Arkansas Act 531: PBM Rules, NADAC Floor, and Audit Protections

Arkansas law on pharmacy benefit managers is built on Act 665 of 2021, not Act 531, which amended mortgage lending rules and has nothing to do with prescription drugs.¹ The correct statute — the Arkansas PBM law most people are searching for — is the Arkansas Pharmacy Benefits Manager Licensure Act, codified at Arkansas Code § 23-92-501 and following sections, together with the Pharmacy Audit Bill of Rights at § 17-92-1201 and follow-up legislation in 2023 and 2025.² Read together, these laws license PBMs, set a floor on what they must pay pharmacies, ban spread pricing, force rebates to lower patient copays, control how PBM audits work, and — pending federal litigation — try to keep PBMs out of the pharmacy business entirely.

Who Must Be Licensed and Who Regulates Them

Any PBM that administers or processes pharmacy benefits for a health plan covering Arkansas residents must hold a license from the Arkansas Insurance Department (AID). That covers PBMs working with private insurers, employer-sponsored plans, and government programs, subject to the ERISA limits discussed at the end.

The Insurance Commissioner’s rulemaking authority under § 23-92-509 is broad. It reaches licensing and application fees, financial solvency, network adequacy, prohibited market conduct, data reporting, rebates, and compensation.³ AID has used that authority to issue Rule 118, which sets the detailed compliance and reporting standards PBMs must follow.⁴ The Commissioner can also examine a PBM’s books to determine the rebates it received, how much it passed on to health plans, how much reached patients at the point of sale, and the spread between what the health plan paid the PBM and what the PBM paid the pharmacy.⁵

The NADAC Reimbursement Floor

PBMs use Maximum Allowable Cost (MAC) lists to cap what they pay pharmacies for generic drugs. Arkansas requires each PBM to file its MAC pricing methodologies with AID, including data sources and update schedules. Under Rule 128, a PBM cannot pay an Arkansas pharmacy less than the National Average Drug Acquisition Cost (NADAC), the federal benchmark for what pharmacies actually pay for drugs. If NADAC data isn’t available for a product, the wholesale acquisition cost serves as the floor instead.²

A pharmacy that believes a MAC rate has fallen below its acquisition cost has an administrative appeal. If the pharmacy’s usual wholesaler cannot supply the drug at or below the MAC rate, the PBM must raise the reimbursement to cover actual acquisition cost and let the pharmacy reverse and rebill each affected claim.⁶

Spread Pricing Is Banned

Spread pricing is the practice of charging a health plan more for a drug than the PBM pays the pharmacy and keeping the difference. Section 23-92-505(c) prohibits it outright.⁵ Because neither the pharmacy nor the health plan necessarily sees the gap, the Commissioner’s audit power over PBM books is what makes the ban enforceable.

Audit Protections for Pharmacies

The Pharmacy Audit Bill of Rights at § 17-92-1201 sets out how PBM audits of Arkansas pharmacies must be conducted.⁷ The core rules:

The auditor must give at least one week’s notice before an initial on-site audit, and cannot start an audit during the first seven calendar days of any month.
An audit cannot look back more than 24 months from the date the claim was submitted or adjudicated.
Outside fraud investigations, a PBM cannot audit the same pharmacy more than twice in a calendar year.
Recoupment must be based on actual overpayments. Extrapolating a larger recovery from a sample is not allowed.
Any audit involving clinical or professional judgment must be conducted by or in consultation with a pharmacist.
The pharmacy gets at least 30 days after the preliminary audit report to produce documentation on any discrepancy.
The preliminary audit report is due within 120 days after the audit closes, and the final report within six months after the preliminary report or the final appeal, whichever is later.

These protections do not apply to audits involving alleged fraud, willful misrepresentation, or abuse, including Medicaid fraud and insurance fraud.⁷

Rebates Have to Lower What Patients Pay

Drug manufacturers pay rebates to PBMs in exchange for favorable formulary placement. Under § 23-92-704, a patient’s cost-sharing at the point of sale — deductible, copay, or coinsurance — must be calculated on a price reduced by 100 percent of all rebates the PBM received or expects to receive on that prescription.⁸ A PBM can pass along more than the rebate, but never less.

So if a drug has a $200 list price and the PBM receives a $60 rebate, your copay or coinsurance is calculated on the $140 net price, not the sticker price.

Network Access and Anti-Steering

The Commissioner must adopt network adequacy rules at least as strict as federal Tricare or Medicare Part D standards. In urban areas, at least 90 percent of covered individuals must live within two miles of a network retail community pharmacy. In suburban areas the distance extends to five miles. In rural areas, 70 percent of covered individuals must live within 15 miles of a network pharmacy. Mail-order pharmacies do not count toward these calculations.³ These standards work with anti-steering rules that prevent PBMs from pushing patients toward their own mail-order or affiliated pharmacies at the expense of access.

Act 624 of 2025: The Pharmacy Ownership Ban

Act 624 prohibits a PBM from directly or indirectly holding a pharmacy permit for the retail sale of drugs in Arkansas. The ban covers brick-and-mortar and mail-order pharmacies and was set to take effect January 1, 2026.⁹

Caremark and Express Scripts sued. On July 28, 2025, a federal district court in the Eastern District of Arkansas granted a preliminary injunction blocking enforcement while the case proceeds. The Arkansas State Board of Pharmacy filed a notice of appeal on July 31, 2025. As of early 2026 the injunction remains in place and the consolidated case, Express Scripts Inc. et al. v. Richmond et al., is ongoing. Whether the ban survives will likely turn on federal preemption and Commerce Clause questions.

Enforcement and Penalties

Section 23-92-509 requires the Commissioner to establish penalties for violations, including monetary fines, license suspension, and license revocation.³ In 2024, Governor Sanders and Insurance Commissioner Alan McClain announced enforcement actions against Caremark, Magellan, Express Scripts, and MedImpact for paying Arkansas pharmacies below NADAC. The Department sought $5,000 per below-NADAC payment, with total exposure potentially reaching into the millions given claim volumes.¹⁰ Pharmacies and patients can submit PBM complaints directly to AID.²

Which Plans Are Actually Covered

Arkansas’s PBM rules do not reach every health plan equally. Fully insured employer plans, state and local government employee plans, Medicaid plans, and individual health insurance plans fall squarely under state authority.

Self-funded employer plans, where the employer directly bears claim risk instead of buying insurance, are different. ERISA gives the federal government exclusive authority over those plans and preempts state laws that “relate to” them. In Rutledge v. Pharmaceutical Care Management Association (2020), the U.S. Supreme Court unanimously held that Arkansas’s MAC reimbursement rules are a permissible form of state cost regulation not preempted by ERISA, because they affect plan costs without dictating a coverage scheme and do not single out ERISA plans.⁶ After Rutledge, cost rules like the NADAC floor likely apply even where a self-funded plan is involved, but more prescriptive requirements — the pharmacy ownership ban in Act 624 is the clearest example — face stronger preemption arguments. If your pharmacy benefits come through a large self-funded employer, how much of Arkansas’s protection you actually get may depend on how courts resolve those disputes.

1
Arkansas State Legislature. Search Acts by Range – 2021 Regular Session
2
Arkansas Insurance Department. Pharmacy Benefits Manager Regulation
3
Justia. Arkansas Code 23-92-509 – Rules
4
Arkansas Insurance Department. Arkansas Rule 118 – Pharmacy Benefits Managers Regulation
5
Justia. Arkansas Code 23-92-505 – Pharmacy Benefits Manager Licensure, Regulation, and Transparency
6
U.S. Supreme Court. Rutledge v. Pharmaceutical Care Management Association
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Justia. Arkansas Code 17-92-1201 – Arkansas Pharmacy Audit Bill of Rights
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Justia. Arkansas Code 23-92-704 – Implementation of Subchapter
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Arkansas General Assembly. Arkansas Act 624 of 2025 – Prohibition on Pharmacy Benefits Manager Obtaining Certain Pharmacy Permits
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Arkansas Governor. Governor Sanders, Arkansas Insurance Department Enforce Arkansas Law Against PBMs