3rd lawsuit challenges new PMB law

A third lawsuit has been filed against Iowa's insurance commissioner over the legality of a new state law regulating pharmacy benefit managers.

A group of insurance companies argue Senate File 383, signed into law earlier this year, "upends the prescription-drug coverage that Iowans receive and prevents health-benefit plans from communicating cost-saving information about one pharmacy over another." The lawsuit claims federal law preempts that sort of "interference," and the First Amendment prohibits the law's restrictions on free speech.

The lawsuit was filed Thursday in U.S. District Court for the Southern District of Iowa by OptumRx, a pharmacy benefit manager headquartered in Minnesota, and by several insurance providers or health plan administrators with which it contracts: United HealthCare Services, UMR Inc., UnitedHealthcare Insurance Company, UnitedHealthcare Plan of the River Valley, and Golden Rule Insurance Company.

Two previous lawsuits challenging the legality of Senate File 383 have already paused enforcement of parts of the law.

In July, Chief U.S. District Judge Stephanie Rose concluded that significant portions of the new law are most likely illegal and invalid and preliminarily enjoined the law's enforcement against the plaintiffs in that particular case – the Iowa Association of Business and Industry.

In October, Rose blocked the law's enforcement in a separate but similar case brought by Wellmark Blue Cross-Blue Shield, Iowa's largest health insurer. In that case, Rose issued a temporary injunction pausing the imposition of a $10.68 dispensing fee for prescriptions filled at pharmacies in Iowa under Wellmark covered plans and policies.

The new law restricts PBMs' ability to set certain cost-sharing rates and fees intended to incentivize a person to fill their prescription at a particular pharmacy. The law also requires independent pharmacies to be reimbursed at the average national acquisition cost of a drug plus a $10.68 dispensing fee.

The law is backed by the owners of many small and rural pharmacies, but is opposed by some business leaders and health insurance companies who argue that while it provides more money for small pharmacies it does so at the expense of Iowa consumers.

ABI has warned the measure could result in an additional $340 million in costs for private-sector health insurance plans, resulting in an increase of $169 for the average insured Iowans' pharmaceutical costs each year.

Iowa's insurance commissioner, Doug Ommen, has appealed the injunction issued in the ABI case to the Eighth Circuit Court of Appeals, and ABI has filed a cross-appeal. Both appeals are still pending.

In the lawsuit brought by OptumRx and its partners, the plaintiffs allege Senate File 383 adds "far-reaching, draconian and expensive new measures" to Iowa law, and they are seeking an injunction halting enforcement of the new law. They also argue the new law is preempted by the federal Employee Retirement Income Security Act of 1974.

Citing the district court's reasoning, the plaintiffs in the new lawsuit argue that Ommen cannot legitimately enforce SF 383 against entities who aren't parties to the ABI lawsuit.