CVS Health is effectively telling Tennessee lawmakers, “Nice pharmacy bill you’ve got there. Shame if something happened to 134 stores.” The company says a proposal targeting pharmacy benefit managers, or PBMs, would force it to shut every CVS pharmacy in the state and wipe out thousands of jobs. Sponsors of the bill say that it is scare tactics in response to a blistering state audit that found a PBM affiliate tied to CVS paid its own pharmacies far more than unaffiliated drugstores.
What the bill would do
SB 2040, the FAIR Rx Act (with companion bill HB 1959), would bar any PBM from directly or indirectly acquiring, holding, or controlling a pharmacy license in Tennessee and would require detailed ownership disclosures and divestiture timelines, according to the Tennessee General Assembly. Sponsors and co-sponsors have framed the proposal as a way to curb what they call “self-dealing” inside vertically integrated giants that own insurers, PBMs, and the pharmacies they pay. The measure was placed on the Senate Health and Welfare Committee calendar for Wednesday, per the legislative website.
State audit at the center of the fight
The showdown traces back to an audit by the Tennessee Department of Commerce and Insurance, which found that the PBM affiliate of CVS reimbursed its own pharmacies at higher per-unit rates than unaffiliated Tennessee pharmacies for hundreds of drugs and dosages. The report flags 661 out of 3,646 dosages in which affiliated pharmacies received higher reimbursements than non-affiliated competitors and highlights some eye-popping examples, including a 16,510% per-unit difference for cinacalcet 60 mg and 9,927% for tadalafil 20 mg, according to the Tennessee Department of Commerce and Insurance.
CVS warns of closures and access headaches
CVS has fired back, arguing that lawmakers are playing with fire and that the bill would blow up access to care. In a statement reported by the Knoxville Daily Sun, the company said the law would force the closure of all 134 CVS retail locations in Tennessee, along with several specialty pharmacies and MinuteClinic sites, and would "cost thousands of jobs."
Policy watchers also note that any move against PBMs in Tennessee is unlikely to stay in Tennessee. The three largest PBMs handled roughly 79% of prescription claims in 2023, a level of market concentration that means a tough state law in one place can send ripples through contracts and practices nationwide, according to analysis by KFF.
Lawmakers call the warning "fearmongering."
Backers of the FAIR Rx Act are not buying CVS’s doomsday scenario. Sen. Bobby Harshbarger, a sponsor of the bill and a practicing pharmacist, told reporters that the company is dramatically overstating what the measure would actually do. The bill focuses on forcing PBMs to divest from pharmacy ownership rather than automatically yanking pharmacy licenses, he said.
Tennessee Lookout quoted Harshbarger as saying, “Divestment does not equal closure,” and noted that several co-sponsors of SB 2040 have pharmacy backgrounds, which helps explain why they are taking the audit findings personally.
Who is pushing the bill?
The Tennessee Pharmacists Association and independent pharmacists have become the bill’s loudest cheerleaders, arguing that the audit simply puts numbers to behavior they have complained about for years. In a Feb. 12 release, the association urged lawmakers to move quickly on PBM reforms and called the state’s findings a “wake-up call” that shows what it described as systemic violations by a PBM affiliate affecting local pharmacies and their patients, according to the Tennessee Pharmacists Association.
Legal precedent and likely fights
Tennessee is not the first state to test how far it can go in telling PBMs where they can and cannot do business. Arkansas passed a similar ownership ban in 2025 and was immediately slapped with lawsuits from CVS and other PBMs. A federal judge temporarily blocked that law on Commerce Clause and federal-program preemption grounds, highlighting the legal headwinds Tennessee is likely to face if its own bill advances, according to reporting by AP. Legal experts say challenges built around interstate commerce and federal preemption are expected whenever states try to regulate PBM ownership and control.
Where the bill stands and what's next
The legislature’s fiscal note warns that TennCare and the state group insurance program could see higher short-term costs depending on how pharmacy networks and reimbursement rates shift, while acknowledging that the longer-term budget impact is unknown. The Tennessee General Assembly currently lists SB 2040 as moving through committees this month, which means amendments and key votes could land quickly.
For now, Tennesseans are watching a high-stakes political and legal brawl that pits a scathing state audit and a cadre of pharmacy advocates against a national chain warning of mass closures. Dr. Anthony Pudlo, CEO of the Tennessee Pharmacists Association, has called the audit a "wake-up call" for lawmakers and employers and urged swift reforms to protect patient access to medications, according to the Tennessee Pharmacists Association.
