April 28, 2026
The Honorable William Lee
Governor of the State of Tennessee
State Capitol, First Floor
600 Dr. Martin L. King, Jr. Boulevard
Nashville, Tennessee 37243
Dear Governor Lee,
The Tennessee General Assembly passed SB 2040 and enrolled it for your signature on April 27, 2026. On behalf of the 5,441 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Tennessee, I urge you to veto this legislation, which would ban any pharmacy that has an affiliation with a pharmacy benefit manager (PBM) from doing business in the state.
PBMs save money for patients by negotiating lower prices on behalf of large groups. Today, PBMs administer plans for more than 289 million Americans nationwide. PBMs save payers and patients an average of $1,154 per person per year. PBMs use various tools like rebates, pharmacy networks, drug utilization review, formularies, specialty pharmacies, mail-order, and audits to drive down drug costs, improve quality, increase patient medication adherence, and prevent fraud. PBMs require pharmacies to compete on price, thus lowering costs for patients and for the various sponsors they serve including businesses, unions, state and local government, associations, and other organizations that provide health insurance to their employees or members.
SB 2040 would close more than 125 brick and mortar retail pharmacies across the state, eliminating cost-saving mail order and specialty pharmacy options for employers. Because many independent pharmacies lack the logistical ability or expertise to handle the storage and transport requirements that some specialty medications require, this will put patients who rely on specialty pharmacies for the treatment of complex and serious conditions at severe risk of not being able to access their medications. These government-mandated pharmacy closures would also put pharmacists and thousands of other people out of work, push providers out of the state, and put Tennessee business owners at a competitive disadvantage by restricting the benefits they would be able to offer their employees.
After legislation like SB 2040 was signed into law in Arkansas in July 2025, a federal district court issued a preliminary injunction halting its enforcement, citing conflicts with federal law and the Commerce Clause of the Constitution. And on April 6, 2026, the Sixth Circuit Court of Appeals found that ERISA preempted two Tennessee laws intended to stop PBMs from sending patients to affiliated pharmacies. It is not unreasonable to expect similar arguments to lead to the same result in court for SB 2040.
For the above reasons, I urge you to veto SB 2040 and protect Tennesseans from its destructive impact on pharmacy access and prescription drug costs, as well as save taxpayers the cost of likely successful litigation to overturn the legislation if it is signed into law.
Sincerely,
Tom Schatz
President, CCAGW