A coalition of businesses, labor unions and a major Iowa clinic is seeking to overturn a law that puts restrictions on companies called Pharmacy Benefit Managers that set the price of medications for people with insurance.
Supporters of the law say it will ensure pharmacies are properly reimbursed for filling prescriptions and patients aren’t forced to use certain pharmacies. The Iowa Association of Business and Industry is leading the lawsuit that argues the law is unconstitutional because it forbids employers from telling employees how to save money on prescriptions.
“There is a provision that will stop health plans from giving people simple, money-saving information like which pharmacy has the better deal and that’s bad policy and that goes against federal law and violates the First Amendment,” said Iowa Association of Business and Industry president Nicole Crain.
The coalition is asking a judge to issue an order that temporarily blocks the law from going into effect. “Time is really of the essence,” Crain told Radio Iowa. “Without action, it’s going to be difficult to unwind the damages that are suffered by Iowans should this law be implemented on July 1, 2025, and that is our concern and that is why we are bringing this lawsuit.”
Opponents have said the law will raise health care costs for Iowa businesses of all sizes by hundreds of millions of dollars. In the lawsuit filed in federal court, the groups argue the new regulations outlined in the Iowa law also are preempted by federal law. “The federal law we’re talking about is the Employee Retirement Income Security Act or ERISA,” Crain said, “and it has its own preemption provisions that bar state laws that relate to ERISA plans.”
That federal law regulates all health insurance plans that are provided by private employers. The Iowa Bankers Benefit Plan, the Iowa Laborers District Council Health and Welfare Fund, Des Moines Orthopedic Surgeons and Adel-based Iowa Spring Manufacturing are also parties to the lawsuit.
Backers of the law say Pharmacy Benefit Managers are forcing independent pharmacies to fill prescriptions at a loss and the $10.68 dispensing fee that will be paid to small pharmacies will stop an avalanche of pharmacy closures.