Republicans back anti-competition pharmacy rules despite rising drug costs

Arkansas and Tennessee have passed laws barring pharmacy-benefit managers from owning pharmacies, a move critics say will raise Medicaid expenses and limit consumer choice.

The recent housing legislation highlighted bipartisan agreement on expanding supply to lower costs, but parallel efforts in the health sector show a different trend. Arkansas became the first state to prohibit pharmacy-benefit managers (PBMs) from running pharmacies, a policy championed by Rep. Jeremiah Moore. Tennessee followed suit with HB 1959 and SB 2040, despite testimony from the Department of Revenue and TennCare that the rules would push out cheaper pharmacies and raise Medicaid spending.

Senate Finance Committee Chair Bo Watson dismissed the cost projections, and fiscal reviewers disagreed with the agencies' assumptions. A lawsuit challenging Tennessee's law has been filed, and the outcome remains uncertain. Similar bills have been introduced in eight other states and at the federal level, though national proposals like the Break Up Big Medicine Act have stalled. Critics, including health-policy analysts, warn that these anti-competition measures could undermine recent federal efforts to curb Medicaid waste and fraud.