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HF 852 – Regulation of Pharmacy Benefit Managers (LSB1492HV)
Staff Contact: Xavier Leonard (515.725.0509) xavier.leonard@legis.iowa.gov
Fiscal Note Version – New
Description
House File 852 relates to pharmacy benefits managers (PBMs), pharmacies, and prescription
drugs and does the following:
• Prohibits PBMs, health carriers, health benefit plans, and third-party payors from
discriminating against a pharmacy or a pharmacist with respect to listed actions in the Bill.
• Prohibits certain conduct by a PBM.
• Requires third-party payors to perform certain actions as described in the Bill.
• Prohibits the Iowa Insurance Commissioner (Commissioner) from certifying a PBM or
licensing an insurance producer that is not in compliance with new Iowa Code section
510B.4B, permits a covered person or pharmacy injured by a violation of this section to
maintain a cause of action to enjoin the continuation of the violation, and provides
exceptions to this section.
• Sets additional cost-sharing requirements, including requirements for point-of-sale
calculations and a covered person’s contribution and deductible calculations.
• Requires PBMs to reimburse pharmacies according to the National Average Drug
Acquisition Cost (NADAC) or, if unavailable, the wholesale acquisition cost on the date the
prescription drug is administered or dispensed.
• Requires PBMs to reimburse pharmacies a professional dispensing fee in an amount that is
not less than the pharmacy dispensing fee published in the Iowa Medicaid enterprise
provider fee schedule on the date that the prescription drug is administered or dispensed.
• Requires all contracts as of FY 2026 that apply to prescription drug benefits for CY 2026 or
after between a third-party payor and either a person or a PBM to include the following
requirements:
• The PBM must use pass-through pricing unless criteria are met, in which case the PBM
may use direct or indirect spread pricing.
• Payments received by a PBM for services provided to a third-party payor or a pharmacy
shall be distributed pursuant to the relevant contract or as otherwise specified by law.
• Unless otherwise prohibited by law, these requirements will supersede any contractual
terms to the contrary in the above contracts.
• Requires a PBM to provide a reasonable process to appeal a reimbursement rate if the PBM
violates Iowa Code section 510B.8A. Upon a PBM’s denial of a pharmacy’s appeal, the
PBM is required to provide the name of a wholesale distributor from which the pharmacy can
obtain the prescription drug at or below the reimbursement rate. Includes requirements if
the prescription drug identified is not available below the pharmacy acquisition cost from the
wholesale distributor from which the pharmacy purchases the majority of its prescription
drugs.
• Includes requirements for the appeal process. If the PBM denies a pharmacy’s appeal, the
pharmacy may submit the denial to the Commissioner for examination.
House File 852 is applicable to PBMs that manage a prescription drug benefit in the State on or
after July 1, 2025.
Fiscal Note
Fiscal Services Division 2
Background
Iowa Code chapter 510B regulates PBMs; sets standards of conduct; provides requirements for
contacting covered persons, substituting prescription drugs, and establishing various
cost-control mechanisms; and establishes the Commissioner as the enforcement body for the
chapter.
Effective October 1, 2024, the Iowa Medicaid enterprise provider fee schedule pharmacy
dispensing fee is $10.63.
Figure 1 shows pharmacy spend in 2024 by plan. The State of Iowa costs were provided by
Wellmark and exclude claims incurred but unpaid as of February 11, 2025. The Regents
universities’ costs were provided by the Board of Regents (BOR) and are as of
February 17, 2025.
Figure 1 — CY 2024 Pharmacy Spend by Plan
Assumptions
• Provisions of the Bill related to point-of-sale rebates will apply infrequently to the State of
Iowa plan because the plan currently applies copays on drug coverage. Therefore, the
fiscal impact of this provision is anticipated to be minimal.
• According to Wellmark, provisions of the Bill related to the NADAC requirements are
estimated to impact annual costs to the State of Iowa plan by between a decrease of
$2.2 million and an increase of $5.2 million. The lower end of this range is more likely, but
according to Wellmark, the impact is expected to rise to the higher end of the range in later
years.
• The increased cost associated with higher dispensing fees will be split 80/20 between the
State of Iowa plan and the member.
• Requiring a $10.63 professional dispensing fee is estimated to cost the State of Iowa plan
an estimated $4.7 million annually. An additional $1.2 million is estimated to be paid in the
form of higher copays by plan members for a portion of the $10.63 professional dispensing
fee cost due to low-cost generic medications that are currently reimbursed below the
member copay level rising above that threshold.
• The prohibition of exclusive pharmacy relationships is estimated to increase the cost of
specialty drugs by 6.0%. It is estimated that this may cost the State of Iowa plan
approximately $2.5 million each year.
• According to Wellmark, it is unclear whether the provisions of the Bill related to copay
coupons apply to the State’s self-funded plan. If the provisions do apply, it is estimated that
the copay coupon provisions may increase annual costs to the State of Iowa plan by
between $1.7 million and $2.5 million.
• According to the Iowa Insurance Division (IID), the provisions of this Bill will require the IID
to hire 4.0 additional full-time equivalent (FTE) positions with an estimated annual cost of
$600,000.
• It is unknown whether the IID will need additional office space and supplies for these
positions. State University of Iowa 113,900,000$
Iowa State University 23,500,000
University of Northern Iowa 8,200,000
University Total 145,600,000$
State of Iowa 97,600,000
Total 243,200,000$ 3
• According to the IID, it is unknown what the job classifications of these positions will be.
• Each of these positions will begin at the start of FY 2026. The positions will be focused
on PBM-related duties within the Company Regulation Bureau and the Market
Regulation Bureau of the IID.
Fiscal Impact — State of Iowa Plan
House File 852 is estimated to increase annual costs to the State of Iowa plan by between
$5.1 million and $15.5 million beginning in FY 2026. It is estimated that the lower end of this
range is more likely to occur in FY 2026. An additional $1.2 million is estimated to be paid
annually in the form of higher copays by plan members for a portion of the $10.63 professional
dispensing fee cost.
Figure 2 below shows the low-end and high-end estimated annual fiscal impact of House File
852 on the State of Iowa plan. It does not include the $1.2 million anticipated to be paid by plan
members in the form of higher copays. The high-end estimate assumes the copay coupons
provisions apply to the State of Iowa plan, while the low-end estimate assumes these provisions
do not apply.
Figure 2 — Low-End and High-End Estimated Annual Fiscal Impact of House File 852 on
the State of Iowa Plan
According to Wellmark, the annual fiscal impact associated with the NADAC requirements is
expected to be in the lower end of the range but may rise toward or exceed the higher end of
the range in later years.
Fiscal Impact — Iowa Insurance Division (IID)
The Bill is estimated to increase annual costs to the IID by $600,000 and 4.0 FTE positions.
According to the IID, the positions will be focused on PBM-related duties within the Company
Regulation Bureau and the Market Regulation Bureau, but the job classification of these
positions is unknown.
Fiscal Impact — BOR
The Legislative Services Agency (LSA) has not received a response to multiple requests for
information from the BOR related to its insurance plans. As a result, the LSA is unable to
estimate the full fiscal impact to the BOR; however, the fiscal impact is anticipated to be
significant.
The impact of the provisions of the Bill related to point-of-sale rebates, the NADAC
requirements, the prohibition of exclusive pharmacy relationships, and copay coupons on the
BOR plans is unknown. Figure 3 below shows the estimated increase in annual dispensing fee
costs for each Regent university’s plan under House File 852.
Low-End High-End
NADAC Requirements -2,200,000$ 5,200,000$
Dispensing Fees 4,722,000 4,800,000
Preferred/Tiered Pharmacies2,538,000 3,000,000
Copay Coupons 0 2,518,000
Total 5,060,000$ 15,518,000$
State of Iowa Plan 4
Figure 3 — Estimated Fiscal Impact of Dispensing Fee Provisions on the BOR Plans
It is unknown whether a portion of the costs associated with the increased dispensing fees will
be paid in the form of higher copays by plan members.
Sources
Iowa Department of Health and Human Services, Pharmacy Dispensing Fee Schedule
Iowa Insurance Division, Department of Insurance and Financial Services
Legislative Services Agency
Board of Regents
Wellmark
/s/ Jennifer Acton
April 16, 2025
Doc ID 1525243
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
www.legis.iowa.gov Current Proposed Difference
State University of Iowa $ 246,000 $ 6,569,000 $ 6,323,000
Iowa State University 77,000 1,743,000 1,666,000
University of Northern Iowa 24,000 455,000 431,000
University Total $ 348,000 $ 8,767,000 $ 8,419,000