Several Iowa business groups are urging Governor Kim Reynolds to veto a bill that would set new rules for pharmacy benefit managers. the companies that negotiate drug prices for insurance companies. The groups say the bill adds “massive costs” for patients and their Iowa employers, primarily through a new dispensing fee for each prescription.
“The cost will be approximately $169 per insured Iowan per year, which adds about $340 million to private sector health plans statewide,” said Nicole Crain, president of the Iowa Association of Business and Industry.
Lawmakers in Iowa and elsewhere have been responding to independent pharmacists who say PBM reimbursements to them are lower than the actual cost of medications and PBMs try to steer patients to chain pharmacies. Crain said Iowa business groups were hoping the state legislature would narrow the bill’s focus. “The business community understands the proponents desire to help small independent pharmacies,” Crain said, “but there’s so much more in this legislation besides the support of small independent pharmacies.”
If the bill becomes law, PBMs will be required to pay a dispensing fee of over 10 dollars per prescription to in-state pharmacies. That includes all of the state’s independent pharmacies as well as Hy-Vee pharmacies. The business coalition estimates that will yield $66 million a year for Hy-Vee. Other elements of the bill escalate costs, too, according to Crain.
“This bill, unless the governor vetoes it, is scheduled to go into effect on July 1,” Crain said. “We would encourage all individuals to contact the goveror and urge her to veto this legislation as it will raise your pharmacy costs at a time when Iowa businesses and their employees are facing increased costs from inflation and challenges with tariffs and trade.”
The Iowa Association of Business and Industry, the Iowa Bankers Association, the National Federation of Independent Business and the Iowa Business Council say the bill is “believed to be the most expensive health care mandate in Iowa history.” During House debate last week, Representative Jeff Cooling of Cedar Rapids unsuccessfully tried to make the dispensing fee optional, arguing that additional costs will drive patients to use large pharmacies. “When a pharmacy just down the road, possibly, doesn’t have to charge or make the person filling their prescription pay that,” Cooling said.
Supporters of the bill say without that dispensing fee, the closure of independent pharmacies “will accelerate.” According to the Iowa Pharmacy Association, 31 Iowa pharmacies closed last year and all 31 said it was due to PBM practices. Eleven other states require PBMs to provide a minimum reimbursement to independent pharmacies. The proposed $10.68 dispensing fee in the bill for Iowa pharmacies would not be paid to CVS, Walgreens, Walmart or Costco pharmacies which operate in multiple states.