Caremark and ESI each seek injunctive relief to prevent the implementation and enforcement of Act 624, as well as a declaration that the law is unconstitutional and preempted by federal law.

On May 29, 2025, two of the nation’s largest pharmacy benefit managers (PBMs), Caremark Rx LLC and Express Scripts Inc. (ESI), along with their pharmacy affiliates, initiated separate lawsuits against the Arkansas State Board of Pharmacy to block enforcement of Arkansas’ first-of-its-kind law regulating PBMs. The Arkansas law, Act 624, entitled, “An Act to Prohibit a Pharmacy Benefits Manager from Obtaining Certain Pharmacy Permits,” will block PBMs from providing pharmacy services in Arkansas via pharmacies in which they have a direct or indirect interest. Caremark and ESI each seek injunctive relief to prevent the implementation and enforcement of Act 624, as well as a declaration that the law is unconstitutional and preempted by federal law.

Act 624 expressly relies upon the findings of an interim report issued by the Federal Trade Commission and a report from the U.S. House Committee on Oversight and Government Reform that anticompetitive business tactics by PBMs are driving independent pharmacies out of business, thereby limiting patient choices and inflating drug prices at pharmacies owned by PBMs. To address this concern, Act 624 prohibits PBMs from obtaining or holding, directly or indirectly, a permit for the retail sale of drugs or medicines in the state of Arkansas, including permits for mail-order pharmacies. The law is set to become effective on January 1, 2026.

ESI, a subsidiary of the Cigna Group, does not have any affiliated brick-and-mortar pharmacies in Arkansas, although it does provide mail-order pharmacy services in the state. In its complaint, filed in the U.S. District Court for the Eastern District of Arkansas, ESI[1] alleges that Act 624 violates the U.S. Constitution’s dormant commerce clause, privileges and immunities clause and bill of attainder clause. ESI further alleges that Act 624 is preempted by the U.S. Defense Department’s TRICARE program, which delivers military health benefits through private contractors. Express Scripts, Inc. et al. v. Richmond et al., Case No. 25-cv-0520 (D. Ark. 2025, compl. filed May 29, 2025).

Unlike ESI, Caremark operates 23 retail pharmacies in Arkansas, as well as mail-order and specialty-pharmacy services. In its complaint, also filed in the U.S. District Court for the Eastern District of Arkansas, Caremark similarly alleges that Act 624 is constitutionally infirm under the U.S. Constitution’s dormant commerce clause, but also alleges that Act 624 violates the equal protection clause. With respect to preemption, Caremark alleges that Act 624 is preempted by the Employee Retirement Income Security Act of 1974, or ERISA, and the Medicare Modernization Act. CVS Pharm. Inc. et al. v. Arkansas State Board of Pharm. et al., Case No. 25-cv-0524 (D. Ark. 2025, compl. filed May 29, 2025).

Arkansas Attorney General Tim Griffin stated that Arkansas intends to defend Act 624. Similar laws have recently been introduced in Vermont, Texas and New York, meaning the outcome of ESI’s and Caremark’s lawsuits will have consequences outside of Arkansas. And this issue has drawn attention at the federal level, including the recent Patients Before Monopolies Act introduced by Senators Elizabeth Warren, D-Mass., Josh Hawley, R-Mo., and others, which would similarly prohibit a parent company of a PBM or an insurer from owning a pharmacy business and require divestment in such circumstances. All of these legislative initiatives, including Act 624, are part of a continued effort by lawmakers to try to provide greater protections for independent pharmacies confronting anticompetitive business tactics by PBMs.

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Notes

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