Pharmacies, business groups lobbying Iowa Gov. Reynolds from opposite sides of PBM bill

May 30—The Gazette offers audio versions of articles using Instaread. Some words may be mispronounced.

DES MOINES — Health care organizations and business groups are on opposite sides of a lobbying effort, trying to sway Gov. Kim Reynolds' decision on legislation designed to help Iowa pharmacies by regulating pharmacy benefit managers.

Reynolds is contemplating whether to sign into law Senate File 383, which would place limits on pharmacy benefit managers — known as PBMs, the companies that function as intermediaries between insurance providers and drug manufacturers.

Passed by the Iowa Legislature, the bill seeks to eliminate "spread pricing," where PBMs keep the difference between what they pay the pharmacy and what they charge the insurance company.

What the two sides are saying

Pharmacies and other health care organizations support the legislation, which they say will help protect pharmacies from closure.

Last year, more than 30 pharmacies closed in Iowa, affecting both rural and urban communities, according to the Iowa Pharmacy Association. Since 2014, more than 200 Iowa pharmacies have closed, creating pharmacy deserts and limiting access to care.

"(The bill) takes on PBM practices that drive up costs and limit patient choice. This bill supports our hospitals, pharmacies, and communities in delivering high-quality, affordable care," Kate Gainer, executive vice president & CEO of the Iowa Pharmacy Association, said in a news release issued this week to highlight a coalition of 14 health care organizations calling on Reynolds to sign the bill into law.

"It is this imperative that has brought many of Iowa's top health care organizations and rural community advocates together to support the signing of SF 383 into law," Gainer said. "Iowa patients can't afford to wait any longer."

Iowa business and banking groups oppose the legislation and have asked Reynolds to use her veto pen. They claim the legislation would lead to higher health care costs.

That claim was made in a joint statement from the Iowa Association of Business and Industry, Iowa Bankers Association, Iowa Business Council, and National Federation of Independent Business, issued when the bill passed the Iowa Legislature near the end of session. The groups called the bill the "costliest health care mandate in state history," and estimated it would cost Iowans an additional $340 million annually.

"As Congress and the President work to reduce the cost of prescription drugs, the Iowa Legislature has taken a different path and voted to significantly increase costs," the groups said in their statement. "(The bill) is believed to be the most expensive health care mandate ever passed in Iowa history. This is a step in the wrong direction for Iowans, employers, and the state economy."

Senate File 383 passed the Iowa Senate by a 36-14 vote on April 28, and passed the Iowa House by a 75-15 vote on May 12.

Reynolds has until June 14 to take final action on bills passed during the recently concluded 2025 session of the Iowa Legislature.

The Iowa Legislature passed 172 bills during the 2025 session; as of Friday afternoon, Reynolds had yet to act on 50 of them.

Iowa Senate Minority Leader Janice Weiner, a Democrat from Iowa City, said Friday that the issue is complex and noted that Senate Democrats split their votes on the bill.

"The governor's going to listen to a lot of people, decide whether or not to sign it," Weiner said during her appearance on this weekend's episode of "Iowa Press" on Iowa PBS. "It wouldn't surprise me if we see this back again next year in some form if tweaks need to be made."

What the bill would do

Under the legislation, all prescription drug contracts in Iowa would be required to use a "pass-through" pricing model. In a pass-through model, the amount paid by the PBM to the pharmacy is passed through to the plan sponsors — employers, insurers, government agencies or managed care organizations — and the PBM is compensated through administrative fees.

PBMs also would be required to pay small pharmacies a dispensing fee, and would be prohibited from:

— Limiting or disincentivizing an individual from selecting a pharmacy or pharmacist of their choice;

— Designating a prescription drug as a specialty drug to prevent a person from accessing the prescription;

— Requiring a customer to purchase prescription drugs or other services through a mail order pharmacy, or from charging more for prescription drugs or other services than if they were purchased from any other pharmacy;

— Or reimbursing small pharmacies less than the national or Iowa average drug acquisition cost.

The bill also requires PBMs to provide an appeals process for pharmacies to challenge reimbursement rates for specific prescriptions and would allow pharmacies to decline to dispense a prescription to a person if the pharmacy would be reimbursed less for the prescription than the cost to the pharmacy.

It also prohibits PBMs from discriminating against pharmacies or pharmacists regarding participation, referrals, reimbursements of a covered service, or indemnification if the pharmacist is acting within its scope of practice.

Lawmakers said the bill would aid independent community pharmacies that have struggled because of PBM practices they argue are contributing to rising overall health care costs through opaque pricing and rebate strategies.

Gazette Deputy Bureau Chief Tom Barton contributed to this report.

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