CVS said it would close all 134 of its pharmacy locations in Tennessee if the state enacts legislation that takes aim at the pharmacy giant's business model.
A Tennessee state senator sponsored a bill that would prohibit companies from owning retail pharmacies and pharmacy benefit managers. CVS employs more than 2,000 at 134 retail pharmacy locations in Tennessee, and the company also owns CVS Caremark, a pharmacy benefit manager.
Pharmacy benefit managers, or PBMs, have drawn bipartisan scrutiny nationwide as the Trump administration, Congress and states seek ways to slow spending on prescription drugs. PBMs act as middleman between drug manufacturers, health insurance companies and retail pharmacies. Health insurers and employers that offer health insurance benefits use PBMs to negotiate prices and manage prescription drugs.
Tennessee state Sen. Bobby Harshbarger, a Republican who sponsored the bill preventing co-ownership of PBMs and pharmacies, said the legislation addresses a "structural conflict in the pharmacy marketplace."
"This legislation separates pharmacy benefit managers from owning or controlling the pharmacies they reimburse or steer patients toward," Harshbarger, a pharmacist, said in a statement. "It does not eliminate PBMs, close pharmacies, or reduce access to medications."
Harshbarger said that the legislation would not require pharmacy closures. Companies that own a PBM and pharmacies could choose to divest part of their business to comply with the legislation, he said.
Harshbarger's bill recently passed the Tennessee Senate health committee and the state's House insurance subcommittee on March 4. The legislation must advance through committees in both chambers before facing full state Senate and House votes.
CVS spokesperson Amy Thibault said the company is committed to work with policymakers, but she said the Tennessee bill doesn't address common PBM industry issues such as spread pricing, reimbursement or formularies – the list of drugs heath insurance plans cover.
"The only thing this legislation does is force the closure of 134 CVS pharmacies," Thibault said. "It’s bad for Tennessee, for the more than 1.5 million patients we serve and for the more than 2,000 colleagues who will lose good paying jobs."
In addition to closing pharmacies, CVS said it would shut down 25 in-store Minute Clinic locations that provide primary care health services to people.
Here is why America pays more on medicines than other countries.
The patent system, consolidation within the healthcare supply chain, and pharmacy benefit managers create one of the most exorbitant drug markets.
Arkansas, Congress take aim at PBMs
In 2025, Arkansas passed a similar bill that would prevent companies that own PBMs from operating retail pharmacies. CVS sued to halt the legislation and a federal judge issued an order halting enforcement of the law. The pharmacy giant continues to operate more than 20 pharmacies in the state.
In December 2024, U.S. Reps Diana Harshbarger, R-Tennessee, and Jake Auchincloss, D-Massachusetts, introduced a bill that would prevent joint ownership of PBMs and pharmacies. The legislation didn't advance out of committee.
In February, Congress passed legislation that ended the partial federal government shutdown and also contained provisions addressing PBM transparency and business practices.
The legislation prohibited PBM's from collecting compensation based on the price of a drug, rebate or discounts under Medicare Part D. Instead, PBMs can only collect a service fee beginning in 2028, according to KFF, a health policy nonprofit.
PBMs that service Medicare drug plans also must meet several transparency requirements. They must disclose drug prices and revenue, affiliated pharmacies and contract with drug manufacturers, KFF said.
PBMs that manage employer pharmacy benefits also must share with employers 100% of rebates they demand from pharmaceutical manufacturers. PBMs also must report details on prescription drug use and spending to most employer health plans.
