CVS could shut down all its stores in this U.S. state: Here’s why Merca2.0

If you’re a CVS customer, this will interest you. The pharmacy chain has announced it could close all its stores in one U.S. state if a new law is enacted that would prohibit companies from owning both retail pharmacies and pharmacy benefit managers. Here’s everything we know so far.

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Where could CVS pharmacies close?

The closures would take place in the state of Tennessee.

Why would CVS pharmacies close in Tennessee?

A bill in Tennessee has placed the business model of major pharmacy chains at the center of debate. The initiative, introduced by state Senator Bobby Harshbarger, seeks to structurally separate pharmacy benefit managers from retail pharmacies, arguing that there is a structural conflict in the pharmaceutical market.

The proposal would directly affect CVS Pharmacy, which operates 134 pharmacies in Tennessee and also owns CVS Caremark, one of the country’s leading pharmacy benefit managers (PBMs). The company has warned that, if the law is approved, it could be forced to close its stores in the state due to the inability to maintain its current corporate structure.

Supporters of the bill argue that the legislation does not mandate closures, but instead requires a clear separation between those who negotiate drug reimbursements and prices and those who operate pharmacies. According to its backers, the goal is to ensure greater transparency and competition in the market.

History of CVS Health

CVS Health’s history is a story of growth, innovation, and commitment to community health. It all began in 1963, when the first Consumer Value Store, focused on health and beauty products, opened in Lowell, Massachusetts. A year later, the company adopted the now-familiar name: CVS.

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In 1967, pharmacies were added to stores, starting in Cranston, Rhode Island, and in 1969, CVS was acquired by the Melville Corporation. During the 1970s and 1980s, the company expanded significantly, including the 1972 acquisition of 84 Clinton Drug and Discount stores. In 1981, CVS built its Technical Support Center in Woonsocket, Rhode Island, and by 1988, its 25th anniversary, it had 750 stores and $1.6 billion in sales.

Between 1990 and 2004, CVS acquired several major chains including Peoples Drug, Revco, and Eckerd. In 2005, it launched an in-store beauty advisor program, and in 2006, acquired MinuteClinic and thousands of Sav-On and Osco pharmacies. The following year, the acquisition of Caremark marked the creation of the largest pharmacy benefits manager in the country.

From 2014 to 2015, CVS purchased Coram, Omnicare, Navarro Discount Pharmacy, and Target’s pharmacies and clinics. It also removed tobacco products from its shelves and launched “Be The First,” a $50 million initiative to help create the first tobacco-free generation.

In 2017, CVS and Aetna announced a merger, finalized in 2018, which transformed the healthcare consumer experience. In 2020, the company committed to investing $600 million to fight racial inequality and played a key role in the COVID-19 response, leading efforts in testing and vaccinations.

In 2021, Karen Lynch became President and CEO. Finally, in 2023, CVS completed the acquisitions of Signify Health and Oak Street Health, strengthening its focus on primary care and home health, and reaffirming its mission to transform healthcare in the United States.

What does Tennessee’s SB 2040 establish?

SB 2040, updated and under legislative discussion through March 2026, establishes the following:

• Prohibits a pharmacy benefit manager from owning, controlling, or holding an interest in a licensed pharmacy in Tennessee.
• Bans any form of direct or indirect control, including management or financial agreements that influence pharmacy operations.
• Grants regulatory authority to the state Board of Pharmacy to oversee and enforce the structural separation.
• Provides for penalties and possible fines in cases of noncompliance.
• Sets January 1, 2027, as the effective date.

If approved without changes, the measure would require vertically integrated companies to restructure or exit the state market, sparking debate over medication access, competition, and jobs in Tennessee.

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