On July 28, 2025, in Express Scripts, Inc. et al v. Richmond et al, the United States District Court for the Eastern District of Arkansas granted the plaintiffs’ motion for a preliminary injunction to prevent enforcement of Arkansas Act 624, which restricts pharmacy benefit managers (PBMs) from owning and operating pharmacies in the state. The court agreed with the plaintiffs, several PBMs and an industry trade group, that Act 624 likely violates the Commerce Clause of the U.S. Constitution and is preempted by TRICARE.
Background
PBMs act as intermediaries between prescription drug plans and the pharmacies that patients use. Some PBMs own their own pharmacies and view such vertical integration as a way to increase operational efficiencies and deliver drugs to patients at lower costs.
In contrast, some state legislatures believe vertical integration promotes anti-competitive practices by PBMs that can force independent local pharmacies out of business, thus narrowing patient choices and increasing drug prices at PBM-owned pharmacies. To address these concerns, the Arkansas legislature enacted numerous PBM regulations in recent years.
Act 624, which was signed into law on April 16, 2025, is the first of its kind and is viewed as disruptive to the industry. Act 624 prohibits PBMs from obtaining or holding, directly or indirectly, permits for the retail sale of drugs or medicines in the state, including permits for mail-order pharmacies. The law was scheduled to take effect, on January 1, 2026.
In response, major PBMs, including Express Scripts, Inc., Optum, Inc., and Caremark Rx, LLC, which own affiliated pharmacies in Arkansas, and other industry stakeholders, sued the state pharmacy board to prevent Act 624’s enforcement. These cases were eventually combined into Express Scripts, Inc. et al v. Richmond et al. The plaintiffs collectively asserted eight claims, including allegations that Act 624 violates the U.S. Constitution’s Commerce Clause and the Supremacy Clause (because it is preempted by federal laws such as TRICARE and ERISA). The plaintiffs motioned for a preliminary injunction to stop the law from taking effect until a final court decision was reached.
The Court’s Analysis
The court granted the plaintiffs’ motion for a preliminary injunction, finding they were likely to prevail on their Commerce Clause and TRICARE preemption claims (although not on their other claims) and would suffer irreparable harm absent such relief.
Regarding the Commerce Clause, the court was inclined to agree with the plaintiffs that Act 624 overtly discriminates against them as out-of-state companies and that the state failed to show it has no other means to advance local interests. The court noted that Arkansas has existing laws that minimize potential conflicts of interest in PBM-affiliated pharmacies (e.g., by requiring PBMs to reimburse local pharmacies at rates paid to PBM affiliates and by prohibiting PBMs from unfairly excluding in-state pharmacies from PBM networks). Accordingly, the court concluded that Act 624 imposed burdens on interstate commerce that were clearly excessive in relation to any supposed additional local benefits.
Furthermore, the court found that Act 624 was likely preempted by TRICARE because it interfered with the federal government’s ability to contract with PBM-owned pharmacies. The court did not believe the plaintiffs would prevail on their ERISA preemption claim since Act 624 regulated pharmacy licensing requirements and not PBMs as plan administrators but acknowledged the law would have an indirect economic impact on ERISA plans.
Employer Takeaway
Over the past decade, individual states have enacted numerous laws that seek to impose wide‑ranging reforms on PBMs and regulate PBM business practices. All 50 states have some type of PBM regulation in effect. Generally, these laws are designed to increase transparency in the market, lower prescription drug prices for state residents, and protect local pharmacies.
Arkansas’s Act 624 stands out from the rest and has gained national attention as a first-of-its-kind PBM law in terms of its broad and explicit prohibition on PBM ownership. Other states will be watching to see if Act 624 can ultimately withstand the many legal challenges.
The law essentially requires PBMs to divest or close their pharmacy businesses in Arkansas and suffer the related financial consequences. For plans and participants, the potential closures of some of the largest pharmacies in the state raise serious prescription drug access concerns, particularly for participants who regularly fill their prescriptions at CVS and other PBM-affiliated retail chains.
The district court’s recent ruling temporarily prevents Act 624 from taking effect and serves as an important reminder to state legislatures that their authority to regulate PBM activities within their states or affecting their residents is not unchecked. Rather, their efforts to protect local interests must be conducted within the confines of our federalist system.
However, it is important to recognize that the court’s opinion is just a preliminary assessment, and the Arkansas pharmacy board has already filed an appeal. Furthermore, the final outcome of the case may differ, after both sides have a chance to fully present their legal arguments.
Employers that sponsor prescription drug plans should be aware of these recent developments. Our team will continue to monitor Act 624 and other significant pharmacy benefits legislation and report relevant updates in Compliance Corner.
For further details on this court ruling, please review the order granting a preliminary injunction in Express Scripts, Inc. et al v. Richmond et al.