The news: CVS Health and Cigna sued Arkansas over a law barring companies with pharmacy benefit managers (PBMs) and pharmacies from operating both in the state. The parent companies filed separate lawsuits in Little Rock federal court to stop the law from going into effect, per Seeking Alpha.

Zooming out: Arkansas passed the PBM and pharmacy ban in April, and it's set to take effect in 2026. It was the first state to pass legislation barring dual operations. However, 39 states and attorneys general asked Congress last month to pass national legislation to prevent PBMs from owning or operating pharmacies.

CVS Health, which owns PBM Caremark and CVS retail pharmacies, argued it will have to close 23 pharmacies in Arkansas to abide by the law. The CEO of the Arkansas Pharmacists Association disputed that, saying CVS could keep the pharmacies open if it spins off its PBM, per the Arkansas Advocate. Cigna owns PBM subsidiary Express Scripts and Express Scripts Pharmacy and under the law wouldn’t be able to keep its mail-order pharmacy permit.

Why it matters: PBMs wield massive influence when it comes to prescription drug access and costs. They negotiate rebates with drugmakers and determine which drugs will be included on insurer formularies and Medicare Part D plans.

They’re meant to be intermediaries between drugmakers, insurers and pharmacies, but when companies own multiple players under one roof, it can tilt the playing field.

• The Big 3 PBMs processed about 80% of US prescription claims in 2024, per recently updated data from Drug Channels Institute.
• The FTC sued PBMs in September, accusing the prescription drug middlemen of artificially inflating insulin prices and collecting billions in rebates while 1 in 4 patients couldn’t afford their medication.
• PBMs allegedly reimburse their own affiliated pharmacies at higher rates than unaffiliated independents. That’s why 98% of independent pharmacies stopped stocking some or all brand-name drugs in the past six months to avoid financial losses on those medications, per a New York Pharmacists Society survey cited by Crain’s.