State Pharmacy Laws Under Microscope After Appeals Court Rulings

A series of court decisions striking down state laws around access to independent pharmacies is raising questions about the impact for similar laws around the country.

“Any willing pharmacy” laws have existed for decades without controversy, but recent decisions from the Sixth and Tenth Circuits signal a potential shift in how the industry views their impact on federally regulated health plans. A third case is pending before the Eighth Circuit.

The laws require pharmacy benefit managers—which oversee prescription drugs for health plans—to grant in-network status to any pharmacy willing to accept the plan’s terms. The circuits rejected laws in Tennessee and Oklahoma in recent months, ruling they interfered with health plan design under the Employee Retirement Income Security Act.

At least 31 states have some version on the books, according to the National Community Pharmacists Association. The laws are going to be tougher to defend going forward based on the direction courts are taking with ERISA preemption, said Julie Selesnick, who advises health plans and third-party vendors as founder of Health Plan Legal Counsel PLLC. But they’re far from defunct.

“I just think they’re going to need to find more nuanced ways to make it work within the growing doctrine of law,” she said of states.

The US Court of Appeals for the Sixth Circuit most recently struck down Tennessee’s law in McKee Foods Corp. v. BFP Inc. In 2023, the Tenth Circuit overturned portions of Oklahoma’s law in Pharm. Care Mgmt. Ass’n v. Mulready.

The “philosophical thrust” of the decisions is clear, said Rachel Alexander, who represents health plans as a member of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC.

“These are themes that we’ve been seeing play out in this market for a long time, and it doesn’t surprise me that you’ve got now two circuits who are headed in the same direction,” she said.

Bolder PBM Laws

“Any willing pharmacy” laws have come under scrutiny as states have stepped up regulation of PBMs. AWP laws are getting dragged into court in the context of more aggressive rules, and depending on how strongly the state chooses to enforce them.

Both the Tennessee and Oklahoma laws contained a number of restrictions clamping down on PBM practices that many regulators see as harmful toward local pharmacies. Those include data reporting provisions and prohibitions on financial incentives steering patients to preferred pharmacies.

The decisions also show how states can structure laws to skirt legal challenges, lawyers said.

Tennessee’s law, for instance, contained a specific reference to ERISA plans. The state should have instead limited the scope to third-party PBMs in line with the 2020 US Supreme Court ruling in Rutledge v. Pharmaceutical Care Management Association, said NCPA general counsel Matthew Seiler. He noted that the Sixth Circuit already ruled against AWP laws’ applicability to ERISA plans in Ky. Ass’n of Health Plans v. Nichols.

“What the unanimous Supreme Court in Rutledge told us is that those types of things are applicable to third parties,” he said. “Third parties are not plans, and therefore it’s not governed by ERISA.”

“We don’t think this will have a significant impact on states’ ability to continue to pass and enforce AWP laws,” Seiler added.

States could also reword laws to say that employers have the right to include AWP clauses in their plans, Selesnick said. That effectively signals to the employer that the PBM can’t block it.

“That determination belongs 100% with the plan sponsor, not with the vendor,” she said.

PBM lobbying group the Pharmaceutical Care Management Association didn’t respond to a request for comment, but has said PBMs pay independent pharmacies more on average than their own, and that employers are largely happy with their PBMs.

What to Watch

The Eighth Circuit is considering an appeal from Iowa over a similar law partly blocked by the US District Court for the Southern District of Iowa in July 2025. Judge Stephanie M. Rose cited the Mulready case in concluding that AWP provisions “eliminate the customizability and discretion that ERISA reserves to plan sponsors and fiduciaries.”

States such as Arkansas are also going further by attempting to ban PBMs from owning pharmacies. The Eighth Circuit is weighing whether to reverse a district court’s preliminary injunction against the law, which is being challenged by Express Scripts Inc., CVS Caremark, and the Pharmaceutical Care Management Association.

The evolution of the PBM debate raises another important legal consideration if PBMs steer patients toward their own pharmacies, Selesnick said. That could potentially violate the prohibited transaction clause of ERISA, but hasn’t been addressed yet by the courts.

Backlash to “any willing pharmacy” might also signal future trouble for broader “any willing provider” laws that apply to doctor groups and hospitals, Alexander said. States’ interest in protecting independent medical practices in local communities is “crashing into” longstanding ERISA regulations.

“They’re two very strong policy considerations that are butting heads,” she said.