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The efforts target UnitedHealth Group, CVS Health, and Cigna, which have expanded into multiple areas of the health care system, including insurance, pharmacy benefit management, and pharmacy operations.

State and federal lawmakers are advancing proposals that would limit the role of some of the nation’s largest health insurance companies in the prescription drug market. The efforts target UnitedHealth Group, CVS Health, and Cigna, which have expanded into multiple areas of the health care system, including insurance, pharmacy benefit management, and pharmacy operations.

Arkansas and Tennessee recently enacted laws intended to prevent companies from both managing prescription drug benefits and operating retail or mail-order pharmacies. Meanwhile, lawmakers in other states and Washington have introduced similar proposals.

Companies Challenge New Laws

The three companies have responded with lawsuits, lobbying efforts, advertising campaigns, and customer outreach. CVS filed suit in federal court shortly after Tennessee Gov. Bill Lee signed the state’s law in May. UnitedHealth, Cigna’s Express Scripts, and an industry trade association later filed additional lawsuits challenging the legislation.

The companies argue that the new laws would reduce patient access to pharmacy services and increase prescription drug costs.

Express Scripts executive Susan Peppers said the company is working to stop what it considers misguided laws from taking effect. Supporters of the legislation, however, contend that separating pharmacy benefit managers from pharmacy ownership would reduce costs by eliminating business practices they believe contribute to higher prices.

Focus Turns to Pharmacy Benefit Managers

Many of the legislative efforts center on pharmacy benefit managers, or PBMs, which negotiate drug prices and reimburse pharmacies. Critics argue that PBMs owned by insurance companies create conflicts because they can direct patients to affiliated pharmacies while reimbursing competing pharmacies at lower rates.

Florida recently opened an investigation into CVS Health over concerns involving its integrated business model, which includes an insurer, PBM, clinics, and retail pharmacies. Florida Attorney General James Uthmeier said the investigation will examine whether the company’s market position affects pricing. CVS said it would work with the attorney general to address any concerns.

At the federal level, lawmakers have introduced three proposals affecting vertically integrated health care companies. Two mirror the Arkansas and Tennessee laws, while a third would prohibit ownership of both health insurers and physician practices.

State Efforts Continue

Arkansas approved legislation last year prohibiting PBM owners from holding pharmacy licenses. A federal judge temporarily blocked the law after insurers argued it unconstitutionally favored in-state businesses. The case remains pending.

Tennessee followed with similar legislation after state Sen. Bobby Harshbarger said greater structural changes were necessary. Tennessee already prohibited companies from steering patients to affiliated pharmacies and from underpaying independent drugstores.

The companies maintain that complying with Tennessee’s law would require significant operational changes. CVS said it would need to close or sell 134 retail pharmacies in the state and could no longer mail certain specialty medications to Tennessee residents. UnitedHealth said it would have to close or divest 20 specialty pharmacies serving patients with severe mental health conditions and chronic illnesses. Express Scripts said it would close and relocate a warehouse-based pharmacy in Memphis.

Before the Tennessee bill became law, CVS spent at least $3 million on advertising opposing the measure, according to AdImpact. A separate advocacy group spent at least $1.5 million on additional advertising. CVS also sent text messages to Tennessee customers warning that pharmacies could close and encouraging them to contact lawmakers. Tennessee Attorney General Jonathan Skrmetti later directed the company to stop using its pharmacy messaging system for political advocacy. CVS said it did not send additional messages on the issue.

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