Law360 (November 5, 2025, 7:29 PM EST) -- A pair of pharmacy trade groups is urging the Eighth Circuit to allow Arkansas to enforce a law barring pharmacy benefit managers from owning pharmacies, arguing the law is a rational response to "abusive" PBM practices.

An Arkansas federal court was wrong to preliminarily enjoin the law, Act 624, on the grounds that it likely violates the dormant commerce clause by discriminating against out-of-state companies, the National Community Pharmacists Association and Arkansas Pharmacists Association told the Eighth Circuit in a Tuesday amici curiae brief. The appeal concerns a consolidated challenge to the law by PBM giants Express Scripts Inc, OptumRx and CVS, among other parties.

Originally set to take effect next year, Act 624 would make it illegal for the state's pharmacy board to issue pharmacy licenses to PBMs, which generally act as intermediaries between insurance companies, drug manufacturers and pharmacies.

Contrary to the district court's read on the law, this restriction is "facially neutral" and constructed to police the "conflict of interest that's inherent in a PBM owning pharmacies," Robert T. Smith of Katten Muchin Rosenman LLP, an attorney for the amici curiae trade groups, told Law360.

"States should have plenary authority over pharmacy licenses and who holds them," Smith said. "This doesn't have anything to do with discriminating against in-state or [out-of-state] institutions. It's treating all PBMs the same regardless of where they're located, and it's agnostic to out-of-state ownership."

In the underlying litigation, the three PBMs and trade group Pharmaceutical Care Management Association argue Act 624 would hurt patients' ability to access drugs at affordable prices. Their consolidated suits allege the law violates several constitutional guarantees and is preempted by federal statutes governing Medicare, employee benefit plans and Tricare health benefits for military personnel and retirees.

In July, U.S. District Judge Brian S. Miller found plaintiffs were likely to succeed on their Tricare preemption arguments and their claims under the U.S. Constitution's dormant commerce clause, which bars states from unjustifiably discriminating against interstate commerce.

In granting plaintiffs' preliminary injunction motion, Judge Miller wrote that Act 624's burden on interstate commerce was "excessive," in part because Arkansas already has laws geared at "curtailing plaintiffs' business tactics and minimizing the conflicts of interest inherent in PBM-affiliated pharmacies."

Specifically, Judge Miller pointed to Arkansas laws requiring PBMs to reimburse pharmacies at rates equal or greater to what it costs pharmacies to acquire a drug, and prohibiting PBMs from reimbursing in-state pharmacies less than the amount they reimburse affiliates for providing the same services.

But these laws have not prevented PBMs from "padding their profit margins through more pernicious practices," the National Community Pharmacists Association and Arkansas Pharmacists Association say in their Tuesday amici brief to the Eighth Circuit.

The pharmacy trade groups point to vertical integration in the PBM industry, arguing that PBMs can steer patients to pharmacies they are affiliated with by offering lower copayments. This in turn leads to higher costs to benefit plans, which "ultimately increases the costs of prescription drug benefits for everyone," according to the amici curiae groups.

"Act 624 was enacted to solve the problem by banning PBMs, wherever they are headquartered, from holding pharmacy licenses in Arkansas directly or through affiliates — stripping PBMs of the ability to both make and take payment terms and conditions," the brief says.

The groups are urging the Eighth Circuit to reverse the district court's judgment.

Representatives for the PBMs and Arkansas did not immediately respond to a request for comment Wednesday.

The National Community Pharmacists Association and Arkansas Pharmacists Association are represented by Robert T. Smith and Timothy H. Gray of Katten Muchin Rosenman LLP.

Arkansas is represented by Asher Steinberg, Ryan Hale and Jordan Broyles of the Arkansas attorney general's office.

CVS is represented by J. Carter Fairley and Ben C. Hall of Barber Law Firm PLLC, and Jeffrey B. Wall and Judson O. Littleton of Sullivan & Cromwell LLP.

The Pharmaceutical Care Management Association is represented by David S. Mitchell Jr. and Tyler D. Mlakar of Rose Law Firm APC, and Michael B. Kimberly of Winston & Strawn LLP.

Express Scripts is represented by Scott P. Richardson of McDaniel Wolff PLLC and Daniel S. Volchok, Kevin M. Lamb and Joseph M. Meyer of WilmerHale.

Optum is represented by Peter Shults of Shults Law Firm LLP, and Allyson N. Ho, Matthew S. Rozen and M. Christian Talley of Gibson Dunn & Crutcher LLP.

The case is Express Scripts Inc et al. v. Richmond et al., case number 25-2529, in the U.S. Court of Appeals for the Eighth Circuit.

• Additional reporting by Patrick Hoff. Editing by Amy French.

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