The Tennessee House and Senate have passed the so-called Fair RX Act after a multi-million dollar opposition campaign from pharmacy giant CVS.
The fight isn’t over. The company has said that if Gov. Bill Lee signs the bill, it will file a federal lawsuit.
“This misguided policy will lead to serious consequences for the state, including the closure of 25 MinuteClinic locations, where Tennesseans get acute and primary care, and the loss of more than 2,000 jobs,” reads a statement the company released shortly after the vote. “We’re prepared to challenge the constitutionality of this law in federal court, as we did in Arkansas.”
Arkansas passed a similar law last year. The federal court ordered Arkansas to stop enforcing the law while the legal review takes place.
What the bill does
Senate Bill 2040 and companion House Bill 1959 aim to crack down on unfair practices by big health care companies that also work in different parts of the prescription drug industry. It’s often called “the PBM bill.” That stands for pharmacy benefit manager. PBMs are private companies that work in drug contract negotiations, like middlemen. They’re involved with everyone in the process: pharmaceutical companies, pharmacies, insurance companies. They basically negotiate who pays what all the way down.
And big corporations like CVS own large shares of each of those markets. It owns the insurance company Aetna, and the pharmacy chain CVS, and the PBM called CVS Caremark, and Minute Clinics that are housed within its pharmacies, and mail-order pharmacies, and small speciality pharmacies.
Critics say this level of control over the industry gives corporations an unfair advantage over mom-and-pop pharmacies. That includes Sen. Bobby Harshbarger, an author on the bill and an independent pharmacist.
A state audit accused the company of widespread unfair practices in the state. They all boil down to one recurring complaint: The PBM that CVS owns negotiated higher payments for affiliated pharmacies than independent ones.
Ad campaign draws ire
CVS and dark money groups combined have spent more than $7 million on opposition advertisements, according to reporting from State Affairs.
During the final votes, lawmakers criticized the ads. Sen. Rusty Crowe, R-Johnson City, was among the most vocal. He was named specifically in some of the ads. He especially took issue with some of the dark money ads, which portrayed the legislation as anti-Trump.
“Many of us have had to endure false, misleading, and illegal TV ads for weeks now, run against us, trying to say that we’re doing something averse to what Trump would want us to do,” he said. “We’re doing what’s right … and I learned when I was in the Vietnam War, when you start taking on flack, you know you’re over the damn target pretty quick.”
He noted that both President Donald Trump and U.S. Health and Human Services Secretary Robert F. Kennedy Jr. have publicly criticized pharmacy benefit managers’ unfair practices.
In addition to television ads, CVS turned to social media, emails and text messages.
Sen. Charlane Oliver, D-Nashville, said she was among the recipients.
“I, like many of you, received a lot of emails about this legislation,” she said. “Quite frankly, it blew my inbox up.”
Attorney General Jonathan Skrmetti wrote a letter to CVS, saying it was an inappropriate use of patient data to send the opposition materials in text messages, and he threatened to bring action against the company.
“The better course for CVS, your customers, and the State of Tennessee is for you to stop sending these messages,” the letter reads in part. “I encourage you to choose wisely at this juncture so that further action will not be warranted.”
Potential closures
CVS’ opposition campaign stated that its 134 pharmacies in Tennessee would close. In many small communities, that would be a major loss.
Executives say that it’s impossible to operate pharmacies in the state under this legislation. The bill would make CVS choose: keep the PBM, called Caremark, in operation, or keep pharmacies in operation.
“Caremark provides a nationwide prescription benefit to over 87 million Americans, in all 50 states,” reads a statement from CVS Health Chairman of the Board and CEO David Joyner. “I must maintain that nationwide network to meet the commitments made in contracts with national employers and the federal government itself.”
Fair RX supporters have cast doubt on the closures and said throughout the legislative session that the company is playing hardball.
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