CVS Sues Tennessee to Block Pharmacy Closure Legislation
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 22 2026
0mins
Source: Yahoo Finance
- Legal Challenge: On May 22, CVS filed a lawsuit in Nashville to block Tennessee's new law that would force the closure of its 136 pharmacies in the state, impacting over 2,000 employees and 1.5 million patients' access to medications.
- Legislative Background: The law, signed by Governor Bill Lee, prohibits companies from owning both pharmacies and pharmacy benefit managers (PBMs), taking effect on July 1, 2028; CVS claims this law undermines patient interests and restricts fair competition.
- Industry Impact: CVS spokesperson stated that the law would increase prescription drug costs and would not lower costs for anyone, highlighting the growing regulatory scrutiny on large healthcare corporations amid congressional and state-level focus on drug pricing.
- Lawsuit Objectives: CVS's lawsuit seeks a federal judge's ruling that the law violates federal statutes and aims to prevent Tennessee from implementing it, naming the Tennessee Board of Pharmacy and other officials as defendants, demonstrating CVS's strong opposition and commitment to protecting patient rights.
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Analyst Views on CVS
Wall Street analysts forecast CVS stock price to rise
17 Analyst Rating
16 Buy
1 Hold
0 Sell
Strong Buy
Current: 92.970
Low
91.00
Averages
96.71
High
105.00
Current: 92.970
Low
91.00
Averages
96.71
High
105.00
About CVS
CVS Health Corporation is a health solutions company. The Company's segments include Health Care Benefits, Health Services, Pharmacy & Consumer Wellness and Corporate/Other. The Health Care Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental and behavioral health plans, PDPs and Medicaid health care management services. The Health Services segment provides a full range of pharmacy benefit management (PBM) solutions through its CVS Caremark operations and delivers health care services in its medical clinics, virtually, and in the home. The Pharmacy & Consumer Wellness segment dispenses prescriptions in its CVS Pharmacy retail locations and, through its infusion operations, provides ancillary pharmacy services including pharmacy patient care programs, and vaccination administration, and sells a wide assortment of health and wellness products and general merchandise.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Efficiency Improvement: By embedding intelligent automation into pharmacy workflows, CVS Health enables pharmacists and technicians to focus more on clinical support, thereby enhancing patient care quality and reducing administrative burdens.
- Rapid Prescription Processing: The technology significantly accelerates prescription fulfillment in both retail and specialty pharmacies, particularly aiding patients in specialty settings to begin therapy faster, thus improving their treatment experience.
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- Increased Drug Accessibility: With CVS Caremark covering approximately 25 to 30 million Americans, Eli Lilly's full obesity medication portfolio is now accessible through the three largest pharmacy benefit managers in the U.S., which is expected to significantly enhance market penetration for its products.
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- Dividend Yield Advantage: Currently, CVS's dividend yield is nearly 2.9%, more than 2.5 times that of the S&P 500, and while stock growth has stagnated, its dividend remains a key attraction for investors, highlighting its importance in the current market.
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See More
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- Stock Recovery: CVS Health's stock has surged over 107% since the beginning of 2025, indicating a growing market confidence in its future prospects after several years of struggles, which may attract more investor interest.
- Dividend Appeal: With a current dividend yield of nearly 2.9%, CVS's yield is more than 2.5 times that of the S&P 500, highlighting its attractiveness; however, the sustainability of this dividend remains a key concern for long-term investors.
- Cash Flow Health: In the most recent quarter, CVS generated $4.2 billion in operating cash flow, down from $4.6 billion last year, yet still sufficient to cover its $847 million in dividend payouts, demonstrating the company's financial robustness.
- Future Projections: CVS expects its cash flow to reach at least $9.5 billion this year, comfortably covering the projected $3.39 billion in dividends, and while the company has paused annual dividend increases, its healthy cash flow supports ongoing dividend payments.
See More
CVS Health Expands GLP-1 Drug Coverage for Members
- Expanded Drug Coverage: CVS Health announced the reintroduction of Zepbound® (tirzepatide) into its commercial formularies, effective October 1, 2026, thereby providing plan sponsors with more affordable GLP-1 options to meet growing market demand.
- New Therapy Introduction: Effective June 1, 2026, CVS Caremark will lift the market block on the new oral GLP-1 therapy Foundayo™ (orforglipron), further increasing medication options and helping patients access a broader range of treatment solutions.
- Cost Reduction Strategy: CVS Caremark has successfully negotiated with drug manufacturers to lower the prices of GLP-1 medications, making these essential weight management drugs more accessible to a larger patient population, which is expected to drive overall savings in the weight management category.
- Customer Support Initiatives: CVS Caremark will provide advanced communication and support to customers and members to ensure a smooth transition to the new drug coverage, reflecting the company's ongoing commitment to reducing prescription drug costs and improving medication accessibility.
See More
CVS Health Wins 2026 Newsweek AI Impact Award
- Award Recognition: CVS Health has been awarded the 2026 Newsweek AI Impact Award for its AI-Driven Prescription Interpretation technology, highlighting its commitment to enhancing patient care through innovative AI integration in pharmacy workflows.
- Patient Safety Enhancement: By deploying trained open-source large language models, CVS Health effectively addressed the manual transcription burden of complex prescription instructions, thereby increasing the time clinicians can dedicate to direct patient support.
- Significant Outcomes in Pharmacy: The automation in retail pharmacy accelerates prescription fulfillment and reduces delays, while in specialty pharmacy, the tool enables quicker patient onboarding and prescription filling, enhancing the overall patient experience.
- Ongoing Performance Evaluation: CVS Health prioritizes patient safety and responsible AI deployment, continuously evaluating model performance against pharmacy accuracy benchmarks and ensuring pharmacists maintain final clinical authority through human-in-the-loop safeguards.
See More
CVS Health Wins 2026 Newsweek AI Impact Award
- Award Recognition: CVS Health has been awarded the 2026 Newsweek AI Impact Award for its AI-driven prescription interpretation technology, highlighting the company's innovative capabilities and commitment to patient care in the healthcare sector.
- Efficiency Improvement: By embedding intelligent automation into pharmacy workflows, CVS Health enables pharmacists and technicians to focus more on clinical support, thereby enhancing patient care quality and reducing administrative burdens.
- Rapid Prescription Processing: The technology significantly accelerates prescription fulfillment in both retail and specialty pharmacies, particularly aiding patients in specialty settings to begin therapy faster, thus improving their treatment experience.
- Ongoing Performance Evaluation: CVS Health has maintained patient safety and responsible AI deployment as foundational design principles, ensuring model performance meets pharmacy accuracy benchmarks while incorporating human-in-the-loop safeguards to uphold pharmacists' clinical authority.
See More
Eli Lilly Shares Surge After CVS Restores Zepbound and Adds Foundayo
- Stock Price Surge: Eli Lilly's shares rose 3.4% to $1,124 in afternoon trading, reflecting positive market sentiment following CVS's restoration of Zepbound as a co-preferred option, indicating strong investor confidence in the company's new drug offerings.
- Increased Drug Accessibility: With CVS Caremark covering approximately 25 to 30 million Americans, Eli Lilly's full obesity medication portfolio is now accessible through the three largest pharmacy benefit managers in the U.S., which is expected to significantly enhance market penetration for its products.
- Importance of Foundayo: Foundayo, as Eli Lilly's oral GLP-1 medication, addresses the barrier of needle aversion, and its inclusion in CVS's formulary is likely to accelerate market acceptance and reduce the typical access hurdles faced by new drugs.
- Investment and Demand Growth: Eli Lilly has invested $21 billion in U.S. manufacturing capabilities to meet surging demand for its weight-loss medications, particularly after clinical trials for Foundayo showed significant weight loss in adults aged 65 and older, further boosting market confidence in the company's growth prospects.
See More
Analysis of CVS Health's Dividend Sustainability
- Cash Flow Coverage: In the most recent quarter, CVS Health generated $4.2 billion in cash flow, which, despite a decrease from last year, was sufficient to cover its $847 million dividend payout, demonstrating the company's robust cash flow management.
- Dividend Yield Advantage: Currently, CVS's dividend yield is nearly 2.9%, more than 2.5 times that of the S&P 500, and while stock growth has stagnated, its dividend remains a key attraction for investors, highlighting its importance in the current market.
- Future Cash Flow Expectations: CVS expects its cash flow to reach at least $9.5 billion this year, comfortably covering the projected $3.39 billion in dividends, indicating financial stability and the sustainability of its dividend payments.
- Dividend Growth Pause: Although CVS has paused annual dividend increases in recent years to pay down Aetna acquisition debt, its healthy cash flow alleviates concerns about potential dividend cuts, reflecting a cautious approach to financial management.
See More
