On July 28, 2025, the U.S. District Court for the Eastern District of Arkansas granted a preliminary injunction to Caremark and Express Scripts, the nation’s two largest Pharmacy Benefit Managers (PBMs), halting enforcement of Arkansas’s Act 624. This law would have barred PBMs from owning or operating pharmacies in the state. The Court found Act 624 likely unconstitutional, citing violations of the Commerce Clause and preemption by the federal TRICARE program.
Background on Act 624
Act 624 prohibits PBMs from acquiring, holding, or renewing a pharmacy permit in Arkansas. The law was supported by local pharmacy groups and state officials, who argue that PBMs have too much influence over drug pricing and competition, harming independent pharmacies and consumers. Arkansas Attorney General Tim Griffin has pledged to defend the law.
The Court’s Decision
Caremark and Express Scripts filed this lawsuit and accompanying Motion for Preliminary Injunction on May 29, 2025, seeking declaratory and injunctive relief to prevent Act 624 from going into effect on January 1, 2026. The PBMs alleged a host of challenges to Act 624’s Constitutionality, including that Act 624 violated: (1) the Commerce Clause; (2) the Privileges and Immunities Clause; (3) the Supremacy Clause because it is preempted by (a) TRICARE, (b) ERISA, and (c) Medicare; (4) the Bill of Attainer Clause; (5) the Takings Clause; and (6) the Equal Protection Clause.
In the Court’s July 28, 2025 Opinion, the Court granted the PBMs’ Motion for Preliminary Injunction finding that Act 624 likely violates the Commerce Clause and is likely preempted by TRICARE. See Express Scripts, Inc., et al. v. Rodney Richmond, et al. No. 4:25-cv-00520-BSM, Dkt. 73 at 1 (E.D. Ark. July 28, 2025) (“Op.”). The standard used to determine whether a Preliminary Injunction should be granted was whether the PBMs proved that: (1) there was a likelihood of success on the merits of the claim; (2) the PBMs would suffer irreparable harm if the injunction was denied; and (3) whether the harm to the PBMs, if the injunction was denied, would outweigh the combination of the harm felt by the Arkansas Government and the overall public interest in granting the injunction.
Likelihood of Success on the Merits
The first (and most pivotal) step in the Court’s inquiry was determining whether the PBMs demonstrated that they were likely to ultimately succeed at trial with respect to their claims against the Arkansas government. After reviewing each of the PBMs’ constitutional challenges to Act 624, the Court found the PBMs were likely to succeed in rendering Act 624 unenforceable as the Act likely violates the:
- Commerce Clause: Act 624 likely violates the dormant Commerce Clause by discriminating against out-of-state PBMs and imposing excessive burdens on interstate commerce. The Court noted that Arkansas already has less restrictive regulations addressing PBM practices.
- Supremacy Clause (TRICARE): The law is likely preempted by the federal TRICARE program, which contracts with some PBMs and expressly preempts inconsistent state laws.
The Court found that the PBMs were unlikely to succeed on:
- Other Clauses: Privileges and Immunities Clause, ERISA, Medicare, the Bill of Attainder Clause, the Takings Clause, and the Equal Protection Clause.
Irreparable Harm and the Balance of Hardships
After finding that the PBMs demonstrated the requisite likelihood of success, the Court summarily determined that the PBMs demonstrated irreparable harm and that the balance of hardships and the public interest favored granting the injunction. For irreparable harm, the Court found that, even though the PBMs were only able to allege economic damages, the harm felt by the PBMs would be irreparable because the PBMs would be “unable to recoup any potential financial loss through a damages award because of the defendant’s [sovereign] immunity.” And lastly, the Court found the harms felt by the PBMs outweighed any harm to the government because “[n]o harm is caused when defendants are enjoined from enforcing an unconstitutional law” and it is always in the public interest “‘to prevent the violation of a party’s constitutional rights.’”
What’s Next
Arkansas’s Act 624 garnered national attention and has spurred multiple states, including Vermont, Texas, and New York, to introduce legislation that mirrors Arkansas’s Act 624. See, e.g., National Community Pharmacists Association’s State Legislative Tracker.
It is presently unknown whether this recent decision will deter legislatures from passing similar pieces of legislation, but it is clear that the will of the electorate to curtail vertical integration by PBMs is a popular issue that seemingly crosses party lines.
This nation-wide support for PBM regulation is further evidenced by a letter, dated April 14, 2025, in which the Attorneys General for 38 states and the District of Columbia pleaded with the leaders of Congress to enact legislation precluding PBMs from owning their own pharmacies in light of the harms to patient service and access that result from this integration. See State and Territory Attorneys General Call on Congress to Prohibit Pharmacy Benefit Manages from Owning or Operating Pharmacies.
Where the Eastern District of Arkansas identified certain PBM regulations on the books that allegedly curtail the PBMs’ anti-competitive business practices, a super-majority of states from Blue to Red to Purple seemingly recognize that regulations guaranteeing fair and equal reimbursement payments simply fall short of what is necessary.
Following the preliminary injunction that temporarily blocked the enforcement of Act 624, the state of Arkansas, through its Attorney General, filed a notice of appeal on July 31, 2025. Frier Levitt will continue to provide updates on Act 624 as this case develops, as well as monitor developing regulations against PBMs across the country.
How Frier Levitt Can Help
Frier Levitt represents numerous pharmacies across the United States, assisting them in challenging PBM audits, network access, reimbursement practices (including DIR fees and MAC reimbursement) and providing extensive knowledge on all aspects of the pharmacy-PBM relationship. Contact us to speak with an attorney about how your pharmacy can leverage the various laws and protections afforded to pharmacies, including Arkansas’s PBM laws.
