As a Result of PBM Reform, CVS Will Close Over 20 Pharmacies in Arkansas
CVS releases a statement shortly after HB1150 was signed in Arkansas, prohibiting pharmacy benefit managers from owning pharmacies.
CVS plans to close up to 23 of its pharmacy locations in Arkansas as a result of the signing of HB1150, which bans pharmacy benefit managers (PBMs) from owning pharmacy storefronts.1,2 This statewide event could serve as a precursor to significant change in the US pharmacy industry if similar federal bills are signed into law.
“For far too long, drug middlemen called PBMs have taken advantage of lax regulations to abuse customers, inflate drug prices, and cut off access to critical medications. Not anymore,” Sarah Huckabee Sanders, governor of Arkansas, said to KARK.1 “These massive corporations are attacking our state because we will be the first in the country to hold them accountable for their anticompetitive actions, but Arkansas has never been afraid to be a conservative leader for America.”
Arkansas Capitol building in Little Rock | image credit: pabrady63 / stock.adobe.com
CVS Health owns a total of 23 pharmacies in the state of Arkansas. Under the new bill, permits for PBM-affiliated pharmacies will either be revoked or not renewed.3 While many experts believe this move will result in greater medication access and lower drug prices, CVS representatives believe the opposite.
READ MORE: Executive Order to Limit PBM Control, Lower Drug Costs
“CVS Health welcomes a good faith discussion with policymakers in Arkansas and across the country on ways to make medicine more affordable and accessible,” CVS said in a statement.1 “Unfortunately, HB1150 is bad policy that accomplishes just the opposite: it will take away access to pharmacy care in local communities, hike prescription drug spending across the state by millions of dollars each year, and cost hundreds of Arkansans their jobs.”
Continuing the ongoing debate between PBMs and community or independent pharmacists, this instance of recent PBM reform has yet to reach nationwide parameters. However, based on the events that follow Arkansas’ passing of HB1150, federal lawmakers could follow suit if the new bill makes a significant impact on patients in the state.
Before understanding how banning PBM ownership of pharmacies can trickle into a national issue, it’s important to understand why this previous ownership presented a conflict of interest in states like Arkansas.
“I don’t think that PBMs should be allowed to own pharmacies in any way. I think that if you are a PBM, your job is to be a fiduciary of making sure that a health plan, a union’s plan, an employer’s plan spend[s] as little as possible on drugs while making sure that people are able to get the drugs that they need. If you are also a pharmacy, a pharmacy’s shareholder value perspective is to sell as many drugs as possible at the highest price possible. The opportunities for a PBM to manipulate pricing and where drugs go to—for their own benefit—is just far too tempting for anybody,” said Benjamin Jolley, PharmD, a third-generation pharmacist and independent pharmacy operator in Salt Lake City, Utah.4
Market-leading PBMs that own pharmacies establish a conflict of interest. Since the PBMs’ goal has been to maximize profits and reduce costs for themselves, pharmacies that dispense the medications and the patients who receive them have historically suffered because of it. Amid other PBM practices that reform advocates are aiming to abolish, this ownership issue has removed the key pharmaceutical conflict of interest in the state of Arkansas.
However, HB1150 is not the only bill banning PBMs from owning pharmacies. The nomenclature for the federal version of this bill is known as the Patients Before Monopolies Act, or the PBM Act for short, and it too prohibits PBM parent companies from owning pharmacies.5 With its tongue-in-cheek name, this bill has bipartisan support in Congress and could be a much greater win for PBM reform advocates across the country.
But the federal signing of the PBM Act would also mean mass pharmacy closures and an unprecedented change to how prescription drugs are distributed in this country. On the other hand, this is just one solitary bill from 1 of 50 US states. The time for full PBM reform is still a ways away as advocates continue to push for a slew of federal bills to pass.
“PBMs have increasingly taken advantage of their position as price negotiators to benefit pharmacies they own and operate by distorting the market and crushing independent pharmacies,” Tim Griffin, attorney general of Arkansas, said in response to the bill’s signing.6 “Arkansas consumers lose because we pay higher prices for drugs we rely on every day. I led a bipartisan coalition of attorneys general calling on Congress to stop PBMs from owning pharmacies, and I applaud the General Assembly and Governor Sanders for making Arkansas the first state to stand up to PBMs.”
READ MORE: National Association of Attorneys General Urges Congress to Prohibit PBM-Owned Pharmacies
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