Federal Court Blocks Arkansas PBM Ownership Law, Citing Constitutional Violations

In a significant legal development, a federal judge has temporarily blocked Arkansas from enforcing Act 624. Act 624 prohibits pharmacy benefit managers (PBMs) from owning or operating pharmacies in the state, effectively forcing vertically integrated companies to divest or shut down their Arkansas pharmacy operations. However, on July 28, 2025, U.S. District Judge Brian Miller granted a preliminary injunction to several major PBMs and affiliated entities, halting the law’s implementation pending final resolution of the case.

Court Finds Violation of Commerce Clause and TRICARE Preemption

In his order, Judge Miller concluded that Act 624 likely violates the U.S. Constitution’s Commerce Clause by overtly discriminating against out-of-state companies and imposes an excessive burden on interstate commerce. The statute’s preamble explicitly states its purpose is to eliminate “business tactics that have driven locally-operated pharmacies out of business,” which the court interpreted as protectionist rhetoric targeting non-Arkansas entities.

“Although the state argues that it is merely targeting a form of business structure, this appears to only be a half-truth,” Judge Miller wrote. “The statute discloses that the state is also attempting to protect ‘locally operated pharmacies’ as opposed to just consumers and non-PBM affiliated pharmacies, including out-of-state non-PBM affiliated pharmacies like Walgreens.”

The judge emphasized that Arkansas already has several laws regulating PBMs, including statutes that prohibit discriminatory reimbursement practices and exclusion of willing pharmacies from health networks. These existing laws, Judge Miller noted, are sufficient to address the state’s stated concerns without imposing the sweeping restrictions of Act 624.

In addition to the Commerce Clause violation, the court found that Act 624 is likely preempted by TRICARE, the federal health benefits program for military personnel and retirees. The law would interfere with the U.S. Department of Defense’s ability to contract with PBM-owned pharmacies, undermining the uniformity and stability of the TRICARE network.

“Subjecting TRICARE to the Arkansas Act 624 license requirements would give the State’s pharmacy board a virtual power of review over . . . who the Department of Defense can contract with,” and “. . . impede[] the TRICARE program’s ability to accomplish the purposes for which Congress enacted it,” Judge Miller wrote..

Broader Constitutional Claims Rejected

While the court granted the injunction based on the Commerce Clause and TRICARE preemption, it rejected the plaintiffs’ other constitutional claims. Judge Miller found that Act 624 does not violate the Privileges and Immunities Clause, the Takings Clause, or the Equal Protection Clause. He also declined to find preemption under ERISA or Medicare, noting that Act 624 regulates pharmacy licensing rather than plan administration.

Furthermore, the court dismissed the argument that Act 624 constitutes a bill of attainder, concluding that the law does not specifically target the plaintiffs and does not impose punishment in a constitutional sense. “While Act 624 is tainted by its protectionist rhetoric so much as to render it unconstitutional under the Commerce Clause, it was not enacted in a wholly arbitrary manner,” Judge Miller wrote.

Irreparable Harm and Public Interest Support Injunction

As outlined in our June 2025 blog post, the plaintiff PBMs and other organizations argued that Act 624 would disrupt access to medications for tens of thousands of Arkansans, including TRICARE beneficiaries, seniors, and patients with complex conditions. The court found that the plaintiffs would suffer irreparable harm if the law were allowed to take effect, citing the threat of unrecoverable economic losses and the inability to seek damages due to the government’s sovereign immunity. The balance of equities and public interest also favored the plaintiffs, as “no harm is caused when defendants are enjoined from enforcing an unconstitutional law.”

Next Steps and Broader Implications

The legal battle over Act 624 is far from over. On July 31, 2025, the Arkansas State Board of Pharmacy filed a notice of appeal. The litigation, now consolidated under Express Scripts Inc. et al. v. Richmond et al., Case No. 4:25-cv-00520, will continue in the U.S. District Court for the Eastern District of Arkansas.

The case is being closely watched nationwide, as Arkansas is the first state to enact such a sweeping restriction on PBMs’ ownership of pharmacies. If upheld, Act 624 could serve as a model for other states seeking to rein in PBM influence. Conversely, a final ruling against the law could reinforce federal protections for PBMs and affiliated pharmacies.

For now, the preliminary injunction preserves the status quo, allowing PBM-affiliated pharmacies to continue operating in Arkansas while the legal battle unfolds.

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