There’s an old saying in medicine: First, do no harm. In economics, we might borrow that line—if policymakers could just remember the harm they’ve already done.
Arkansas’ now-paused attempt to ban pharmacy benefit managers (PBMs) from owning pharmacies wasn’t just misguided. It was an act of economic amnesia. And thanks to a federal judge’s injunction, we’ve been spared—for now—the consequences of another “cure” that ignores the disease.
Let’s call this what it is: political frustration dressed up as reform—but aimed at the wrong target.
Last week, U.S. District Judge Brian Miller issued a preliminary injunction against Arkansas’ first-in-the-nation law targeting PBMs with retail pharmacy operations—companies like CVS and Express Scripts. The judge ruled that the law was likely discriminatory because Arkansas had not exhausted all other avenues before enacting its ban. In doing so, he not only protected 23 CVS locations from forced closure, but preserved access for thousands of Arkansas patients—especially in rural communities where options are already limited.
That access was threatened by a narrative that ignores history. PBMs are not new. They have been around for decades and their role in American healthcare was expanded in response to growing federal involvement in healthcare—specifically, the 2003 creation of Medicare Part D. The government had just added a vast new prescription drug entitlement, and someone needed to manage the chaos of billing, reimbursement, and coverage across tens of millions of beneficiaries.
Enter PBMs: a market solution to a government-created complexity.
In 2010, the Affordable Care Act introduced new rules requiring insurers to allocate at least 80 percent of premiums toward healthcare claims, effectively limiting administrative flexibility. Faced with rising medical costs and stricter regulation, insurers adapted by turning to vertical integration—bringing PBMs, pharmacy operations, and provider networks under one roof. These strategic partnerships represented a market-driven response that allowed companies to better coordinate care, streamline processes, and ultimately manage costs for consumers in an increasingly complex regulatory landscape.
By 2025, the healthcare landscape looks like something only the government could design: convoluted, costly, and confusing. And yet, instead of fixing the misaligned rules, state legislatures like Arkansas’ double down on failed ideas.
It’s not that lawmakers are wrong to be concerned. Drug prices are high, and patients are frustrated. But every regulation has a ripple. When government disrupts market signals, the private sector adapts—not always in ways politicians like, but almost always in ways they should have predicted. Trying to reverse-engineer market behavior without changing the underlying laws is like draining a flooded basement without turning off the faucet.
Arkansas’ law didn’t attack the root of the problem. It went after one branch of a tree Washington planted two decades ago.
The better approach isn’t another round of punitive regulations. It’s course correction. Repeal outdated rules that distort the economics of care. Replace opacity with transparency, allowing patients, providers, and payers to see real costs and make rational decisions. And most importantly, remember that when government dictates structure, it owns the outcomes.
Markets aren’t sentient creatures, and they’re not perfect. But they are responsive, adaptive, and honest about tradeoffs. The same can’t always be said of policy.
Judge Miller’s decision gave Arkansas a second chance. Let’s hope policymakers use it to rethink the real cause of their frustration—not just the symptoms.
Editor’s Note: The Democrat Party has never been less popular as voters reject its globalist agenda.
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