Tennessee enacts FAIR Rx Act targeting PBM vertical integration

NASHVILLE, Tenn. — On Friday, Tennessee Gov. Bill Lee signed the Tennessee Freedom, Access, and Integrity in Registered Pharmacy Act (FAIR Rx) into law, marking a major victory for independent pharmacies and advocates pushing for pharmacy benefit manager reform.

The legislation, SB 2040/HB 1959, prohibits a single company from operating a health plan, a pharmacy benefit manager (PBM), and a pharmacy in the state at the same time. Supporters say the measure is intended to preserve competition, protect patient choice and prevent vertically integrated healthcare companies from exerting excessive control over prescription drug access and reimbursement.

The FAIR Rx Act passed with strong bipartisan support, clearing the Tennessee Senate 24-9 and the House 86-7. The law is scheduled to take effect on July 1, 2028.

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“Today marks a historic step forward for patients and pharmacists across Tennessee,” said Anthony Pudlo, CEO of the Tennessee Pharmacists Association.

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Under the new law, a company may not hold more than a 5% ownership interest in both a PBM and a health insurer while operating a pharmacy in Tennessee. Advocates argue that separating those interests will help level the playing field for community pharmacies and improve access to care, particularly in underserved and rural communities.

The Tennessee Pharmacists Association played a key role in advocating for the legislation throughout the legislative session, collaborating with the National Association of Chain Drug Stores and the bill sponsors to advance the reforms.

“The signing of the FAIR Rx Act is a testament to what is possible when lawmakers, stakeholders, and advocates come together around good public policy,” said Steven C. Anderson, president and CEO of NACDS. “This landmark law takes a meaningful step toward ensuring that the rules governing pharmacy reimbursement are set fairly, supporting a marketplace where pharmacies can compete and patients can continue to access the care they need.”

Anderson also thanked members of the Tennessee General Assembly and Gov. Lee for supporting the legislation, which adds to the growing nationwide momentum for PBM reform aimed at increasing transparency and oversight in the prescription drug supply chain.