Regulating Drug Price Managers
States Enact Laws to Regulate Pharmacy Benefit Managers, Aiming to Lower Drug Prices
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At least a dozen states passed laws in the first half of 2026 to rein in pharmacy benefit managers, the powerful middlemen that control prescription drug coverage for millions of Americans, according to Associated Press. These companies — known as PBMs — process roughly $334 billion in drug rebates each year and now control nearly 80% of the U.S. prescription market, per KFF.
The crackdown has sparked a fierce legal and political counterattack. Drug companies, PBMs, and their allies have spent at least $24 million on broadcast and digital advertising since January 2025 to fight back, according to Associated Press. CVS Health alone spent $4 million on ads in 2026 to oppose a Tennessee law that could force it to close 136 pharmacies by 2028.
Tennessee Audit Exposed a 16,000% Reimbursement Gap
State audits gave lawmakers the evidence they needed to act. A Tennessee Department of Commerce and Insurance audit found that CVS Caremark reimbursed its own affiliated pharmacies up to 16,000% more than independent pharmacies for the same drugs, according to Tennessee Lookout. A separate audit found that Express Scripts generated $30 million in "spread pricing" revenue from Tennessee employers alone.
"Spread pricing" is when a PBM charges a health plan more for a drug than it actually pays the pharmacy — and pockets the difference. Critics say this is a key reason drug costs keep rising. Tennessee has lost 620 independent pharmacies since 2017, a number lawmakers directly link to PBM reimbursement practices, Tennessee Lookout reported.
CVS and Express Scripts Sue Tennessee Over Pharmacy Breakup Law
On May 22, 2026, Tennessee Governor Bill Lee signed the FAIR Rx Act. The law bans PBMs from owning retail pharmacies in the state by 2028. Lee said the law restores a system that "protects patients and healthcare providers," according to Healthcare Dive. Within weeks, CVS Health, Express Scripts, and the industry trade group PCMA all filed separate federal lawsuits to block it.
Express Scripts warned it would shut down its Accredo specialty pharmacy in Memphis if the law stands, threatening hundreds of jobs, Fierce Healthcare reported. CVS's lawsuit calls the law "naked protectionism" and claims it benefits state lawmakers who own independent pharmacies. Legal analysts note that a similar Arkansas law was blocked by a federal judge in 2025, giving the PBM industry reason for optimism in court.
New State Laws Set Pay Floors and Force Transparency
Beyond Tennessee, states are passing laws to limit how much PBMs can keep and force them to reveal more about their dealings. Kansas set a mandatory pharmacy dispensing fee of $10.50 per prescription. Louisiana set its floor at $11.81. These fees guarantee pharmacies get paid a minimum amount for every drug they fill, according to Associated Press.
Other new laws require PBMs to share more data with clients, states, and the public. At the federal level, President Trump signed the Consolidated Appropriations Act on February 3, 2026, which includes the most significant federal PBM reforms in decades — requiring semiannual cost reporting. The FTC has also pushed hard, releasing a report in January 2025 that described "enormous markups" by the three biggest PBMs on specialty generic drugs.
Industry Spends Millions to Frame Itself as the Good Guy
The PCMA, the PBMs' main trade group, launched a "Mom's Medicine" ad campaign framing PBMs as essential tools for affordable care. PCMA CEO David Marin argued that "forcing pharmacies to close does not improve access, it takes it away," according to Fierce Healthcare. CVS paid a $45 million settlement to Louisiana in 2025 over deceptive practices related to lobbying, Associated Press reported.
Critics are not buying the industry's message. A 2026 KFF poll found 6 in 10 U.S. adults worry about affording prescriptions. Four in 10 said they skipped doses or used substitutes because of cost. Independent pharmacist Joshua Brown put it simply: PBMs act as "the referee, player, and coach on the field at the same time," according to Associated Press.
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