Just before the close of the 2025 Louisiana legislative session, a hotly debated bill targeting PBMs – pharmacy benefit managers – was thrown into the arena, which would have barred companies from simultaneously owning PBMs and retail pharmacies. While it ultimately failed to pass, the conversation surrounding PBMs continues.

The basic idea behind PBMs is that they can purchase drugs in bulk and serve large networks of customers, allowing them to negotiate better prices from manufacturers. It’s a model similar to how consumers shop at bulk retailers like Sam’s Club or Costco to access better deals.

However, the current reality has become far more complex. Many insurance companies have consolidated and now own PBMs – and, in some cases, the pharmacies themselves as well. Several lawmakers argued that these arrangements have been limiting the amount of savings being passed on to consumers. The Louisiana bill that failed in the final hours of the legislative session sought to remedy the controversy surrounding this confusing landscape, but with a sledgehammer that would ban their operation in the state. While well-intentioned, it would have done more harm than good.

The reason why? Like any other sector, healthcare functions as a marketplace. Markets need competition to provide more options and better prices for customers, as well as transparency so that people know how much they are paying for a particular good. Unfortunately, the healthcare industry is already so heavily regulated that transparency is difficult to achieve. Policies that further restrict competition and increase government control only reduce customers’ ability to navigate and negotiate within the system. The proposed Louisiana legislation would have ultimately prevented some pharmacies from operating in Louisiana, eliminating choices for customers and likely leading to price increases due to reduced supply.

It’s true that bad actors can distort any market. However, excessive government regulation and intervention is not the solution. In the case of PBMs, government meddling would amount to imposing price controls and blocking competitors from the marketplace – telling some businesses and their customers that they don’t belong. This type of government overreach does the bidding of the pharmaceutical companies by removing companies that negotiate with them. If there are genuine problems with PBM practices, they can be addressed through the transparency and oversight measures that the Legislature already enacted in House Bill 264 – not through blunt-force mandates like forced divestiture.

We’ve already seen the consequences of this approach. In Arkansas, a similar law banning PBMs from owning pharmacies drove out CVS locations and triggered a costly federal lawsuit – one now being paid for by Arkansas taxpayers. Even more troubling, the Arkansas law included convenient exemptions that protected certain in-state competitors while targeting out-of-state companies. As noted in the federal lawsuit challenging the law, the final bill was amended to include “an exemption for PBM-affiliated pharmacies if the PBM serves only the pharmacy’s own employee benefit plan” – an exemption that covers Walmart while forcing CVS to potentially exit the state entirely.

Heavy-handed regulation in healthcare has also led to Rite Aid filing for Chapter 11 bankruptcy, further reducing consumer choice and therefore, affordability. The takeaway is clear: for the sake of fairness and free enterprise, government should not pick winners and losers in the market. Louisiana would be wise not to follow Arkansas’s path.

There are already rumblings of a potential special session in Baton Rouge to revive this anti-market legislation. As past experience shows, that would be a mistake. Instead, policymakers should focus on improving price transparency – across PBMs and the broader healthcare industry – and ensuring fair competition, so that consumers can access the best care at the best price.