Senate approves PBM divestiture bill aimed at curbing pharmacy vertical integration

The Tennessee Senate passed Senate Bill 20‑40 on third reading, a measure that would require divestiture where pharmacy benefit managers (PBMs) own or are vertically integrated with retail pharmacies, while exempting hospitals, employer‑owned pharmacies, TRICARE/Indian Health Service and limited‑distribution specialty drugs. Senator Harshbarger, the sponsor, told colleagues the bill “calls for divestiture” and stressed the intent is to prevent conflicts of interest rather than close pharmacies.

Debate lasted more than an hour as senators aired competing views about patient access, competition and enforcement. Senator Ackberry said federal guidance from the FTC is addressing PBM problems but warned the Tennessee bill “goes just a step too far” and could raise costs for consumers or affect specialty drug access. Senator Oliver said constituent emails raised concerns that the bill would close pharmacies but added after the sponsor’s explanation she would support the measure.

Sponsors cited audit findings in defending the bill. Senator Harshbarger said federal audits found “$615,000,000 in overcharges because required discounts and credits were not passed through,” and pointed to a Tennessee audit that showed PBMs reimbursed affiliated pharmacies at higher rates than independents. “This bill does not ban companies. It does not shut down pharmacies,” Harshbarger said. “It simply says, if you're going to manage the system, you should not also be positioned to benefit from it in ways that distort that system.”

Opponents pressed practical questions about implementation and carve‑outs. Senator Akbari asked whether other states have adopted similar laws; Harshbarger acknowledged Arkansas enacted a related law that is currently enjoined in part. Senator Ackberry and others asked how the state will protect access to specialty medications; the sponsor said exclusions were added for “limited distribution orphan and REMS drugs” and other targeted carve‑outs.

The bill passed by recorded vote with all present voting in favor as announced by the clerk (Ayes 24, Nays 0). The sponsor requested an affirmative vote, saying the legislation promotes transparency and competition and “protects the integrity of the system for patients and providers.”