retail pharmacies would eventually push small drugstores out of business. Should that happen, consumer drug prices would rise due to lack of local competition.
The wording of Act 264 specifically mentions the Federal Trade Commission (FTC) as justification for reining in PBMs: “The FTC and the United States House Committee on Oversight and Government Reform have found evidence of anticompetitive business tactics that have driven locally operated pharmacies out of business, limiting patient choices and inflating drug prices at pharmacies owned by PBMs.”
Notably, the bill also regulates Walmart—which is involved in drug distribution and operates pharmacies in the state. The retailer's headquarters have been in Arkansas since its founding in 1962.
To comply with the law, any company operating as a PBM would need to divest from its retail pharmacies.
Act 264 is scheduled to go into effect at the beginning of 2026.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.