Iowa House sends bill regulating pharmacy benefit managers to Gov. Kim Reynolds

Yahoo

13-05-2025

Pharmacists who advocated for legislation setting regulations on pharmacy benefit managers celebrated from the Iowa House gallery as the chamber sent the bill to Gov. Kim Reynolds' desk May 12, 2025. (Photo by Robin Opsahl/Iowa Capital Dispatch)
Iowa House lawmakers sent legislation to implement restrictions on pharmacy benefit managers to Gov. Kim Reynolds Monday, a bill supporters said will help keep rural pharmacies in business — but that opponents said could lead to higher insurance and drug costs for Iowans.
Pharmacists celebrated from the gallery as the House voted 75-15 Monday on Senate File 383, the legislation setting some restrictions and regulations on pharmacy benefit managers. PBMs are the entities that negotiate prescription drug prices between manufacturers, health insurance companies and pharmacies.
The bill sets new restrictions on certain PBM practices that supporters of the measure argue are major factors contributing to the closure of local and rural pharmacies in the states. It creates multiple restrictions on PBMs' use of strategies that favor a specific pharmacy to fill a prescription, like different cost-sharing rates or fees, or other financial penalties or incentives.
The legislation would also require pharmacies to be reimbursed at the average state or national acquisition cost of a drug.
Rep. Brett Barker, R-Nevada, said the bill was needed to combat practices by PBMs, which he said have manipulated the U.S. health care system and 'stacked the deck against consumers, pharmacies, employers and taxpayers.'
'These monopolistic companies have become three of the most powerful corporations in the world from profiting off an opaque and complex system at the expense of everyone else in supply chain,' Barker said. 'These abusive, anti-competitive practices have created an epidemic of pharmacy closures and rising prescription drug prices nationwide. … Community pharmacists want to care for their communities, and it's time that they get an even playing field to do just that.'
Pharmacists and advocates have spoken out in favor of the bill, saying that current PBM practices favoring mail-order prescription refills and pharmacy chains have played a major role in the closure of more than 200 pharmacies across the state, including 31 pharmacies in 2024. The measure was amended by the Senate to make some definition changes for how drug rebates received by PBMs would be passed through to health insurance companies to lower coverage costs, but Democratic Sen. Sarah Trone Garriott said the amendment could lead to higher health insurance costs for Iowans.
Some business leaders share these concerns, citing the Legislative Services Agency analysis that found the bill could result in higher costs and copays for the state's health insurance program. According to a news release Iowa Association of Business and Industry (ABI) from earlier in May, the bill could result in an additional $340 million in costs for private-sector health insurance plans and raised costs of approximately $169 per insured Iowan annually.
Leaders representing business organizations like ABI, the Iowa Business Council and Iowa chapter of the National Federation of Independent Business released a statement urging lawmakers to make further changes to the legislation that will ensure health coverage costs do not rise for Iowans.
'ABI members and Iowa businesses support policies that improves access to care. But this legislation simply shifts hundreds of millions of dollars in new costs to employers and working families,' Nicole Crain, ABI president said in the news release.
Rep. Jeff Cooling, D-Cedar Rapids, introduced an amendment that he said would limit prescription drug cost increases for Iowans, but the proposal failed. He said he believed the portion of the bill setting a dispensing reimbursement fee of $10.68 from PBMs to pharmacists for each prescription would be a cost put on Iowans filling their prescriptions.
Cooling said the bill allows the insurance or employer group to decide whether to cover the dispensing fee.
'As a representative in this state, I can't imagine an employer that is going to say, 'yes, that's okay insurance company, raise my rates, I'll cover that,'' Cooling said. 'What to me seems far more likely is (saying), 'no pass that on.' So I believe a vote for this is a vote to raise prescription costs per fill by $10.68 if someone fills them at an independent pharmacy.'
He also said this provision will likely further incentivize Iowans to fill their prescriptions at larger pharmacies and increase financial pressures on independent and rural pharmacies, as people filling their prescriptions at larger, chain companies which do not receive the $10.68 dispensing fee.
'That's fine, but when folks figure out that they can go to a larger pharmacy and not have to pay that $10.68 at the counter, where do you think they're going to go to save money?' Coolin said. 'That's what I think will happen. I think even with the best of intentions with this bill, that it will not fix the problem that we all want to fix.'
But the Iowa Pharmacy Association, a major supporter of the bill, released a statement urging the legislation, as passed by the Senate, to go to the governor's desk. In a news release, the organization stated other states have implemented similar PBM regulations and have not seen health insurance premiums increase.
Wes Pilkington, the president-elect of the Iowa Pharmacy Association Board of Trustees and owner of Evans Crossing Pharmacy, said in a statement that further changes to the bill 'are only designed to protect the massive profits of Big Insurance and the PBMs they own.'
'Big Insurance makes huge profits on the current system which leads to pharmacy closures and harm to Iowa's patients,' Pilkington said. 'This legislation is designed to help Iowa pharmacies, NOT protect Fortune 10 insurance companies.'
Barker dismissed the criticisms of the bill as misinformation.
'Despite mistruths many you have heard in this room tonight, dark money, astroturf campaigns and fear mongering, we have a really good bill in front of us that will move the needle to protect vital health care infrastructure in our state,' Barker said. '… By sending this bill to the governor, Iowa will take a huge step to catch back up with states across the country who have taken a leading role in reforming a broken system by reining in abusive PBM practices.'
Kate Gainer, CEO of the Iowa Pharmacy Association, celebrated the bill's passage in a statement Monday.
'This bill is a critical step toward protecting Iowa's local pharmacies and ensuring accountability for PBMs, whose practices have forced Iowa pharmacies to shutter their doors and countless Iowans to lose healthcare access,' Gainer said. 'With states nationwide enacting similar reforms, we're grateful the House and Senate have paved the way for Governor Reynolds to sign this bill and safeguard Iowa's pharmacies and the patients they serve.'