Tennessee legislation · 114th General Assembly

Tennessee SB2040: AN ACT to amend Tennessee Code Annotated, Title 63, relative to the ownership or control of pharmacies by pharmacy benefits managers.

Status: Chaptered, May 27, 2026

Fiscal Summary OTHER FISCAL IMPACT The proposed legislation may result in increased expenditures to the Division of TennCare and the State Group Insurance Program as a result of increased drug acquisition costs, professional dispensing fees, and administrative costs associated with modifying or renegotiating pharmacy networks and reimbursement arrangements. Cost-savings from reducing certain non-competitive business practices may occur. Because the fiscal impact depends on business decisions, procurement responses, and evolving market conditions, the net impact on state expenditures cannot be reasonably determined. Impacts are anticipated to be most pronounced in the short- to mid-term periods following enactment, with stabilization expected as reimbursement benchmarks and pharmacy networks adjust over time. Bill Summary This bill establishes comprehensive regulations and prohibitions regarding the ownership and control of pharmacies by a pharmacy benefits manager ("PBM"), as described below. This bill prohibits, on and after January 1, 2027, a PBM from directly or indirectly acquiring, holding, controlling, or otherwise possessing any ownership or beneficial interest in, or exercising control over, a pharmacy license or a pharmacy license holder, including through any contract or arrangement that transfers operational control or economic benefit to the pharmacy benefits manager. This prohibition applies regardless of the percentage of ownership interest. Compliance with the prohibition is made a condition of the issuance, renewal, and continued validity of a pharmacy license. This bill prohibits evasion of the prohibition through corporate structuring, intermediary ownership, management contracts, leases, or other indirect means, and requires the board of pharmacy ("board") to construe and enforce the prohibition to pre