A new Arkansas law that would have prohibited some of the biggest health care businesses in the country, including CVS, from running pharmacies in the state was stopped Monday by a federal judge in Little Rock.
Governor Sarah Sanders, who signed the legislation at the conclusion of this spring’s legislative session, is at a loss due to the preliminary injunction issued by U.S. District Court Judge Brian Miller.company is a victory for CVS, which at one point said that the state law probably would have compelled company to close its 23 retail stores in Arkansas. The statute, which was set to take effect on January 1st, will instead be put on hold until the federal court challenge is being heard.
Any business that owns a pharmacy benefit manager, or PBM, would not have been allowed to have a pharmacy license under the Arkansas statute. PBMs are business intermediaries that manage prescription medication claims and bargain for insurance companies on their behalf. The amount that pharmacies are paid to fill prescriptions is mostly determined by them. However, health care giants that also operate their own internal pharmacy chains hold the three largest PBMs in the country, including CVS Caremark.
Independent pharmacies claim that the corporate parents of PBMs have exploited their enormous influence in the healthcare system to benefit their own pharmacy operations and that the business arrangement is fundamentally unfair. The statute that was passed this spring is the result of their persistent requests for lawmakers in Arkansas to enact stricter regulations on PBMs.
In May, ExpressScripts, another massive PBM, and CVS Caremark filed separate lawsuits against Arkansas over the statute. The federal court subsequently consolidated the four complaints into a single complaint after two more were filed.
Miller’s ruling on Monday stated that although the PBM plaintiffs’ arguments on a number of points were unsuccessful, the court predicted that they would win their case over the U.S. Constitution’s Commerce Clause, which limits the ability of states to impede interstate commerce. Miller said that it seems that the Arkansas legislation openly discriminates against plaintiffs who are out-of-state businesses.
Since the statute reveals that the state is also trying to protect locally operated pharmacies rather than just consumers and non-PBM affiliated pharmacies, including out-of-state non-PBM affiliated pharmacies like Walgreens, the state’s argument that it is only targeting a type of business structure appears to be only partially accurate, the judge said.
This is the complete order:
It’s dragon-slaying time!
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