Risk Management

In a groundbreaking legislative move, Arkansas has enacted Act 624, which prohibits pharmacy benefit managers (PBMs) from owning or operating pharmacies within the state, effective January 1, 2026. This law represents a significant shift in the regulatory landscape, as it imposes a structural separation between PBMs and pharmacies, a departure from previous regulations that primarily focused on reimbursement and transparency. The law aims to address concerns market power and competition in the pharmacy distribution sector, reflecting a growing skepticism among state policymakers regarding the compatibility of vertical integration in this space. The implications of this law are profound for vertically integrated healthcare entities operating in Arkansas. PBMs will need to restructure or divest their pharmacy operations, as the Arkansas Board of Pharmacy is empowered to revoke licenses held by PBMs or their affiliates. The law does allow for certain exceptions, such as pharmacies that serve only their own employees and their dependents, but these carveouts are narrow and designed to maintain the laws core objectives. Additionally, the Board can issue temporary limited use permits for pharmacies dealing with rare or specialty drugs that are otherwise unavailable, but these permits will expire in 2027, introducing further uncertainty for manufacturers and patients alike. The enactment of Act 624 is expected to create a ripple effect throughout the pharmaceutical distribution chain. Manufacturers of specialty pharmaceuticals may face challenges in their distribution strategies, as the law could disrupt existing patient support programs and data-sharing initiatives tied to PBM-owned pharmacies. Furthermore, the law may lead to a realignment of market power, affecting contracting dynamics and reimbursement strategies across the industry. As Arkansas sets a precedent, other states are also considering similar regulations, indicating a potential shift toward structural separation in healthcare that could reshape the national landscape. With the laws implementation on the horizon, affected businesses must prepare for compliance and assess their ownership structures. The transition period may introduce legal risks and operational challenges, particularly for those companies that have relied on integrated PBM-pharmacy models. As the regulatory environment evolves, stakeholders across the healthcare supply chain will need to adapt their strategies to navigate the changing dynamics of pharmacy access and competition.