Tennessee’s FAIR Rx Act Sets Up Legal Battle over PBM Pharmacy Ownership
Tennessee passed the FAIR Rx Act, banning PBM and pharmacy-insurer ownership combinations, effective July 2028.
Why it matters: Legal teams in the healthcare and pharmacy sectors face heightened regulatory uncertainty. Court decisions on these laws could reshape PBM business models and impact pharmacy access statewide.
- Tennessee’s FAIR Rx Act, passed April 21, 2026, restricts PBMs from owning pharmacies when they also own a health insurer.
- Arkansas passed a similar law in April 2025, but it was blocked by a federal judge in July 2025 over constitutional concerns.
- CVS Health has threatened to close more than 100 Tennessee pharmacies if the law is enforced.
- Major PBMs are expected to challenge the Tennessee law, following litigation patterns established in Arkansas.
The Tennessee General Assembly passed the Freedom, Access, and Integrity in Registered Pharmacy (FAIR Rx) Act on April 21, 2026, escalating the national debate over pharmacy benefit managers’ (PBMs) ownership of retail pharmacies. The law bars entities from simultaneously owning or controlling a pharmacy, a PBM, and a health insurer within the state, and will take effect July 1, 2028.
- State Rep. Rick Scarbrough, R-Oak Ridge, said the new law ensures “entities setting the rules for prescription drug benefits are not also operating pharmacies within that system.”
- CVS Health, which owns both a PBM and retail pharmacies in Tennessee, has threatened to shutter over 100 in-state locations if the FAIR Rx Act is enforced. (WVLT)
The Tennessee move follows Arkansas’s Act 624, signed into law in April 2025 to prohibit PBM ownership of pharmacies. CVS Health and Express Scripts challenged that law, claiming it violated the Constitution’s Commerce Clause and Privileges and Immunities Clause. (Mintz)
In July 2025, a federal judge blocked Arkansas’s law with a preliminary injunction, citing likely constitutional violations. (Axios) Legal analysts expect the Tennessee law will trigger similar litigation.
Healthcare and pharmacy in-house counsel should prepare for a volatile regulatory environment, as the outcomes of these legal challenges will significantly affect PBM and pharmacy business strategies in the coming years.
By the numbers:
- April 21, 2026 — Tennessee passed the FAIR Rx Act.
- July 1, 2028 — FAIR Rx Act scheduled to take effect.
- 100+ — Number of Tennessee pharmacies CVS Health may close if law is enforced.
Yes, but: The full economic impact on independent pharmacies and consumers in Tennessee remains unclear.
What's next: Legal challenges to Tennessee’s FAIR Rx Act are expected before its July 2028 effective date.