A law working its way through Tennessee’s legislature could serve the interests of the pharmacy industry-linked GOP lawmakers sponsoring it by reducing competition for them and their donors.
Tennessee Senate Bill 2040, according to CVS, would force it to close every pharmacy it maintains in the Volunteer State. Some of the lawmakers pushing the bill own pharmacies that could potentially benefit from the resulting dearth of competition, whereas others supporting the law are funded by business interests that themselves could gain from knocking out the state’s CVS locations.
State Sen. Shane Reeves (R), one of the bill’s sponsors, owns TwelveStone Health Partners, a pharmacy in the city of Murfreesboro, according to state ethics records. Just a five-minute drive from Reeves’s pharmacy is a CVS location, highlighting the potential for friction.
In addition to owning a pharmacy, Reeves has also accepted considerable campaign funding from organizations with a vested interest in seeing SB 2040 become law.
The American Pharmacy Cooperative, which represents the interests of independent pharmacists, for instance, has given Reeves $24,800, campaign finance records show. Independent pharmacists compete with CVS. Also representing independent pharmacies, the Tennessee Pharmacists Association has donated $24,500 to Reeves.
The Tennessee Pharmacists Association has endorsed SB 2040. The bill would force CVS to divest from a core part of its business or else close its locations in Tennessee.
Reeves is far from the only lawmaker backing SB 2040 who could stand to gain from it or who has taken money from interests that would benefit from its passage.
State Sen. Bobby Harshbarger (R) — the author and lead sponsor of the legislation — previously identified himself as the CEO of Premier Pharmacy on his LinkedIn page, which has since been scrubbed. In a recent interview, the senator described his leadership duties at the pharmacy.
Harshbarger denies holding an ownership stake in the pharmacy himself but told the Washington Examiner that he and many other members of the Tennessee General Assembly “bring industry experience to the legislature, which helps inform policy discussions affecting Tennesseans.”
Tennessee property records show that Harshbarger’s parents own the building where Premier Pharmacy operates. Harshbarger’s mother, a U.S. congresswoman, stated in a February 2022 radio interview that she and her husband own Premier Pharmacy but maintain they had “divested from it,” language that could track with the business being placed in a family trust.
In addition to managing a pharmacy, Harshbarger has also accepted $1,000 from the American Pharmacy Cooperative.
While state Rep. Rick Scarbrough (R), the lead sponsor of the bill in Tennessee’s lower chamber, hasn’t accepted significant funding from donors linked to independent pharmacies, his wife co-owns a drug store that is just a three-minute walk from the nearest CVS, demonstrating his potential stake in the legislation.
“The FAIR Rx Act is a licensure bill that addresses conflicts of interest in the marketplace by ensuring entities responsible for administering prescription drug benefits are not simultaneously operating pharmacies within the same system,” Scarbrough told the Washington Examiner. “This legislation does not seek to eliminate or hurt pharmacies or benefit managers. I’m proud of the work our pharmacists do every day serving patients across Tennessee, including the work my wife does in our community. The goal is to bring greater transparency and fairness to the marketplace for Tennesseans.”
Other lawmakers sponsoring the legislation who have taken donations from organizations representing interests that stand to gain from SB 2040 include state Sen. Ferrell Haile (R), a former pharmacy owner who has taken $44,800 from the American Pharmacy Cooperative and $23,000 from the Tennessee Pharmacist Association; Lt. Gov. Randy McNally (R), a retired pharmacist who has accepted $28,750 from the Tennessee Pharmacist Association and $1,000 from the American Pharmacy Cooperative; and state Sen. Ken Yager (R), who took $12,450 from the Tennessee Pharmacist Association.
“There is no conflict of interest,” Haile told the Washington Examiner. “Like many legislators, I receive contributions from a wide range of groups, and those donations do not dictate how I vote. I no longer practice pharmacy, and my support for this legislation is based solely on what I believe is best for my constituents. The real conflict of interest exists within the current PBM structure, where companies can control reimbursement rates, design pharmacy networks, and at the same time own the pharmacies those decisions benefit.”
For many of the lawmakers backing SB 2040, the American Pharmacy Cooperative and the Tennessee Pharmacist Association are among their top 10, or in some cases top five, all-time donors. The lawmakers have accepted thousands of dollars more from individual independent pharmacists and pharmacies.
Harshbarger, Haile, Reeves, McNally, and Yager all took contributions from pharmaceutical corporations or trade associations representing the drug industry as well. The pharmaceutical industry also stands to gain from SB 2040, seeing as the legislation targets its bitter rivals: pharmacy benefit managers.
PBMs are middlemen in the drug industry that negotiate medication prices with pharmaceutical manufacturers, insurance companies, and pharmacies. Ideally, this would lead to significantly lower overall prices; however, critics argue that PBMs, in reality, pocket much of the savings they negotiate as profit and leave consumers paying higher prices.
Further complicating matters, many PBMs own pharmacies themselves. Critics, among them Tennessee lawmakers, argue this creates a conflict of interest by allowing such firms to steer business away from independent pharmacies while themselves inflating prices. Indeed, a Tennessee state audit released in February found that CVS has reimbursed its own pharmacies at inflated rates for certain drugs.
“The legislation proposed levels the playing field in the pharmacy space where CVS/Caremark has continued to use discriminatory practices in reimbursement, spread pricing which was banned in 2021 in Tennessee, failed to pay required dispensing fees, denied due process to pharmacies, and failed to accept valid documents,” Speaker of the Tennessee House Cameron Sexton (R) said of the bill. “Also, CVS/Caremark fought against legislation that allowed the state to audit PBMs, which ended up becoming law.”
“Senate Bill 2040 addresses the structural conflict that exists when pharmacy benefit managers both control prescription drug reimbursement and own the pharmacies they steer patients toward,” Harshbarger added. “The legislation separates those roles by preventing PBMs from owning or controlling the pharmacies they reimburse.”
CVS, which has PBM and retail pharmacy arms, would be forced by SB 2040 to either divest from its PBM arm — which could have national implications — or shutter its retail pharmacies in Tennessee.
“Senate Bill 2040 would devastate pharmacy care access and affordability in Tennessee,” CVS said in a statement. “Even our more than 25 MinuteClinic locations would close, meaning patients will have to find convenient access to acute care — for things like ear infections, strep throat, and flu — elsewhere, and more than 500 patients will need to find a new primary care provider.”
“Claims that this legislation would force pharmacy closures are inaccurate,” Harshbarger told the Washington Examiner. “Divestiture requires a change in ownership, not a closure of services. Ownership transitions occur regularly in healthcare without disrupting patient care — pharmacies remain open, pharmacists remain employed, and patients continue receiving their prescriptions.”
Haile called CVS’s messaging on the legislation “scare tactics.”
CONGRESSWOMAN INTRODUCES PHARMA LEGISLATION THAT COULD BENEFIT HER FAMILY AND DONORS
A significant portion of CVS’s revenue comes from its PBM arm, making divestment complicated for the corporation.
Reeves, McNally, and Yager did not respond to requests for comment.
