PBM Reform on Trial: Arkansas’s Landmark Law Faces Legal Test

Pharmacy Benefit Managers (PBMs) have become some of the most scrutinized players in the U.S. healthcare system, attracting attention from regulators and legislators alike. Positioned at the intersection of insurers, manufacturers, and pharmacies, PBMs establish formularies, negotiate manufacturer rebates, and set reimbursement rates for pharmacies.

While these functions can generate cost efficiencies, they also confer substantial market power.[1] That concentration of influence is evident in the dominance of just three entities (CVS Caremark, Express Scripts, and OptumRx) which together manage the vast majority of U.S. prescriptions.[2]

Recognizing the weight of this market control, lawmakers have increasingly turned to PBM reform as a means to address drug costs, preserve competition, and protect patient access.[3] In 2025 alone, numerous states advanced legislation aimed at greater transparency, ownership restrictions, and tighter contractual
oversight.[3]

KEY POINTS

• Arkansas’s HB1150 (Act 624) bans PBMs from owning or operating retail pharmacies, with limited exceptions for restricted-distribution drugs.
• The law was set to take effect January 1, 2026, but a federal judge issued a preliminary injunction blocking enforcement.
• Healthcare organizations may find it helpful to review PBM compliance, document operations carefully, and consult legal counsel regarding potential regulatory exposure.

What is Act 624: Arkansas’s Ban on PBM-Owned Pharmacies

In April 2025, Arkansas broke new ground when Governor Sarah Huckabee Sanders signed HB1150 (Act 624), making the state the first in the nation to ban PBMs from owning or operating retail pharmacies.[4] The statute was intended to take effect on January 1, 2026, barring PBMs—whether parent entities, subsidiaries, or affiliates—from holding pharmacy permits directly or indirectly.

An exception allows “limited use” permits for PBM-owned pharmacies dispensing rare, orphan, or other restricted-distribution drugs, although that provision is set to expire in 2027. The law also restricts manufacturers’ use of limited distribution networks to control access.[5] Its implementation, however, has been temporarily blocked following a preliminary injunction issued in July 2025.

The act drew national attention and rapid legal pushback; in May 2025, CVS Health and Cigna’s Express Scripts filed federal lawsuits contesting Act 624.[6] They argue that prohibiting PBMs from owning pharmacies interferes with interstate commerce and raises constitutional concerns.

The companies also contend that vertically integrated models (where PBMs operate with insurers and pharmacies) streamline operations, secure rebates, and reduce costs. From their perspective, dismantling these arrangements could undermine efficiency and limit patient access.[7]

Federal Lawsuits and Injunctions Blocking Act 624 Enforcement

By late July, a federal judge issued a preliminary injunction blocking enforcement while litigation proceeds.[8] The order emphasized plaintiffs showed both a likelihood of success on the merits and potential for irreparable harm if the statute were implemented prematurely. The consolidated case, Express Scripts, Inc. v. Richmond in the Eastern District of Arkansas, is being closely watched by legal and industry observers.[9]

The attorneys at Boesen & Snow Law help businesses, practices, and pharmacies navigate PBM-related compliance and legal matters. If you are a licensed professional or healthcare organization facing legal uncertainties, we can provide legal guidance.

Act 624 Impact: Compliance and Legal Considerations for Healthcare Providers

Arkansas is not alone; in fact, all 50 states have enacted some form of PBM regulation. Legal analysts suggest Act 624 could establish a precedent for how states are permitted to regulate PBMs. If Act 624 is upheld, other states may be encouraged to follow; if struck down, the decision could reinforce limits on state authority in a system largely governed by federal oversight.

Whatever the ruling, the trajectory is clear: states are moving decisively to expand their role in PBM reform, even as courts determine where the legal boundaries lie.

As states continue testing the limits of PBM oversight, the regulatory landscape for pharmacies and healthcare organizations is shifting rapidly. 

If your business, practice, or pharmacy is navigating PBM-related compliance questions or facing legal uncertainties stemming from new legislation, the attorneys at Boesen & Snow can help you evaluate your risks and understand your options moving forward.

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FAQs: Arkansas PBM Law 2025, Act 624 Litigation, and Compliance

What is Act 624 and who does it affect?

Act 624 bans PBMs from owning or operating retail pharmacies in Arkansas, with temporary exceptions for rare or restricted-distribution drugs. It applies to PBMs, affiliates, and subsidiaries holding pharmacy permits.

Why is Act 624 being challenged in court?

PBMs including CVS Health and Express Scripts argue the law interferes with interstate commerce and violates constitutional protections, claiming it could disrupt efficient PBM-pharmacy-insurer models.

What does the federal injunction mean for PBMs and pharmacies?

The preliminary injunction blocks enforcement of Act 624 while litigation continues. This means PBMs and affiliated pharmacies are not required to comply immediately and can continue operations as before until the court rules.

Could Act 624 influence PBM regulations in other states?

Yes. If the law is upheld, it could encourage other states to adopt similar PBM ownership restrictions. If struck down, it may reinforce limits on state authority over PBMs, clarifying how far states can regulate pharmacy benefit managers.

What steps should pharmacies and healthcare organizations take to comply with Act 624?

Organizations should review all PBM contracts, maintain detailed documentation of PBM interactions, monitor litigation developments, and consult legal counsel experienced in PBM compliance and state regulations to minimize regulatory risk.

References

1. Commonwealth Fund. Pharmacy benefit managers and their role in drug spending. An Explainer. Published 2019.
2. HMP Global. The 2025 economic report on U.S. pharmacy benefit managers. Drug Channels Institute.
3. Pharmacy Times. PBM reform takes off in 2025. Published June 2025.
4. Bass, Berry & Sims. Arkansas restricts PBM ownership of pharmacies and limits manufacturers’ use of limited distribution networks. Published 2025.
5. Whitecase. Arkansas bans PBMs from owning pharmacies, escalating scrutiny of vertical integration in pharmacy distribution.
6. Moritz K. Two federal lawsuits challenge Arkansas anti-PBM law. Arkansas Advocate. Published May 29, 2025.
7. Healthcare Dive. CVS, Cigna sue Arkansas over new PBM law. Published May 2025.
8. Healthcare Dive. Judge blocks enforcement of Arkansas PBM-pharmacy law. Published July 2025.
9. Miller & Chevalier. The ERISA Edit: Federal court blocks Arkansas PBM law. Published August 2025.
10. Silverman E. Arkansas PBM law faces constitutional test amid lawsuits. STAT News. Published July 29, 2025.
11. Rightway Healthcare. PBM reform: A closer look at state legislation this year. Published 2025.