Arkansas Law Prohibits Pharmacy Benefit Managers from Obtaining or Holding Pharmacy Permits

On April 16, 2025, Arkansas House Bill 1150 (the “Bill”) was signed by Governor Huckabee Sanders. The Bill will have substantial implications for pharmacy benefit managers (“PBMs”) and pharmacies across the country. Introduced in January this year, the Bill sought to minimize conflicts of interest by stopping PBMs “acting as a ‘fox guarding the henhouse’ by being both a price setter and price taker” and thus increase patient access to prescription drugs and pharmacy services at a fair price.

The Law and Its Exceptions

The Bill amended the section in Arkansas’ laws governing pharmacy permits to add a new section, Ark. Code §17-92-416, that prohibits a PBM (including entities managed by a PBM or subsidiaries of PBMs) from acquiring a direct or indirect interest in, or otherwise holding, directly or indirectly, a retail pharmacy permit for the sale of drugs or medicines in Arkansas. The broad prohibition includes pharmacies operating as mail-order pharmacies. Beginning January 1, 2026, the Bill requires the Arkansas Board of Pharmacy (the “Board”) to revoke or not renew pharmacy licenses of pharmacy facilities directly or indirectly owned by a PBM.

There are a few narrow exceptions to the prohibition:

• Limited Use 90-Day Permits. The law allows the Board to grant a 90-day limited use permit for pharmacies dispensing rare, orphan, or limited distribution drugs that are “otherwise unavailable in the market”. Notably, availability of this exception will sunset on September 1, 2027. 
• Critical Patient Services. The Board will also have the ability to extend the use of a retail permit or issue a renewal of a retail permit for a pharmacy that offers same-day patient access for pharmacist services, a prescription for a controlled substance, mental health services, or other critical patient healthcare services for a period of time determined by the Board, but only if there is a pending sale of the pharmacy to an eligible buyer (i.e., a buyer that does not have PBM ownership that would violate the prohibition).
• Pharmacy Employers. Finally, the law clarifies that the prohibition does not apply to a pharmacy employer and pharmacy if the pharmacy employer and pharmacy have direct or indirect interest in a PBM if, the pharmacy employer is the sole Arkansas client of the PBM, and the pharmacy exclusively services the employees and dependents of the pharmacy employer while using the affiliated PBM in Arkansas.

Critical Dates

• On or before July 1, 2025, the Board will conduct an assessment to learn which pharmacies may or may not violate this law by virtue of having a PBM-owned pharmacy (directly or indirectly). 

• Thereafter, the Board will send written notice of suspected violations. Such notices will be issued at least 90 days before January 1, 2026 (i.e., no later than September 30, 2025).
• On or before October 31, 2025, each pharmacy that receives the notice from the Board is required to send written notice to each patient and each prescriber that used the pharmacy within the past 365 days that they are going out of business on or after January 1, 2026. That notice must include alternative pharmacy locations for the patient/prescriber to use who are not deemed to violate this law.

Industry Reactions

Arkansas House Bill 1150 has received stark criticism from the PBM industry. The Pharmaceutical Care Management Association, a national association representing the pharmacy benefits industry, has stated that the prohibition puts patients’ health at risk and will likely increase drug costs for Arkansas employers, noting that the immediate impact of the law will include closure of more than 35 retail pharmacies in Arkansas as well as suspension of home delivery and specialty pharmacy services in the state.¹ The National Community Pharmacists Association, a national association for independent pharmacies, lauded the prohibition as a structural change that addresses issues in the industry regulating from vertical integration.² In addition, on April 14, 2025, the National Association of Attorneys General, on behalf of 39 state and territory attorneys general, sent a letter to congressional leaders urging them to pass an act prohibiting PBMs from owning or operating pharmacies.³

What Happens Next?

In the days following passage of the new prohibition, many questions regarding how the prohibition will be interpreted and implemented, and the practical impact of the law on patient access to pharmacy services, cost of medication, and jobs in Arkansas still remain. If you have additional questions related to the new Arkansas law or other similar state legislation, reach out to your Quarles attorney or:

• Simone Colgan Dunlap: 602-229-5510 / simone.colgandunlap@quarles.com
• Katie Lavigne: 612-224-3759 / katie.lavigne@quarles.com

END NOTES

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¹ Arkansas Senate should Reject Dangerous Legislation, Pharmaceutical Care Management Association, (Apr. 3, 2025)

² Arkansas law bans state permits to PBM-owned pharmacies effective 2026, NCPA, (Apr. 17, 2025)

³ State and Territory Attorneys General Call on Congress to Prohibit Pharmacy Benefit Managers from Owning or Operating Pharmacies, National Association of Attorneys General, (Apr. 14, 2025)