If there’s one thing every conservative knows, it’s that California regulates…well, everything. San Francisco’s leadership even considered taxing driveways. That’s on top of lesbian firefighter hiring regulations in Los Angeles, statewide COVID-era crackdowns that made zero sense, and — back to San Francisco — housing regulations that have made the city the most expensive in America.
It’s no surprise that a lot of people are leaving California. They’re tired of it all and seeking greener and freer pastures elsewhere. Philosophers call it “natural consequences.” If you’re an economist, it’s called “market responses.” Me? I say it’s common sense.
That’s why it’s concerning to see Arkansas Governor Sarah Huckabee Sanders make the same mistakes as California. Sanders signed a bill in April — the first in the nation — banning pharmacy benefit managers (PBMs) from her state, HB1150 (Act 624). It prevents PBMs from owning or holding retail pharmacy permits in Arkansas and will be gradually phased in.
PBMs are third-party companies that manage prescription drug benefits for health insurance plans, employers and government programs such as Medicare. They act as intermediaries between pharmacies, drug manufacturers and insurers, leveraging their scale to negotiate lower drug prices and secure rebates. Employers and health plans can choose from various PBMs.
President Donald Trump and advisors like Elon Musk and Vivek Ramaswamy have resisted PBM reform in broader spending bills to avoid increasing federal costs. House Republicans pulled back PBM reform from the 2024 end-of-year spending package, citing fiscal concerns.
Of course, Democrats predictably attacked them. “A CR that includes health provisions but excludes bipartisan PBM reform is an embarrassing capitulation to the health insurance lobby,” said Rep. Jake Auchincloss (D-MA-04) on X. A “who’s who” of attorneys general, dominated by Democrats, sent a letter in April to Congressional leadership demanding a ban on PBMs.
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When PBM reform bills are proposed, they usually come from Democrats and questionable Republicans like Rep. Mariannette Miller-Meeks (R-IA-02). She has a dismal lifetime rating of 68 from the American Conservative Union. Meeks introduced the bipartisan DRUG Act in March, co-sponsored by three Democrats. The legislation would set prices for PBMs — instead of the free market — by mandating that PBMs charge a flat fee for drug placement instead of a percentage of the drug’s price.
This is shortsighted, since PBMs would predictably react by shifting costs to other services, such as higher fees for formulary management or data analytics, indirectly raising costs for health plans and consumers.
That’s why it’s both surprising and disappointing to see an ardent conservative like Sanders follow the path of government banning a legitimate market response to a need in the market. While her goal is laudable — protecting constituents from price and access abuse — banning PBMs will have the same effects as California’s high taxes, chasing businesses and jobs out of Arkansas without achieving Sanders’ stated goals.
CVS, for example, will be forced to close 23 stores, costing 500 people their livelihoods across the state. Genoa, a subsidiary of UnitedHealth, has said it is likely to close its 11 pharmacies in Arkansas. That’s a tough break for a state that, according to U.S. News & World Report, is the seventh poorest state in the country. Reduced access to pharmacies will especially hurt patients who rely on specialty drugs.
Again, Sanders' intentions are admirable, and her desire to increase freedom and choice is correct. Her citizens are paying too much for prescription drugs, and that should change. Still, the fact remains: if CVS closes 23 stores, Arkansans will have fewer options, longer wait times, and, most ironically of all, higher prices due to a lack of competition throughout the state.
Ironically, many Arkansans will still have a PBM option because the legislation Sanders signed exempts Walmart. Sure, some people might give it a pass because it’s Walmart’s home state — but it also, ironically, risks giving Walmart a state-sanctioned monopoly.
The PBM ban might seem to be an effective attempt at conservative, populist policy, but it harms the people it seeks to serve. And it raises the question: Is the GOP the party of free markets and capitalism, or is it the party of heavy-handed regulations controlling the market and making exceptions for the most powerful and well-connected?
It would be a shame because Sanders has recently shown her desire to help the poor in her state. In May this year, Sanders announced a new Community Assistance Grant Program that targets childhood food insecurity and unemployment, expands education, offers resources for victims of crime, and provides housing, nutrition, or emergency services to increase self-sufficiency across the state.
Self-sufficiency and self-determination are what it’s all about; giving people access to more, not less. That’s exactly why the PBM ban hurts the same beneficiaries of Sanders’ new grant program. It removes options like CVS from the playing field, thus increasing prescription drug insecurity and unemployment while diminishing choice.
Critics contend that PBMs create regulatory distortions and suffer from a lack of transparency, but that could be addressed by reducing government interference and enhancing competition, not banning them. Much of the criticism seems to be coming from resentment toward several large pharmacies that garner a significant portion of the market—but there’s no monopoly, and they use their large sizes as leverage to negotiate down prices.
It’s commendable that Sanders wants to help Arkansas families. Ironically, this is one of the few areas where she should trend more in California Governor Gavin Newsom’s direction than not. Last year, Newsom vetoed a PBM licensing bill, and last month he proposed measures that fall short of a ban.
When California doesn’t ban something, you know the jig is up. And so, too, could be Arkansas’ law. Major PBMs, including CVS, have already filed lawsuits, arguing it could disrupt patient access and increase costs. The courts may ultimately rule that it violates the Commerce Clause of the U.S. Constitution, finding that such regulation belongs under the purview of Congress.