Iowa groups urge Reynolds to veto pharmacy reform bill
Several influential business organizations in Iowa are urging Gov. Kim Reynolds to veto a bill that would reform the operations of pharmacy benefit managers (PBMs) in the state — a move they warn could impose hundreds of millions in new costs on employers and consumers.
Why it matters: PBMs — middleman companies that negotiate drug prices on behalf of health insurers — are under scrutiny from both pharmacies and lawmakers nationwide for reimbursing pharmacies at rates lower than the cost of acquiring medications.
Senate File 383, which passed both chambers with bipartisan support, aims to regulate their practices in response to a wave of pharmacy closures across Iowa.
Catch up quick: The legislation includes a $10.68 minimum dispensing fee to be paid to pharmacies by PBMs, a provision supporters say is crucial to keeping small-town pharmacies afloat.
More than 200 have closed in Iowa since 2014, including a record 31 last year, according to the Iowa Pharmacy Association.
Driving the news: The Iowa Association of Business and Industry (ABI), Iowa Bankers Association, Iowa Business Council and National Federation of Independent Business jointly issued a statement soon after the bill passed the Iowa Senate late Monday, calling it the costliest health care mandate in state history.
The groups unsuccessfully backed an amendment that would have limited the dispensing fee to independent pharmacies with annual revenues of less than $250 million.
The version of the bill that's now before Reynolds could cost Iowans an additional $340 million annually via higher costs for prescription drugs and insurance, they estimate.
Stunning stat: Hy-Vee, Iowa's largest pharmacy retailer, is projected to receive an additional $66 million annually under the bill, according to ABI, which used data from the Kaiser Family Foundation for its estimate.
Zoom in: Hy-Vee deferred Axios' request for comment to the Iowa Pharmacy Association, which accused the opponents of using scare tactics and questionable math.
The bill could instead help Iowans save on prescription drugs and protect access to local pharmacies like other states have done, Kate Gainer, CEO of the association, tells Axios.
The big picture: All 50 states have enacted at least one law in the last decade that regulates pharmacy benefit managers, according to the National Academy for State Health Policy.
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'This is a sad day for Iowa that will be long remembered,' Johanssen said. Reynolds said the bill would impact 'more than just CO2 infrastructure' and would change permitting rules 'across the board,' giving 'uncertainty into critical energy projects.' Opponents of the bill called the insurance requirements 'untenable.' The American Petroleum Institute's Midwest Regional Director Mike Karbo said the bill had 'unprecedented and unfeasible requirements' that would have hindered future projects in the state. 'Since there are no refineries in the state, critical energy infrastructure, such as pipelines, are crucial in ensuring Iowans have a reliable source of energy, and certainty is needed to develop the infrastructure network,' Karbo said. 'We thank the Governor for doing what is right for the future of energy development in the state.' Reynolds said HF 639 included 'a few helpful provisions' and the surrounding debate 'highlighted' areas for progress. 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We will not stop fighting and stand firm on our commitment until landowners' in Iowa are protected against Eminent Domain for private gain.' Rep. Charley Thomson, R-Charles City, said he was 'very disappointed' in the governor's decision and that he was supportive of a special session to override the veto. Two-thirds of the Legislature must sign a petition to request a special session, and to override a veto, two-thirds of the members from each chamber must vote to pass the bill again. Sen. Jack Whitver, R-Grimes, the majority leader for the chamber, said he expects most of his caucus will 'not be interested in any attempt' to override the governor's veto. The bill likely would not have advanced in the Senate had it not been for a dozen Republican senators who vowed to block necessary budget legislation until the chamber debated eminent domain. The 12 were also joined by Senate Democrats in pushing for amendments, which were ultimately defeated, and approval of the bill. Senate Democrats said the fight for property rights will continue. 'I'm disappointed by the governor's veto of HF639, but, unfortunately, I cannot say I'm surprised,' Sen. Janice Weiner, D-Iowa City, said. 'There is simply no amount of political posturing or legislative stonewalling that can deny the fact that Iowans' right to private property should never be infringed upon for private gain.' One of the 12 to disagree with the Senate majority, Sen. Kevin Alons, R-Salix, said signing the bill was 'the single option available' to protect the rights of impacted landowners. Alons pledged to 'never quit working' on the issue, but said that means 'very little' to landowners who have been impacted by the 'unprecedented, and unconstitutional land grab.' 'To be clear: the Iowa government has given this private company the right to take people's land for one reason: corporate earnings,' Alons said in a statement. 'This has nothing to do with public use. It's absolutely not necessary for the ethanol industry in our state … And it certainly is not what the founders had in mind.' Alons said when the Legislature returns in January, he and other lawmakers 'will use every tool at our disposal' to 'return property rights back to the people.' Rep. Steven Holt, R-Denison, who sponsored the legislation, wrote in a social media post he was 'profoundly disappointed' by the veto. Holt said the state constitution and the Republican platform are clear in their message that eminent domain is for public use projects. 'Today the Governor has chosen to ignore landowners, the vast majority of the Legislature, the Republican Party Platform and the Iowa Constitution by choosing the economic development argument of special interests,' Holt wrote. Holt said Reynolds, and the Senate had opportunities of the past several years to offer their own suggestions to the eminent domain issue instead of opposing House legislation. 'On behalf of the people of Iowa and their fundamental property rights, the Governor's veto should be overridden,' he wrote. 'This fight for who we are as Republicans is far from over.' House Democratic Leader Rep. Brian Meyer said parties in the House collaborated to 'protect property rights.' 'At the end of the day, there is only one group to blame for the failure of the eminent domain bill: Iowa Republican lawmakers,' Meyer said in a statement. The first phase of the Summit Carbon Solutions project was approved by IUC nearly a year ago, which granted Summit the right to condemn easements from landowners who do not want to voluntarily sign agreements to put the pipeline on their land. Per the Iowa permit, Summit still needs a permit from South Dakota, which it has been denied twice, to begin construction. SUPPORT: YOU MAKE OUR WORK POSSIBLE
