---
title: "Tennessee's FairRx Act: A Turning Point for Community Pharmacy Nationwide"
description: Tennessee's FairRx Act challenges PBM monopolies, promoting fair competition in pharmacy. This landmark legislation could inspire similar reforms nationwide.
image: https://blog.pharmacymarketplace.com/hubfs/iStock-1406531596-1.jpg
---

# Tennessee's FairRx Act: A Turning Point for Community Pharmacy Nationwide

[ Athena ](https://blog.pharmacymarketplace.com/blog/author/athena)  Apr 22, 2026 2:16:45 PM

*After a multi-million dollar battle waged by CVS Caremark, and fueled by years of data*  
*painstakingly gathered by community pharmacies,Tennessee has struck a blow against*  
*vertical integration in the prescription drug supply chain that will echo across every state capitol in the country.*

The fight for a fair pharmacy marketplace just cleared its highest hurdle yet. On April 21,  
2026, the Tennessee General Assembly passed the Freedom, Access, and Integrity in  
Registered Pharmacy Act (the FairRx Act) with a resounding 86-to-7 vote in the  
House and 24-to-9 in the Senate. The bill now heads to Governor Bill Lee's desk and, if  signed, will take effect July 1, 2028. What it does is deceptively simple: it prohibits any  
company from simultaneously owning or controlling a pharmacy, a pharmacy benefit  
manager (PBM), and a health insurance issuer in the state of Tennessee. In practice, it  
puts CVS Caremark, which owns all three, at a crossroads.

But this moment didn't come from nowhere. It is the product of a years-long, data-driven  
grassroots battle waged by community pharmacists who refused to let the evidence of  
abuse disappear into spreadsheets and silence. 

### ![$7.5M Spent by CVS Caremark in ad campaigns opposing the Act (1)](https://blog.pharmacymarketplace.com/hs-fs/hubfs/$7.5M%20Spent%20by%20CVS%20Caremark%20in%20ad%20campaigns%20opposing%20the%20Act%20(1).png?width=3320&height=830&name=$7.5M%20Spent%20by%20CVS%20Caremark%20in%20ad%20campaigns%20opposing%20the%20Act%20(1).png)

#### When the Referee Owns the Team

To understand why this legislation matters, you have to understand the conflict of  
interest at its core. PBMs like CVS Caremark sit at the center of prescription drug  
transactions — they set reimbursement rates for every pharmacy in a network, including  
their own. As bill sponsor Sen. Bobby Harshbarger (R-Kingsport) put it, the system is  
built on a fundamental unfairness: a company is simultaneously setting the rules and  
playing the game.

One independent pharmacist told a House member what it means on the ground: "I  
have to pay a higher price to them than the pharmacies that they own, but I still have to  
deal with them." That's not a marketplace — it's a rigged table.

*"If you're playing the other team and the other team's owned by the referees, it is*  
*going to be hard to win."*

*— Rep. Scarbrough, Tennessee House of Representatives*

#### The TDCI Audit: The Smoking Gun

Legislative conviction is one thing. Quantitative, audited evidence is another — and  
that's precisely what the Tennessee Department of Commerce and Insurance (TDCI)  
delivered in February 2026. Under authority granted by Tennessee's landmark 2022  
PBM reform laws, the TDCI conducted a comprehensive audit of Caremark's 2024  
operations. What it found was damning.

The audit identified 11 formal findings and 5 additional observations, documenting  
systemic violations across four major categories:

• Discriminatory Reimbursement: Caremark reimbursed its own CVS pharmacies at higher rates for 661 of 3,646 medications sampled including a staggering 16,510% higher rate for Cinacalcet 60 mg and 9,927% higher for Tadalafil 20 mg compared to independent pharmacies filling the same prescriptions.  
• Illegal Spread Pricing: The audit confirmed Caremark continued to charge plan sponsors more than it paid pharmacies, a practice that has been banned in Tennessee since 2021. A separate audit of Express Scripts found it collected $30 million from Tennessee employers in a single year through the same tactic.  
• Dispensing Fee Failures: Caremark failed to pay the required dispensing fee to low-volume and rural pharmacies in 21.7% of tested claims.  
• Appeals Process Violations: Caremark denied 27.9% of pharmacy appeals without providing the legally required window for pharmacies to submit information, and routinely failed to pay approved appeal amounts within required deadlines.

This wasn't an isolated incident. By September 2025, TDCI had already entered into  
consent orders with both Caremark and Express Scripts, imposing hundreds of  
thousands of dollars in penalties and requiring detailed corrective action plans. The  
February 2026 audit report on Caremark's 2024 conduct confirmed that even after those penalties, the violations continued.

Sen. Harshbarger cited these findings directly in arguing for SB 2040: "This audit  
confirms what Tennessee pharmacists and patients have been saying for years: PBMs  
are using their position to favor their own pharmacies and undermine fair competition.  
These findings reinforce the need for SB 2040."

#### David vs. Goliath: The $7.5 Million Lobbying War

CVS Caremark did not accept this challenge quietly. The company reportedly spent  
$7.5 million in advertising to combat the bill's passage, a figure that speaks volumes about how much it values the vertically integrated model the FairRx Act targets. The campaign was multifaceted and, at times, aggressive:  
• CVS organized pharmacists to lobby on Capitol Hill.  
• It threatened to close all 134 of its Tennessee pharmacy locations and eliminate  
2,000 jobs if the bill passed.

Shell companies and political groups launched attacks on legislators, attempting  
to tie them to opposition against President Trump's drug pricing agenda.The Tennessee Attorney General, Jonathan Skrmetti, was sufficiently alarmed by CVS's tactics that he sent a formal warning letter to the company's CEO over political  advocacy messages the company sent to customers through its own pharmacy text notification system. When a corporation uses its prescription pickup alerts as a lobbying platform, it is a measure of just how threatened they felt.

Despite it all, the legislature held firm and held firm decisively.

#### Arkansas Lit the Path; Tennessee Widened It

Tennessee didn't act in a vacuum. Arkansas was first-in-the-nation to pass legislation barring PBMs from owning pharmacies, but a federal judge temporarily blocked it on Commerce Clause grounds. Tennessee's drafters learned from that experience. The  
FairRx Act was explicitly written to regulate "qualifications, licensure, ownership, and  
control of pharmacies as a condition of professional practice within the state" language designed to withstand the constitutional challenge CVS has already pledged  
to bring.

Arkansas proved the political will existed. Tennessee proved the legal framework could  
be built to last. That precedent is now available to every other state in the country.

#### Why Your Data Made This Possible

Here is the part of this story that every community pharmacist reading these words  
needs to understand: this victory was built on your participation.

The TDCI audit that became the legislative smoking gun was not conjured from thin air.  
It was made possible by Tennessee's MAC and Acquisition Cost laws,  laws that  
require PBMs to reimburse pharmacies based on actual acquisition costs and give  
pharmacies the right to appeal underpayments. But those laws only generate  
enforceable evidence when pharmacies actually use them: when they document  
underpayments, file appeals, and report violations to the state insurance department.

The consent orders against Caremark and Express Scripts, the TDCI's escalating audit  
program, Sen. Harshbarger's evidentiary foundation for SB 2040, all of it traces back to community pharmacies generating the quantitative record that regulators and  
legislators needed to act. Without pharmacies taking advantage of existing statutes,  
enforcement agencies and legislators simply don't have the data to build a strong case.

The FairRx Act is proof that they do, and that it works.

The Core Lesson  
*Legislative reform is not handed to community pharmacy, it is built claim by **claim, appeal by appeal, audit by audit. Every time your pharmacy documents an **underpayment and files for MAC appeal review, you are contributing to the **evidentiary record that drives state action. Tennessee's FairRx Act is the most **powerful validation yet of that strategy.*

#### A National Momentum Shift

With multiple states now taking intense legislative and regulatory action to restrict PBM-  
retail vertical integration, a momentum shift is underway. Tennessee joins a growing  
coalition of states that have concluded that three PBM conglomerates controlling 80% of  
the national market, and using that power to squeeze out local competitors, is not a  
marketplace. It is a monopoly in slow motion.

The FairRx Act's passage gives other state legislatures a battle-tested template: robust  
MAC and acquisition cost laws to generate data, a serious audit infrastructure to  
document violations, and carefully constructed ownership-separation language to  
survive federal court challenge. The playbook is written. Tennessee executed it. Other  
states are watching.

CVS Caremark spent $7.5 million trying to stop one state. It lost. The question for  
the rest of America's community pharmacists is simple: are you generating the  
data that will make the next Tennessee possible in your state?

[Learn how Pharmacy Marketplace](https://blog.pharmacymarketplace.com/demo) is helping Community Pharmacies recoup underwater claims through our PBM Appeals Tool, part of our comprehensive platform that helps pharmacies price shop medications across secondary wholesalers. [Join the movement now and see a demo of our platform.  ](https://blog.pharmacymarketplace.com/demo)

[PBM Appeals](https://blog.pharmacymarketplace.com/blog/tag/pbm-appeals) , [PBM Reform](https://blog.pharmacymarketplace.com/blog/tag/pbm-reform)

## Related posts

[![](https://blog.pharmacymarketplace.com/hs-fs/hubfs/Untitled%20design%20(60).png?height=500&name=Untitled%20design%20(60).png) ](https://blog.pharmacymarketplace.com/blog/denver-delivered-key-takeaways-from-mckesson-ideashare-2026)

## [Denver Delivered: Key Takeaways from McKesson ideaShare 2026](https://blog.pharmacymarketplace.com/blog/denver-delivered-key-takeaways-from-mckesson-ideashare-2026)

 Back at the Booth: AthenaPM Sits Down with CEO Wade Hinkle After McKesson ideaShare 2026

[Read more >](https://blog.pharmacymarketplace.com/blog/denver-delivered-key-takeaways-from-mckesson-ideashare-2026)

[![](https://blog.pharmacymarketplace.com/hs-fs/hubfs/iStock-1218442460%20%5BConverted%5D.png?height=500&name=iStock-1218442460%20%5BConverted%5D.png) ](https://blog.pharmacymarketplace.com/blog/the-best-kept-secret-in-pharmacy-how-to-actually-recover-your-underwater-claims)

[PBM Appeals](https://blog.pharmacymarketplace.com/blog/tag/pbm-appeals)

## [The Best-Kept Secret in Pharmacy: How to Actually Recover Your Underwater Claims](https://blog.pharmacymarketplace.com/blog/the-best-kept-secret-in-pharmacy-how-to-actually-recover-your-underwater-claims)

 Underwater claims have become an accepted cost of doing business in pharmacy. When you try to...

[Read more >](https://blog.pharmacymarketplace.com/blog/the-best-kept-secret-in-pharmacy-how-to-actually-recover-your-underwater-claims)

[![](https://blog.pharmacymarketplace.com/hs-fs/hubfs/Untitled%20design%20(34).png?height=500&name=Untitled%20design%20(34).png) ](https://blog.pharmacymarketplace.com/blog/why-pharmacy-marketplace-decided-to-address-the-core-of-pharmacy-purchasing-and-dispensing)

[Purchasing](https://blog.pharmacymarketplace.com/blog/tag/purchasing), [Pharmacy Procurement Software](https://blog.pharmacymarketplace.com/blog/tag/pharmacy-procurement-software), [Pharmacy Cost Management](https://blog.pharmacymarketplace.com/blog/tag/pharmacy-cost-management), [Pharmacy Analytics](https://blog.pharmacymarketplace.com/blog/tag/pharmacy-analytics), [PBM Reform](https://blog.pharmacymarketplace.com/blog/tag/pbm-reform)

## [Why Pharmacy Marketplace Decided to Address the Core of Pharmacy Purchasing and Dispensing](https://blog.pharmacymarketplace.com/blog/why-pharmacy-marketplace-decided-to-address-the-core-of-pharmacy-purchasing-and-dispensing)

 With countless opportunities in today’s pharmacy landscape, Pharmacy Marketplace made a deliberate...

[Read more >](https://blog.pharmacymarketplace.com/blog/why-pharmacy-marketplace-decided-to-address-the-core-of-pharmacy-purchasing-and-dispensing)

```json
{
  "@context" : "https://schema.org",
  "@type" : "BlogPosting",
  "author" : {
    "@type" : "Person",
    "name" : "Athena",
    "url" : "https://blog.pharmacymarketplace.com/blog/author/athena"
  },
  "dateModified" : "2026-04-23T12:53:32.697Z",
  "datePublished" : "2026-04-22T19:16:45.000Z",
  "headline" : "Tennessee's FairRx Act: A Turning Point for Community Pharmacy Nationwide",
  "image" : [ "https://blog.pharmacymarketplace.com/hubfs/iStock-1406531596-1.jpg" ],
  "mainEntityOfPage" : {
    "@id" : "https://blog.pharmacymarketplace.com/blog/tennessees-fairrx-act-a-turning-point-for-community-pharmacy-nationwide",
    "@type" : "WebPage"
  },
  "publisher" : {
    "@type" : "Organization",
    "logo" : {
      "@type" : "ImageObject",
      "url" : "https://blog.pharmacymarketplace.com/hubfs/PMP.png"
    },
    "name" : "Pharmacy Marketplace"
  }
}
```