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Companies say law is unconstitutional

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Lawsuits seek to block enforcement

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PBMs have faced scrutiny in multiple states

(Updates to include CVS lawsuit in paragraph 1, additional

information)

By Diana Novak Jones

CHICAGO, May 29 (Reuters) - CVS and Express

Scripts filed lawsuits on Thursday seeking to overturn an

Arkansas state law set to go into effect next year that would

ban pharmacy benefit managers from owning pharmacies.

The law puts an unconstitutional restriction on interstate

commerce by burdening out-of-state companies like Express

Scripts, which is based in St. Louis, and CVS, which is based in

Rhode Island, the companies said in separate lawsuits filed in

Little Rock federal court.

Express and CVS, which are among the nation's largest

pharmacy benefit managers, both seek a declaration that the law

is unconstitutional and an order barring its enforcement.

Sam Dubke, a spokesperson for Arkansas Governor Sarah

Huckabee Sanders, a Republican, who signed the law in April,

said in a statement, "these big drug middlemen are only

attacking Arkansas in the courts because they're worried other

states will join Governor Sanders in fighting for patient access

and affordable prescriptions."

The lawsuits name the executive director and members of the

Arkansas State Board of Pharmacy, which regulates the state's

pharmacies, as defendants.

In a statement, Express Scripts, which is a unit of Cigna

Group ( CI ), said the law will likely bar it from mailing

prescriptions to thousands of Arkansas residents through its

mail-order pharmacy business.

"While Arkansas politicians claim this law was designed to

lower drug prices and increase access to medications, it will do

just the opposite," said Andrea Nelson, Cigna's ( CI ) chief legal

officer.

CVS, which operates 23 pharmacies in Arkansas, said it is

exploring all possible options to keep them open, including the

lawsuit.

Pharmacy benefit managers serve as intermediaries,

negotiating prescription drug prices with drugmakers on behalf

of employers and health plans. They also often manage pharmacy

networks and operate mail-order pharmacies.

Arkansas' law, which is set to go into effect in January,

bars PBMs from receiving permits to dispense prescription

medication and revokes PBMs' existing permits, according to the

legislation.

The law is meant to cut down on anticompetitive behavior by

the PBMs, which set the prices for the drugs they dispense

through their pharmacies, according to the governor's office.

PBMs' business practices have drawn increasing scrutiny in

recent years from U.S. lawmakers looking to lower drug prices,

state attorneys general and from the Federal Trade Commission,

which accused the three largest PBMs of driving up the cost of

insulin drugs.

Michigan Attorney General Dana Nessel, a Democrat, sued

Express Scripts and another PBM, Prime Therapeutics, last month

over claims they conspired to reduce reimbursement rates for

independent pharmacies. That litigation is ongoing, court

records show.

Representatives for the PBMs did not immediately respond to

requests for comment about the Michigan allegations.

(Additional reporting by Amina Niasse in New York; Editing by

Leigh Jones, Bill Berkrot and Sonali Paul)