PBM Reform Heats Up as Arkansas Law Faces Court Test: What HR Should Know

Arkansas’s landmark pharmacy benefit law is back in the spotlight – and the outcome could shape the next phase of pharmacy benefit manager (PBM) reform nationwide. 

On Nov. 5, 2025, the National Community Pharmacists Association (NCPA) and the Arkansas Pharmacists Association (APA) filed a joint brief urging the Eighth Circuit Court of Appeals to uphold Arkansas’s ban on companies that both manage and operate pharmacies. They argue that PBM ownership of retail pharmacies drives up costs, limits patient choice, and undermines transparency – issues that directly affect employer plan spending and employee trust.

The law was scheduled to take effect Jan. 1, 2026, but enforcement is on hold after two of the nation’s largest pharmacy benefit managers – CVS Health and Express Scripts – won a preliminary injunction in July 2025, with an Arkansas federal district court citing likely conflicts with federal law and the Constitution’s Commerce Clause.

The case heightens pressure on PBM accountability and transparency – critical factors for controlling pharmacy spend, reducing fiduciary risk, and maintaining employee trust, whether the Arkansas law takes effect or not.

Why PBM Reform Matters to HR

For HR leaders and benefits leaders, PBM reform is about reducing fiduciary risk and regaining control over pharmacy spend. As pharmacy costs continue to rise, so do the financial and compliance implications of opaque vendor contracts. 

These changes are more urgent given recent findings. In early 2025, the Federal Trade Commission reported that the Big 3 PBMs made more than $7.3 billion in excess revenue by marking up specialty generics at their affiliated pharmacies between 2017 and 2022.

Stronger regulation and oversight can help HR:

• Eliminate hidden fees and spread pricing that inflate employer costs
• Ensure rebates flow directly to the employer rather than being retained by PBMs
• Improve transparency, so employees better understand and trust their benefit options
• Strengthen compliance with ERISA by demonstrating clear fiduciary oversight

As regulation tightens, HR teams that proactively address these areas will be better positioned to defend plan choices and demonstrate fiduciary diligence.

Lack of transparency drives up costs and exposes employers to legal and reputational risk. It may also erode employee trust in the benefits program if pricing appears inconsistent or self-serving.

How HR Can Respond to PBM Reform

Health care and pharmacy benefits can be complex, even for experienced HR teams. To stay aligned with evolving PBM regulation updates and cost-control goals, team up with legal and finance teams to audit current PBM contracts, explore alternative models, and assess overall vendor performance. 

Here are the most impactful actions HR can take right now.

Review Current Contracts

Evaluate whether your current PBM arrangement includes:

• Provisions that ensure rebates are passed directly to the employer
• Pricing transparency and itemized fee structures, and
• Clauses that establish fiduciary responsibility.

Compare Alternative Models

Look beyond traditional PBM structures that rely on rebate maximization. Evaluate vendors that:

• Focus on pharmacist-led care and support
• Make drug pricing methods clear and easy to understand, and
• Offer performance metrics tied to employee adherence and drug spend.

Assess PBM Terms and Overall Vendor Performance

Benchmark PBM contract performance against cost, compliance, and care delivery goals. Key questions to address include: 

• How does the current model affect pharmacy costs for the company and employees?
• Do rebate incentives encourage the use of the most effective and affordable medications?
• Can we track improvements in employee health and long-term cost savings?
• Should we bring in a pharmacy benefits consultant to evaluate our vendor and help with RFP development?

PBM Reform Momentum Is Reshaping Employer Strategy

The momentum for pharmacy benefit management reform is accelerating at the state level. For example, last year, 33 PBM-related bills were enacted across 24 states, including:

• Idaho and Vermont, which have banned spread pricing, and
• New Hampshire, which requires rebate disclosure.

And the reform efforts are continuing this year. In New York, Assembly Bill A6546 – introduced in March – mirrors the Arkansas law and would ban PBMs from owning or operating pharmacies.

At the federal level, a bipartisan group of 39 state attorneys general recently wrote a letter urging Congress to enact legislation that would impose similar limits on PBM ownership and business models.

Emerging Care Models Are Gaining Traction

As pharmacy benefit reform accelerates, many HR leaders are exploring new care models that align with cost control, compliance and employee health outcomes.

AllyRx is one example of an emerging model that takes a clinical approach to pharmacy care. Developed by EmpiRx Health, AllyRx is a national pharmacy care network for grocery and retail pharmacies. Unlike traditional PBMs that focus on rebate maximization, AllyRx emphasizes collaboration between pharmacists and prescribers to improve medication decisions and reduce unnecessary spending.

This model also uses EmpiRx Health’s AI-powered Clinically platform to help pharmacists assess patient needs and process claims in real time. This added intelligence drives price transparency and reduces prescription drug costs.

For HR, adopting a pharmacist-led model like AllyRx can help:

• Ensure employees get the right medications for their needs
• Support better overall employee health, and
• Keep pharmacy costs more stable and easier to manage.

As HR teams work to improve pharmacy benefits, they also need to think about access challenges. Since 2018, many pharmacies have shut down, partly because of how PBM contracts are structured. The problem has grown more serious lately, especially after Rite Aid announced more store closures amid its bankruptcy. This has added to growing concerns that employees may have fewer nearby pharmacies, creating so-called “pharmacy deserts.”

For HR teams, limited pharmacy access could mean more sick days and lower productivity if employees can’t get the medications they need.

To monitor access challenges, HR can track indicators such as increases in employee complaints about prescription delays, refill interruptions, or reliance on out-of-network pharmacies. 

These issues may surface as absenteeism, refill delays, or lower productivity – signs that employees aren’t getting needed medications. To reduce risk, HR should consider care models that support both local and remote pharmacy access.

Proven Results: How New Pharmacy Models Align with HR Goals

Many employers have been able to manage rising pharmacy costs by making sure pharmacy care supports employees’ health needs. Real-world examples show that focusing on clinical care and smarter drug choices can improve employee well-being while also lowering costs.

For example, Giant Eagle has partnered with EmpiRx Health to better align pharmacy care with the health needs of its employees.

Case Study: Giant Eagle Prioritizes Quality Care, Value

When Giant Eagle started exploring a change for pharmacy benefit management, company leaders prioritized quality care and value for its employees.

“It was very important to us that we pursue a partner with a patient-first operating approach,” said Dan Donovan, Senior Director, Public Relations & Sports Partnership at Giant Eagle.

The solution? Giant Eagle selected EmpiRx to manage pharmacy benefits for its employees after determining that its clinically focused model “helps to ensure that our Team Members can receive the highest quality pharmacy benefits and care,” Donovan said.

“We are committed to providing quality care and value for our Team Members, and our partnership with EmpiRx Health is the latest example of how we show up for our Team Members in a meaningful way,” he said. 

The new arrangement is working well, and Giant Eagle has recently expanded the partnership. “We are excited to work with EmpiRx Health to create a national network of pharmacy chains and benefits plan sponsors who will collaborate on transforming pharmacy benefits care,” Donovan said.

The Giant Eagle case illustrates how employer-led changes to PBM strategy can deliver real results, making pharmacy care both more efficient and employee-centered.

Key Takeaway for HR Leaders

For HR teams evaluating pharmacy benefits, exploring models that prioritize clinical care and patient outcomes can provide a clearer path to controlling costs while improving employee health.

It shows that these strategies aren’t just ideas on paper. They’re already being used by employers and can help HR teams build a stronger, more adaptable benefits strategy.

Action Steps for HR

Build on PBM reform momentum by taking a closer look at whether your pharmacy benefits approach supports both cost control and employee health as you prepare for your next renewal. Key action steps include:

• Audit contract terms for transparency, fiduciary language and spread pricing.
• Look into PBM models that focus on improving results rather than just getting rebates.
• Collaborate with finance and legal to assess PBM terms and vendor performance.
• Communicate any changes in coverage clearly to employees, and
• Provide ongoing education to foster benefits literacy throughout the year.

Pharmacy benefit design is no longer just a procurement function. It’s an essential part of HR’s strategic role in managing cost, compliance, and care.