Tennessee Gives CVS a Technical Foul

If you know me, then you know this lede got my attention…

The proposal it’s referencing would ban any PBM from also owning a pharmacy in the state, effectively forcing CVS to choose between the two businesses or stop doing business in Tennessee altogether.

CVS is telling everyone they will shut down 130+ pharmacies if Tennessee passes this bill.

They’re spending millions on ads. Blasting text messages. Warning about lost jobs and pharmacy deserts.

If you don’t know any better, it sounds like they’re fighting to protect patients.

But we know that isn’t what’s happening here.

They’re just fighting to protect the single most important advantage in American healthcare: the ability to control both sides of the transaction. To decide what gets paid for and how much gets paid… and then pay themselves to deliver it.

The bill doesn’t take that business away from them.

It just forces them to pick a side.

If this sounds familiar, it should.

Last year, Arkansas Governor Sarah Huckabee Sanders signed a law that did exactly this. For the first time in the country, a state said that pharmacy benefit managers (PBMs) could not own pharmacies.

I’m not exactly a Sanders fan, but I’ll give credit where it’s due. Arkansas was the first state to treat this like what it actually is: an antitrust problem. And while the courts are temporarily holding up its enactment, it was definitively the first domino to fall.

Now Tennessee is trying to follow.

And we all get to sit back and watch what happens when someone pokes directly at the foundation of the system instead of the symptoms.

Let’s keep this simple.

You can be a PBM.
Or you can be a pharmacy.
But you cannot be both.

That’s it.

In any other industry, that would be obvious. You wouldn’t let an NBA owner ref the team’s games. Or a stock exchange trade against its own customers. And you wouldn’t let your electric company decide what appliances you’re allowed to buy and then sell them to you at a price it sets itself.

But in healthcare, we’ve somehow decided this is fine.

If you want a deeper breakdown of how that “vertical integration” actually works, go read my piece - The Monopoly Hiding in Plain Sight. I’ve already taken you through the full anatomy of it.

This piece is about something else.

This is about what happens when you try to stop it.

The most revealing part of this story isn’t the bill.

It’s CVS’s response to it.

They’re not arguing that vertical integration lowers costs.
They’re not arguing that it improves care.
They’re not even attempting to defend the structure itself.

Their entire case is this:

If you take this away, people will get hurt.

Jobs will be lost. Stores will close. Access will suffer.

That’s the whole argument.

And to be honest, they’re probably right about parts of it.

I think the closures are real. I believe if this passes, CVS will shut down a meaningful number of stores in Tennessee. I think there will be disruption. I think some communities will temporarily lose access to nearby pharmacies.

That’s not a reason to keep the system.

It’s an admission that the system only works because it was built this way.

There’s another detail here that I feel obligated to point out.

If CVS is forced to separate its PBM from its pharmacies, the obvious move would be to sell the stores.

Except… they can’t.

Not in any meaningful way.

Because the only entities capable of buying that many pharmacies at scale are… other vertically integrated players who wouldn’t be allowed to operate them either.

The system is so consolidated that trying to leave it means finding someone else trapped inside it.

So instead, the most likely outcome is closures.

Not because the bill demands it. But because the structure of the market makes any alternative nearly impossible.

And this is where you need to zoom out.

CVS isn’t afraid of losing its pharmacies in Tennessee. They don’t make that much money.

They’re afraid of what Tennessee represents.

Because if this passes—and more importantly, if it holds—it becomes the proof of Arkansas’ blueprint.

Then New York looks at it.
And California looks at it.
And Texas too.

Suddenly, this isn’t a one-off regulatory headache.

It’s a trend.

And once that trend starts, you’re no longer arguing about a single state. You’re arguing about whether the entire vertically integrated PBM model can survive in its current form.

That’s the real fight.

Now, let’s address the obvious counterargument, because if you’re reading this, you’re probably already thinking about it.

What if CVS is right?

What if this actually does create pharmacy deserts? What if patients lose access? What if this causes real harm in the short term?

It might.

But that doesn’t make the bill wrong.

It makes the current system fragile.

There’s a difference.

If removing one layer of vertical integration causes the entire structure to wobble, that’s not evidence that the layer is necessary.

It’s evidence that everything built on top of it depends on it.

Here’s what I think actually happens if laws like this spread.

Short term? Some chaos.

Stores close. Jobs shift. Access gets uneven in certain areas. Politicians point fingers. CVS says “we told you so.”

Then something else happens.

Independent pharmacies—who have been getting crushed for years—start filling the gaps. New operators step in where they can. The workforce redistributes. The market adjusts.

And slowly, things stabilize.

New players will emerge, and pharmacists who were forced out of the game by PBM manipulation will come back to the plate. The pain won’t last forever.

There is no single law that fixes American healthcare.

This system didn’t get built overnight, and it’s not going to get dismantled overnight either.

It’s going to die the way most bad systems do.

Slowly. Unevenly. Piece by piece.

A thousand paper cuts.

Arkansas was one.

Tennessee might be another.

And if enough states decide to take the same bite, we’ll begin to see that domino effect.

The truth is, the only reason this system was allowed to get this far in the first place is because it was too complicated for most people to understand.

It hid behind contracts, complicated terms, and layers of middlemen that made it nearly impossible to see where the money was actually going.

But that’s starting to change.

People like you are paying attention. They’re learning how it works. They’re asking better questions.

And for the first time in a long time, that system is starting to feel a little bit of pressure.

Not from inside.

From the people. From all of us.

That’s why I started Drugstore Cowboy. To add a little bit more pressure to the system until we start to break open the cracks.

Look closely. You can already see them.

Alec Wade Ginsberg, PharmD, RPh
4th-Gen Pharmacist | Owner & COO, C.O. Bigelow
Founder, Drugstore Cowboy