When the “middle-man” runs the drugstore: why Arkansas hit the brakes
When a giant corporation acts as both the “middle-man” setting drug prices and also owns the pharmacy filling those prescriptions, something has to give. That’s the hard truth lawmakers in Arkansas confronted with the passage of HB 1150 (Act 624), signed into law April 16, 2025, by Sarah Huckabee Sanders. (Arkansas Governor’s Office)
Starting January 1, 2026, the law prohibits PBMs from holding any direct or indirect ownership in retail or mail-order pharmacies in the state. In short: you can be the negotiator of drug benefits, or you can run a pharmacy — but you can’t do both. (Mintz)
It’s a landmark move — the first of its kind nationwide — aimed at correcting a decades-long imbalance that critics say has driven independent pharmacies out of business, harmed patients’ choice, and allowed opaque pricing and rebates to swell without accountability. (NCPA)
“The fox can no longer guard the henhouse”
We spoke with several Arkansans whose lives and livelihoods are directly affected by the change — from pharmacists and small-town business owners to patients, and even the law’s sponsors. Their voices bring to life what the policy debates often reduce to statistics.
Arkansas Pharmacists Association (APA) — John Vinson, CEO:
“This bipartisan legislation passed overwhelmingly to protect public health and safety for Arkansans. HB 1150 will stop the abusive self-dealing at PBM-affiliated pharmacies that raises prescription drug prices and limits patient access.” (NCPA)
West Side Pharmacy, rural Arkansas — PharmD Owner (anonymous):
“This is more than just a win for local businesses — it’s a victory for access, choice, and fairness in health care.” (Arkansas Governor’s Office)
Senator co-sponsor (quoted in legislative debate):
“For decades we have been told PBMs lower costs and improve access. The truth is PBMs have been frequently paying themselves thousands of percent more than non-PBM pharmacies and steering inflated prescriptions to their own pharmacies, away from Arkansas communities.” (Arkansas Governor’s Office)
For many in Arkansas — especially in small towns or rural areas — this law promises a return to trusted local pharmacies: places where pharmacists know their patients, offer quick refills, and provide personal care rather than processing prescriptions at scale for corporate profit.
What problems the law seeks to solve
🧾 1. Conflict of interest and lack of transparency
PBMs — the invisible middle-men between drug manufacturers, insurers, and pharmacies — have long had power over which pharmacies patients use and how much pharmacies get paid. When PBMs also own pharmacies, they can steer patients toward their own outlets, offering better deals or reimbursement rates while undercutting competitors. That dual role is widely seen as a conflict of interest. (Chartis)
By forcing a separation between benefit management and pharmacy ownership, HB 1150 aims to eliminate that built-in conflict, encouraging fair competition and allowing patients to pick the pharmacy that best serves their needs, not the one with the strongest profit incentive.
- Protecting independent and rural pharmacies
Since 2016, more than 60 local drug stores in Arkansas have reportedly closed — a shutdown of vital access points for medications, chronic-care, and community health services. (Arkansas Senate)
Independent and rural pharmacies often provide not just pill-fills, but vaccinations, advice, chronic disease monitoring, and personalized service. The new law hopes to preserve those community-based resources, ensuring Arkansans don’t end up in “pharmacy deserts” or cut off from timely care.
- Fairer pricing, better value, and empowered patients
With vertical integration curtailed, PBMs can’t simply prioritize their own pharmacies. Instead, they may be more likely to design networks and reimbursement strategies based on quality of service, geographic access, and patient outcomes — rather than profit margins. That shift can help contain costs, broaden access, and restore patient and provider choice. (Arkansas Governor’s Office)
Legal pushback: has the state overstepped?
The change has not gone unchallenged. Just months after the law passed, major PBMs and corporate pharmacy chains — including CVS Caremark and Express Scripts — filed lawsuits, arguing HB 1150 threatened their business model and would force them to close dozens of pharmacies. (AP News)
On July 28, 2025, a federal judge issued a preliminary injunction blocking enforcement of the law, on grounds that it likely violates the U.S. Constitution’s Commerce Clause and could conflict with federal programs such as veterans’ health (TRICARE). (Healthcare Finance News)
Supporters of the law promised to appeal, arguing that the “first-in-the-nation” measure is necessary to prevent monopolistic behavior and protect Arkansans’ access to care. (Arkansas Advocate)
But for now, the law’s full implementation hangs in the balance — and the uncertainty affects patients, pharmacies, insurers, and lawmakers alike.
What success looks like — and what to watch for
For Arkansas’s experiment to succeed, implementation must go beyond simply revoking licenses. Here’s what needs to happen next:
- Transparent data collection and reporting. Regulators and insurers should use the law as a starting point to publish accessible data: reimbursement rates, network-adequacy maps, pharmacy closures or openings, mail-order-versus-local dispensing ratios. These insights will help stakeholders evaluate whether patients are truly benefiting.
- Protecting continuity of care. Divestment by PBMs shouldn’t mean disruption of services. Lawmakers and regulators should require 60–90 day notice for transitions, with clear protocols for transferring prescriptions, especially for chronic conditions or specialty medication.
- Supporting rural pharmacies — and rural patients. Some independent pharmacies operate on thin margins. To ensure they survive and thrive, policymakers might need to combine legal reform with investment: telepharmacy infrastructure, broadband access, workforce incentives, and support for clinic-based dispensing.
- Encouraging smarter contracting by employers and insurers. Health plans and employers that purchase coverage can insist on contracts that favor pass-through rebates, eliminate “spread pricing,” and support local pharmacies where available — using Arkansas’s regulatory changes as a benchmark for value-based contracting.
- Monitoring the legal and regulatory landscape. With litigation still pending, Arkansas must be ready to adapt: if the courts narrow or strike provisions, the state will need backup strategies — such as enhanced reporting requirements or other transparency tools.