Tennessee’s Forced Pharmacy Closure Bill Will Reduce Healthcare Access and Raise Costs
On the eve of Memorial Day weekend, Tennessee Governor Bill Lee (R) signed SB 2040, the Freedom, Access, and Integrity in Registered Pharmacy (FAIR Rx) Act into law. He may have decided to act late on Friday, May 22, because the law will make healthcare less accessible and more expensive and cause dozens of businesses to shutter and thousands of jobs to be lost.
SB 2040 requires any Pharmacy Benefit Manager (PBM) that owns a pharmacy in the state to divest their pharmacy business to have their pharmacy license renewed. This legislation goes much further than other PBM transparency measures that have been adopted by other state legislatures and Congress.
Proponents of this law claim that PBMs raise prices for patients and need greater regulation, but the economic reality tells a different story. PBMs save money for patients by negotiating lower prices on behalf of patients who receive health insurance coverage from their employers, labor unions, and federal and state government health care plans which rely on PBMs to administer their prescription drug plans. Today, PBMs administer plans for more than 289 million Americans nationwide and save payers and patients an average of $1,154 per person per year. PBMs use a variety of tools like rebates, pharmacy networks, drug utilization reviews, formularies, specialty pharmacies, mail-order pharmacies, and audits to drive down drug costs, improve quality, increase patient medication adherence, and prevent fraud. SB 2040 would substantially diminish or completely erase these savings for Tennesseans.
This law increases government control and regulation of healthcare in the Volunteer State and will have serious adverse effects on Tennesseans. According to a February 26, 2026, WSMV article, SB 2040 would force 134 CVS pharmacy locations in the state to close, but they will not be the only businesses to do so. These closures will lead to thousands of job losses in the state and put business owners at a competitive disadvantage by limiting the number of benefits they are able to offer their employees.
Beyond the economic repercussions, this law will also limit healthcare access for patients. This law will disproportionately impact patients in rural areas, which typically have few local pharmacies, and many patients rely on mail-order pharmacies to receive their medications. Once this law is implemented, rural patients will have fewer options and will have to travel farther distances to receive the medications they need.
The law is already facing legal challenges. On May 25, 2026, CVS filed a lawsuit challenging the law claiming that it purposefully targets national pharmacy chains and the company will have to close 136 pharmacy locations in Tennessee. In 2025, Arkansas legislators passed and the governor signed into law similar legislation that banned a PBM from owning or operating a pharmacy in the state. On July 28, 2025, the United States District Court for the Eastern District of Arkansas issued a preliminary injunction preventing the law from taking effect because “it likely violates the Commerce Clause and it is likely preempted by TRICARE.” The FAIR Rx Act is probably going to have the same result, making its passage and the costs of litigation a waste of Tennessee taxpayers’ money.
