CVS Health sued Tennessee lawmakers hours after Gov. Bill Lee signed a law banning a pharmacy benefit manager from also owning a pharmacy.
The suit was filed Friday in U.S. District Court for the Middle District of Tennessee.
Lee signed the bill about a month after it made its way through the state legislature. State lawmakers have called the legislation pharmacy benefit manager reform. Pharmacy benefit managers are the intermediaries between pharmacies and insurance companies, negotiating drug prices.
For nearly a decade, lawmakers have been trying to rein in pharmacy benefit managers to benefit independent pharmacies. A recent state audit found that all the state’s pharmacy benefit managers reimbursed drugs at their affiliated pharmacies at higher rates than at non-affiliated stores, in some cases up to 160 times higher.
The law effectively targets CVS Health, which is the only company in Tennessee to own both brick-and-mortar pharmacy locations and a pharmacy benefit manager. CVS Health, United Health/Optum and Cigna/Express Scripts are the three largest pharmacy benefit managers controlling almost 80% of the market, according to KFF Health, an independent policy research organization.