Tennessee lawmakers have passed the “Fair Rx Act,” a bill designed to prevent companies from simultaneously owning or controlling a pharmacy, a pharmacy benefit manager (PBM), and a health insurance issuer within the state. Under the legislation, any person or entity with more than 5% ownership or control in both a pharmacy and the other two entities (PBM and health insurer) would be prohibited from doing so. Supporters argue the measure aims to curb corporate consolidation in the prescription drug system, where a single company could influence insurance coverage, benefit management, and pharmacy operations, thereby reducing conflicts of interest and improving patient access to care.

The bill includes several exceptions, such as for hospital and health-system pharmacies, employer-operated pharmacies that only serve employees and their dependents, and certain federal healthcare arrangements. If signed by Governor Bill Lee, the law would take effect on July 1, 2028. Existing pharmacies that would violate the new rules would be allowed to continue operating until December 31, 2028, provided they demonstrate to the Tennessee Board of Pharmacy that they are actively pursuing a sale to an unaffiliated buyer; the board could grant one six-month extension if sufficient progress is shown. Violations could result in civil penalties of up to $10,000 per violation per day, and the pharmacy board would have authority to develop implementing rules.

CVS Health has strongly opposed the bill, warning that its passage could force the closure of more than 100 CVS pharmacies in Tennessee and the loss of over 2,000 jobs. In response, Tennessee Attorney General Jonathan Skrmetti sent a warning letter to the company’s CEO regarding political advocacy messages sent through its pharmacy text system. Supporters of the legislation have countered that CVS Caremark’s threats reflect an effort to protect an unfair system that has already led to the closure of more than 600 independent pharmacies in the state, accusing the company of prioritizing profits over patients. The bill now heads to Governor Bill Lee’s desk for consideration.