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Bill in Iowa legislature proposes new rules for Pharmacy Benefit Managers
Pharmacists are praising a bill under consideration in the Iowa House and Senate that would set new restrictions on pharmacy benefit managers or PBMs.
Critics accuse PBMs of pocketing part of the money that should instead be reimbursing the pharmacies that fill prescriptions. During a House subcommittee hearing on the bill, Iowa Pharmacy Association executive director Kate Gainor said two dozen pharmacies closed in Iowa last year.
“Meaningful PBM reform provides regulatory oversight and authority to our state over these powerful middlemen that control much of the pharmaceutical supply chain,” she said, “and control drug pricing and reimbursement to our state’s pharmacies.”
Charlie Hartig, CEO of the Dubuque-based Hartig Drug Company, told lawmakers two of its 15 pharmacies closed last year. “From July ’24 through September ’24, just the third quarter of our business, Hartig Drug filled over 3500 brand products for a net loss of $48,000,” he said. “It’s not a lot of businesses that can fill 3500 prescriptions for a $50,000 loss and make it in business.”
Scott Koener, the chief pharmacist for MercyOne hospitals and clinics in Iowa, said there are now “pharmacy deserts” that were created by the PBMs.
“PBMS negatively impact doctors’ and hospitals’ ability to serve our patients in Iowa by restricting patient access and increasing drug costs,” Koener said.
Insurance companies say PBMs are controlling the price of medications and the bill would lead to increased costs. Scott Sundstrom is a lobbyist for Wellmark Blue Cross and Blue Shield of Iowa, the state’s dominant insurance carrier.
“This is a massive bill that will have massive changes to how pharmacy benefits are administered, structured and paid for,” Sundstrom said. “We do anticipate there will be quite significant costs.”
Matt McKinney, a lobbyist for Principal Financial Group and the Federation of Iowa Insurers, also testified “This bill will absolutely result in more money going to pharmacies, probably hundreds of millions of dollars,” McKinney said. “…Patients and Iowa businesses are going to be paying these hundreds of millions of dollars.”
Sharon Presnall, a senior VP at the Iowa Bankers Association, said the Iowa Bankers Insurance and Services health plan that covers 21,000 Iowans would be affected if the bill becomes law. “We estimate that just two provisions in the bill cost our plan an estimated $17 million annually and we are still assessing other cost drivers in the bill,” Presnall said.
The chair of a House committee said she’s eager to take action on the bill, which is largely patterned after a law in West Virginia. Hundreds of pharmacists and pharmacy students are at the Capitol Wednesday, lobbying for the bill.
