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

New ownership limits for Tennessee pharmacies

Beginning July 1, 2028, Tennessee bars direct or indirect ownership, operation, control, or direction of a pharmacy, or both a health insurer and a pharmacy benefit manager, when ownership exceeds 5%, including through affiliates. Affiliates are businesses under common ownership or control. Control includes contracts, shared management, and other arrangements that materially influence dispensing, patient steering, clinical operations, or pharmacists’ independent judgment. Hospital and health-system pharmacies are not treated as pharmacy benefit managers. Independent or unaffiliated pharmacies can still offer mail-order, specialty, and delivery services directly to their patients. Employers can own pharmacies or administer pharmacy benefits solely for their employees, retirees, and dependents under employee benefit plans. Exceptions also cover FDA-designated orphan drugs with limited distribution and drugs with FDA-required safety programs that limit distribution. Pharmacy services under federal health program contracts with Defense, Veterans Affairs, Indian Health Service, or Personnel Management are exempt. A pharmacy illegally affiliated with both a benefit manager and an insurer can operate through December 31, 2028, while actively pursuing a sale to an unaffiliated buyer. The sale must be at arm’s length, with a written letter of intent or purchase agreement filed with the Pharmacy Board. The Board can grant one extension of up to six months for substantial progress. Violations carry civil penalties up to $10,000 per violation; each continuing day counts separately. The Attorney General enforces the law, and the Board must refer potential violations and can issue implementation rules. Affected parties can request administrative hearings; challenges to enforcement or validity must go to Sumner County Chancery Court. The law does not set drug prices or guarantee household savings.