A sweeping new health care law is setting up a high-stakes battle over prescription drug pricing, corporate power, and patient access.
The legislation targets a controversial part of the drug supply chain, and it has already prompted warnings of pharmacy closures, job losses, and a looming federal court battle.
In April 2026, the Tennessee General Assembly passed the Freedom, Access, and Integrity in Registered Pharmacy (FAIR Rx) Act. The bill aims to limit the influence of pharmacy benefit managers (PBMs) by prohibiting companies from owning both a PBM and a pharmacy.
If enacted, the law would directly affect CVS Health (CVS), the only company in Tennessee operating both, and could redefine how prescription drugs are priced and distributed across the state.
What the FAIR Rx Act does
The FAIR Rx Act targets the vertically integrated business model used by large health care corporations.
PBMs act as intermediaries between insurers, employers, and pharmaceutical companies. They negotiate drug prices, determine which medications are covered, and influence where patients can fill prescriptions and how much they pay out of pocket.
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“As entities in the supply chain that don’t make medicine are increasingly using medicines to subsidize other parts of their business, patients and employers face increasing costs and barriers to accessing care,” said Molly Jenkins, a health communication expert with the PBM Accountability Project, which advocates for PBM transparency.
Critics argue that when a single company controls both the PBM and the pharmacy, it creates conflicts of interest that can distort pricing and limit competition.
According to official records reported by Tennessee Lookout, CVS Health spent around $1.3 million on political advertisements in Tennessee opposing the bill.
Why PBMs are under scrutiny
PBMs have faced growing scrutiny nationwide from policymakers, regulators, and physician groups. The American Medical Association has raised concerns about their impact on competition and rising drug costs.
Common criticisms include:
- High service costs charged to insurers
- Incomplete pass-through of negotiated drug rebates to consumers
- Increased insurance premiums
- Lower reimbursement rates for independent pharmacies
- Reduced competition due to industry consolidation
Supporters of the FAIR Rx Act say the measure is intended to level the playing field for independent pharmacies while improving affordability for patients.
CVS warns of closures and job losses
CVS Health has strongly opposed the legislation, warning of significant consequences if it takes effect.
The company says the law could result in:
- Closure of up to 134 pharmacies in Tennessee
- Shutdown of 25 MinuteClinic locations
- Loss of more than 2,000 jobs
CVS Health also argues that the bill fails to address core drivers of drug pricing, such as reimbursement structures and formulary decisions.
In a public statement, the company said the policy “will not lower drug costs” and could reduce access to trusted pharmacies and care providers. It has also indicated it is prepared to challenge the law in federal court.
State Senator Bobby Harshbarger pushed back on those claims, stating that any closures would ultimately be a business decision made by the company.
If signed into law, the FAIR Rx Act would take effect on Jan. 1, 2027.
Jeffrey Greenberg/Universal Images Group via Getty Images
Audit findings intensify the debate
The legislation follows heightened regulatory scrutiny of PBM practices in Tennessee.
In February 2026, the Tennessee Department of Commerce and Insurance released an audit of a CVS-affiliated PBM, identifying 11 formal findings and five additional observations. The report documented concerns related to:
- Reimbursement disparities, where affiliated pharmacies were reimbursed up to 16,150% more than independent pharmacies, according to the audit.
- Prohibited “spread pricing,” where PBMs charge insurers more than the amount they reimburse pharmacies
- Failed to provide required dispensing fees to rural and low-volume pharmacies
- Transparency and compliance issues
Tennessee Pharmacists Association CEO Dr. Anthony Pudlo said in a statement that the findings point to “systemic, harmful, and unlawful practices” that could undermine patient access and threaten independent pharmacies.
What’s at stake for Tennessee patients
The broader impact of potential pharmacy closures or shifts in how care is delivered could be significant, particularly for vulnerable populations.
According to U.S. Census data:
- Tennessee’s poverty rate stood at approximately 13.5% in 2024, above the 10.6% national average.
- The state’s population is about 7.3 million as of 2025.
- Roughly 20% of residents are enrolled in Medicare.
- 11.6% of people under 65 remain uninsured.
Research published in the Southern Medical Journal via the National Library of Medicine shows that individuals in higher-income groups live 2.5 to 4 years longer on average than those in lower-income groups.
These disparities underscore the stakes of the policy debate. Supporters argue the law will protect local pharmacy access and reduce costs, while opponents warn it could limit access to care in underserved areas.
A legal battle with national implications
Tennessee is now the second state, after Arkansas, to pass legislation restricting PBMs from owning pharmacies. With CVS Health preparing a legal challenge, the outcome could influence similar efforts nationwide.
As lawmakers, health care providers, and corporations continue to clash over the future of drug pricing and access, the FAIR Rx Act is emerging as a potential test case in the broader push to reform the U.S. health care system.
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