Committee backs PBM licensure bill to separate ownership of pharmacies and benefit managers

Representative Scarborough presented HB 1959 as a structural licensure reform under Title 63 of the Pharmacy Practice Act, saying it would prevent the same corporate structure from controlling a pharmacy and a pharmacy benefit manager (PBM) or covered insurer in Tennessee beginning Jan. 1, 2028, with a divestiture window and civil enforcement. "If you wanna hold a Tennessee pharmacy license, you cannot simultaneously own or control a PBM and a health insurance issuer," he said.

Public testimony came from Zach Hanson, who identified himself as representing a transparent PBM based in Mount Juliet and urged support for the bill. Hanson described vertical integration in the pharmacy market and said the largest PBMs control the full life cycle of a claim. "So that vertical integration has created a huge conflict of interest and, you know, is what has contributed to rising health care costs," he said. Hanson also said clients that moved to transparent PBM models reported lower drug-costs by 20–50% in his experience.

Committee members pressed sponsors and the witness on exemptions, timing, market impacts and savings. Sponsor and supporters emphasized the bill is narrow — preserving TRICARE, veteran programs, hospital pharmacies, mail order and employer self-funded plans — and that the policy is structural and prospective rather than retroactive. Members raised concerns about industry disruption, potential job impacts, and the timeline for divestiture; sponsor noted companies may choose divestiture or structural separation and that a transition period and limited extensions are included. The clerk recorded 11 ayes, 0 nays, and 1 present not voting; the committee forwarded the bill to finance/ways and means.