Senate Study Bill 1074 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON HEALTH AND HUMAN SERVICES BILL BY CHAIRPERSON KLIMESH) A BILL FOR An Act relating to pharmacy benefits managers, pharmacies, and 1 prescription drugs and including applicability provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1492XC (2) 91 nls/ko
S.F. _____ Section 1. Section 510B.1, Code 2025, is amended by adding 1 the following new subsections: 2 NEW SUBSECTION . 11A. Pass-through pricing means a 3 model of prescription drug pricing in which payments made 4 by a third-party payor to a pharmacy benefits manager for 5 prescription drugs are equivalent to the payments the pharmacy 6 benefits manager makes to the dispensing pharmacy or dispensing 7 health care provider for the prescription drugs, including any 8 professional dispensing fee. 9 NEW SUBSECTION . 21A. Spread pricing means a pharmacy 10 benefits manager charges a third-party payor more for 11 prescription drugs dispensed to a covered person than the 12 amount the pharmacy benefits manager reimburses the pharmacy 13 for dispensing the prescription drugs to a covered person. 14 Sec. 2. Section 510B.4, Code 2025, is amended by adding the 15 following new subsection: 16 NEW SUBSECTION . 4. A pharmacy benefits manager, health 17 carrier, health benefit plan, or third-party payor shall not 18 discriminate against a pharmacy or a pharmacist with respect to 19 participation, referral, reimbursement of a covered service, 20 or indemnification if a pharmacist is acting within the scope 21 of the pharmacists license and the pharmacy is operating in 22 compliance with all applicable laws and rules. 23 Sec. 3. NEW SECTION . 510B.4B Prohibited conduct pharmacy 24 rights. 25 1. A pharmacy benefits manager shall not do any of the 26 following: 27 a. Where a pharmacy or pharmacist has agreed to participate 28 in a covered persons health benefit plan, prohibit or limit 29 the covered person from selecting a pharmacy or pharmacist of 30 the covered persons choice, or impose a monetary advantage 31 or penalty that would affect a covered persons choice. A 32 monetary advantage or penalty includes a higher copayment, a 33 reduction in reimbursement for services, or promotion of one 34 participating pharmacy over another. 35 -1- LSB 1492XC (2) 91 nls/ko 1/ 10
S.F. _____ b. Deny a pharmacy or pharmacist the right to participate as 1 a contract provider under a health benefit plan if the pharmacy 2 or pharmacist agrees to provide pharmacy services that meet 3 the terms and requirements of the health benefit plan and the 4 pharmacy or pharmacist agrees to the terms of reimbursement set 5 forth by the third-party payor. 6 c. Impose upon a pharmacy or pharmacist, as a condition 7 of participation in a third-party payor network, any course 8 of study, accreditation, certification, or credentialing that 9 is inconsistent with, more stringent than, or in addition to 10 state requirements for licensure or certification, and the 11 administrative rules adopted by the board of pharmacy. 12 d. Unreasonably designate a prescription drug as a 13 specialty drug to prevent a covered person from accessing 14 the prescription drug, or limiting a covered persons access 15 to the prescription drug, from a pharmacy or pharmacist that 16 is within the health carriers network. A covered person or 17 pharmacy harmed by an alleged violation of this paragraph may 18 file a complaint with the commissioner, and the commissioner 19 shall, in consultation with the board of pharmacy, make a 20 determination as to whether the covered prescription drug meets 21 the definition of a specialty drug. 22 e. Require a covered person, as a condition of payment 23 or reimbursement, to purchase pharmacy services, including 24 prescription drugs, exclusively through a mail order pharmacy. 25 f. Impose upon a covered person a copayment, reimbursement 26 amount, number of days of a prescription drug supply for 27 which reimbursement will be allowed, or any other payment 28 or condition relating to purchasing pharmacy services from 29 a pharmacy that is more costly or restrictive than would be 30 imposed upon the covered person if such pharmacy services were 31 purchased from a mail order pharmacy, or any other pharmacy 32 that can provide the same pharmacy services for the same cost 33 and copayment as a mail order service. 34 2. a. If a third-party payor providing reimbursement to 35 -2- LSB 1492XC (2) 91 nls/ko 2/ 10
S.F. _____ covered persons for prescription drugs restricts pharmacy 1 participation, the third-party payor shall notify, in writing, 2 all pharmacies within the geographical coverage area of the 3 health benefit plan restriction, and offer the pharmacies 4 the opportunity to participate in the health benefit plan at 5 least sixty days prior to the effective date of the health 6 benefit plan restriction. All pharmacies in the geographical 7 coverage area of the health benefit plan shall be eligible to 8 participate under identical reimbursement terms for providing 9 pharmacy services and prescription drugs. 10 b. The third-party payor shall inform covered persons of 11 the names and locations of all pharmacies participating in 12 the health benefit plan as providers of pharmacy services and 13 prescription drugs. 14 c. A participating pharmacy shall be entitled to announce 15 the pharmacys participation in the health benefit plan to the 16 pharmacys customers. 17 3. The commissioner shall not certify a pharmacy benefits 18 manager or license an insurance producer that is not in 19 compliance with this section. 20 4. A covered person or pharmacy injured by a violation 21 of this section may maintain a cause of action to enjoin the 22 continuation of the violation. 23 5. This section shall not apply to an entity that owns 24 and operates the entitys own facility, employs or contracts 25 with physicians, pharmacists, nurses, or other health care 26 personnel, and that dispenses prescription drugs from the 27 entitys pharmacy to the entitys employees and dependents 28 enrolled in the entitys health benefit plan, except that 29 this section shall apply to an entity otherwise excluded that 30 contracts with an outside pharmacy or group of pharmacies 31 to provide prescription drugs and services to the entitys 32 employees and dependents enrolled in the entitys health 33 benefit plan. 34 Sec. 4. Section 510B.8, Code 2025, is amended by adding the 35 -3- LSB 1492XC (2) 91 nls/ko 3/ 10
S.F. _____ following new subsections: 1 NEW SUBSECTION . 3. A pharmacy benefits manager shall not 2 impose different cost-sharing or additional fees on a covered 3 person based on the pharmacy at which the covered person fills 4 a prescription drug order. 5 NEW SUBSECTION . 4. a. A covered persons cost-sharing 6 for a prescription drug shall be calculated at the point of 7 sale based on a price that is reduced by an amount equal to 8 at least one hundred percent of all rebates that have been 9 received, or that will be received, by the health carrier or a 10 pharmacy benefits manager in connection with the dispensing or 11 administration of the prescription drug. 12 b. A health carrier shall not be precluded from decreasing 13 a covered persons cost-sharing by an amount greater than the 14 covered persons cost-sharing as calculated under paragraph 15 a . 16 NEW SUBSECTION . 5. A pharmacy benefits manager shall 17 include any amount paid by a covered person, or on behalf of 18 a covered person, when calculating the covered persons total 19 contribution toward the covered persons cost-sharing. 20 NEW SUBSECTION . 6. Any amount paid by a covered person for 21 a prescription drug shall be applied to any deductible imposed 22 on the covered person by the covered persons health benefit 23 plan in accordance with the health benefit plans coverage 24 documents. 25 Sec. 5. Section 510B.8B, Code 2025, is amended to read as 26 follows: 27 510B.8B Pharmacy benefits manager affiliates managers 28 reimbursement reimbursements . 29 1. A pharmacy benefits manager shall not reimburse any 30 pharmacy located in the state in an amount less than the amount 31 that the pharmacy benefits manager reimburses a pharmacy 32 benefits manager affiliate for dispensing the same prescription 33 drug as dispensed by the pharmacy. The reimbursement amount 34 shall be calculated on a per unit basis based on the same 35 -4- LSB 1492XC (2) 91 nls/ko 4/ 10
S.F. _____ generic product identifier or generic code number. 1 2. A pharmacy benefits manager shall not reimburse any 2 pharmacy located in the state in an amount less than the most 3 recently published national average drug acquisition cost or 4 the Iowa average acquisition cost for the prescription drug 5 on the date that the prescription drug is administered or 6 dispensed. If the most recently published national average 7 drug acquisition cost and the Iowa average acquisition cost 8 for the prescription drug are unavailable on the date that the 9 prescription drug is administered or dispensed, a pharmacy 10 benefits manager shall not reimburse any pharmacy located in 11 the state in an amount less than the wholesale acquisition cost 12 for the prescription drug on the date that the prescription 13 drug is administered or dispensed. 14 3. In addition to the reimbursement required under 15 subsection 2, a pharmacy benefits manager shall reimburse the 16 pharmacy or pharmacist a professional dispensing fee in an 17 amount not less than the pharmacy dispensing fee published in 18 the Iowa Medicaid enterprise provider fee schedule on the date 19 that the prescription drug is administered or dispensed. 20 4. A pharmacy may decline to dispense a prescription drug 21 to a covered person if the requirements of subsections 2 and 3 22 cannot be met. 23 Sec. 6. NEW SECTION . 510B.8D Pharmacy benefits manager 24 contracts spread pricing. 25 1. All contracts executed, amended, adjusted, or renewed 26 on or after July 1, 2025, that apply to prescription drug 27 benefits on or after January 1, 2026, between a pharmacy 28 benefits manager and a third-party payor, or between a person 29 and a third-party payor, shall include all of the following 30 requirements: 31 a. The pharmacy benefits manager shall use pass-through 32 pricing unless paragraph b applies. 33 b. The pharmacy benefits manager may use direct or indirect 34 spread pricing only if the difference between the amount the 35 -5- LSB 1492XC (2) 91 nls/ko 5/ 10
S.F. _____ third-party payor pays the pharmacy benefits manager for a 1 prescription drug and the amount the pharmacy benefits manager 2 reimburses the dispensing pharmacy or dispensing health care 3 provider for the prescription drug is passed through by the 4 pharmacy benefits manager to the person contracted to receive 5 third-party payor services. 6 c. Payments received by a pharmacy benefits manager for 7 services provided by the pharmacy benefits manager to a 8 third-party payor or to a pharmacy shall be used or distributed 9 pursuant to the pharmacy benefits managers contract with 10 the third-party payor or with the pharmacy, or as otherwise 11 required by law. 12 2. Unless otherwise prohibited by law, subsection 1 shall 13 supersede any contractual terms to the contrary in any contract 14 executed, amended, adjusted, or renewed on or after July 1, 15 2025, that applies to prescription drug benefits on or after 16 January 1, 2026, between a pharmacy benefits manager and a 17 third-party payor, or between a person and a third-party payor. 18 Sec. 7. NEW SECTION . 510B.8E Appeals and disputes. 19 1. A pharmacy benefits manager shall provide a reasonable 20 process to allow a pharmacy to appeal a reimbursement rate for 21 a specific prescription drug for any of the following reasons: 22 a. The pharmacy benefits manager violated section 510B.8A. 23 b. The reimbursement rate is below the pharmacy acquisition 24 cost. 25 2. The appeals process must include all of the following: 26 a. A dedicated telephone number at which a pharmacy may 27 contact the pharmacy benefits manager and speak directly with 28 an individual who is involved with the appeals process. 29 b. A dedicated electronic mail address or internet site for 30 the purpose of submitting an appeal directly to the pharmacy 31 benefits manager. 32 c. A period of no less than thirty business days after the 33 date of a pharmacys initial submission of a clean claim during 34 which the pharmacy may initiate an appeal. 35 -6- LSB 1492XC (2) 91 nls/ko 6/ 10
S.F. _____ 3. The pharmacy benefits manger shall respond to an appeal 1 within seven business days after the date on which the pharmacy 2 benefits manager receives the appeal. 3 a. If the pharmacy benefits manager grants a pharmacys 4 appeal, the pharmacy benefits manager shall do all of the 5 following: 6 (1) Adjust the reimbursement rate of the prescription drug 7 that is the subject of the appeal and provide the national drug 8 code number that the adjustment is based on to the appealing 9 pharmacy. 10 (2) Reverse and resubmit the claim that is the subject of 11 the appeal. 12 (3) Make the adjustment pursuant to subparagraph (1) 13 applicable to all of the following: 14 (a) Each pharmacy that is under common ownership with the 15 pharmacy that submitted the appeal. 16 (b) Each pharmacy in the state that demonstrates the 17 inability to purchase the prescription drug for less than the 18 established reimbursement rate. 19 b. If the pharmacy benefits manager denies a pharmacys 20 appeal, the pharmacy benefits manager shall do all of the 21 following: 22 (1) Provide the appealing pharmacy the national drug 23 code number and the name of a wholesale distributor licensed 24 pursuant to section 155A.17 from which the pharmacy can obtain 25 the prescription drug at or below the reimbursement rate. 26 (2) If the prescription drug identified by the national 27 drug code number provided by the pharmacy benefits manager 28 pursuant to subparagraph (1) is not available below the 29 pharmacy acquisition cost from the wholesale distributor from 30 whom the pharmacy purchases the majority of its prescription 31 drugs for resale, the pharmacy benefits manager shall adjust 32 the reimbursement rate above the appealing pharmacys pharmacy 33 acquisition cost, and reverse and resubmit each claim affected 34 by the pharmacys inability to procure the prescription drug 35 -7- LSB 1492XC (2) 91 nls/ko 7/ 10
S.F. _____ at a cost that is equal to or less than the previously appealed 1 reimbursement rate. 2 Sec. 8. APPLICABILITY. This Act applies to pharmacy 3 benefits managers that manage a prescription drug benefit in 4 the state on or after July 1, 2025. 5 EXPLANATION 6 The inclusion of this explanation does not constitute agreement with 7 the explanations substance by the members of the general assembly. 8 This bill relates to pharmacy benefits managers (PBMs), 9 pharmacies, and prescription drugs. 10 The bill prohibits a PBM from discriminating against 11 a pharmacy or a pharmacist with regards to participation, 12 referral, reimbursement of a covered service, or 13 indemnification if a pharmacist acts within the scope of 14 the pharmacists license and the pharmacy is operating in 15 accordance with all applicable laws and rules. 16 Under the bill, where a pharmacy or pharmacist has agreed 17 to participate in a covered persons (persons) health benefit 18 plan (plan), a PBM shall not prohibit or limit the person from 19 selecting a pharmacy or pharmacist of their choice, or impose 20 a monetary advantage or penalty as described in the bill. 21 A PBM shall not deny a pharmacy or pharmacist the right to 22 participate as a contract provider under a plan if the pharmacy 23 or pharmacist agrees to the terms and requirements of the plan 24 and the terms of reimbursement. A PBM shall not impose upon 25 a pharmacy or pharmacist, as a condition of participation in 26 a network, any course of study, accreditation, certification, 27 or credentialing different than state requirements and rules 28 of the board of pharmacy. A PBM shall not unreasonably 29 designate a prescription drug (prescription) as a specialty 30 drug to prevent a person from accessing the prescription or to 31 limit a persons access to the prescription from a pharmacy 32 or pharmacist that is within the persons plans network. 33 A person or pharmacy harmed by such a violation may file a 34 complaint. A PBM shall not require a person, as a condition 35 -8- LSB 1492XC (2) 91 nls/ko 8/ 10
S.F. _____ of payment or reimbursement, to purchase pharmacy services 1 exclusively through a mail order pharmacy. A PBM shall not 2 impose upon a person any payment or condition to purchasing 3 pharmacy services that is more costly or restrictive than if 4 such services were purchased from a mail order pharmacy, or any 5 other pharmacy. 6 If a third-party payor providing reimbursement to persons 7 for prescriptions restricts pharmacy participation, the 8 third-party payor shall notify, in writing, all pharmacies 9 within the geographical coverage area of the plan, and offer 10 the opportunity to participate in the plan at least 60 days 11 prior to the effective date of the restriction. All pharmacies 12 in the geographical coverage area are eligible to participate 13 under identical reimbursement terms. The third-party payor 14 shall inform persons of the names and locations of all 15 pharmacies participating in the plan. A participating pharmacy 16 shall be entitled to announce the pharmacys participation to 17 the pharmacys customers. The commissioner shall not certify 18 any PBM or license an insurance producer not in compliance with 19 the bill. 20 A PBM shall not impose different cost-sharing or additional 21 fees on a person based on the pharmacy at which the person 22 fills a prescription order. A persons cost-sharing for a 23 prescription shall be calculated at the point of sale based 24 on a price that is reduced by an amount equal to at least 100 25 percent of all rebates that have been received, or will be 26 received, by the health carrier or a PBM in connection with 27 the dispensing or administration of the prescription. A PBM 28 shall include any amount paid by a person, or on behalf of a 29 person, when calculating the persons total contribution toward 30 the persons cost-sharing. Any amount paid by a person for a 31 prescription shall be applied to any deductible imposed on the 32 person by the persons plan in accordance with the coverage 33 documents. 34 The bill prohibits a PBM from reimbursing a pharmacy in an 35 -9- LSB 1492XC (2) 91 nls/ko 9/ 10
S.F. _____ amount less than the national average drug acquisition cost or 1 the Iowa average acquisition cost or, if neither is available, 2 the wholesale acquisition cost, for a prescription on the date 3 that the prescription is administered or dispensed. A PBM 4 also must reimburse the pharmacy or pharmacist a professional 5 dispensing fee in an amount not less than the pharmacy 6 dispensing fee published in the Iowa Medicaid enterprise 7 provider fee schedule on the date that the prescription 8 is administered or dispensed. The bill permits a pharmacy 9 to decline to dispense a prescription to a person if the 10 pharmacy will be reimbursed less for the prescription than the 11 pharmacys acquisition cost. 12 The bill requires all contracts executed, amended, adjusted, 13 or renewed on or after July 1, 2025, that are applicable 14 to prescription drug benefits on or after January 1, 2026, 15 between a PBM and a third-party payor, or between a person 16 and a third-party payor, to use a pass-through pricing model; 17 to exclude terms that allow for spread pricing unless the 18 entire amount of the difference caused by spread pricing is 19 passed through by the PBM; and to ensure that payments received 20 in relation to providing services to a third-party payor or 21 a pharmacy are used or distributed pursuant to the PBMs 22 contract with the third-party payor or with the pharmacy, or 23 as otherwise required. Pass-through pricing and spread 24 pricing are defined in the bill. 25 The bill requires a PBM to provide a process for pharmacies 26 to appeal a reimbursement rate for a specific prescription. 27 The appeal process is detailed in the bill. 28 The bill applies to pharmacy benefits managers that manage 29 a prescription drug benefit in the state on or after July 1, 30 2025. 31 -10- LSB 1492XC (2) 91 nls/ko 10/ 10