Senate Bill 2040, also known as the "Freedom, Access, and Integrity in Registered Pharmacy (FAIR Rx) Act," aims to amend Tennessee law regarding the ownership and control of pharmacies by pharmacy benefits managers (PBMs). The bill prohibits PBMs from acquiring or controlling any ownership interest in pharmacies, effective January 1, 2027. It establishes definitions for terms such as "affiliate," "beneficial owner," and "control," and mandates that all pharmacy license applicants disclose ownership and management structures to the Tennessee Board of Pharmacy. The legislation seeks to eliminate conflicts of interest that arise when PBMs have financial control over pharmacies, thereby promoting transparency, patient choice, and access to affordable medications.

Additionally, the bill outlines compliance requirements for pharmacies and the Board of Pharmacy's authority to enforce these regulations. It includes provisions for limited-use pharmacy licenses for rare drugs, annual reviews, and penalties for violations, which can reach up to $10,000 per day. The Board is also tasked with notifying pharmacies that may be in violation of the new regulations and allowing a grace period for those actively pursuing a sale to an unaffiliated entity. Overall, the bill aims to strengthen the integrity of Tennessee's healthcare system by ensuring that pharmacy operations remain independent from PBM influence.