Tennessee lawmakers advance bill to bar PBMs from owning pharmacies amid fiscal concerns

Sen. Jack Johnson, the Tennessee Senate majority leader, described legislation that would prohibit pharmacy benefit managers (PBMs) from owning retail pharmacies, saying supporters view the change as a necessary step to curb anti-competitive practices.

"Vertical integration...is anti competitive," Sen. Jack Johnson said, explaining proponents' view that a PBM-owner could steer patients to specific pharmacies. He noted the bill passed the Senate health committee overwhelmingly and cleared the Senate finance committee 9'to'2, with Johnson one of two no votes.

The debate hinges not only on policy but on cost. Johnson said fiscal staff for the state health plan estimated the measure could cost about $29 million and TennCare estimated $24 million, while the legislature's fiscal review unit reported no state fiscal impact. "That's just too big of a gap for me," Johnson said, citing his vote against the measure on principal grounds about paying for new mandates.

Backers of the bill, Johnson said, include independent pharmacies and pharmacy associations arguing that PBMs have found workarounds after prior anti-competitive statutes were adopted in 2021. He also said large chains have run advertising warning that, if the legislation passes, they might divest or close some pharmacy outlets.

Supporters say the bill would protect independent pharmacies from being disadvantaged by arrangements that direct patients to owner-controlled outlets. Opponents and some fiscal analysts say the measure could raise costs for state health plans and TennCare without a clear plan to offset them.

There was no formal vote or amendment taken at the forum; panelists agreed the legislation is likely to move forward in some form during the session. The panel did not record a definitive fiscal offset or specify the bill number during the discussion.

The forum closed with panelists noting the policy trade-offs: limiting vertical integration to preserve local pharmacies versus addressing potential state budget impacts. The bill's next procedural steps were not detailed at the event.