Several influential business organizations in Iowa are urging Gov. Kim Reynolds to veto a bill that would reform the operations of pharmacy benefit managers (PBMs) in the state — a move they warn could impose hundreds of millions in new costs on employers and consumers.
Why it matters: PBMs — middleman companies that negotiate drug prices on behalf of health insurers — are under scrutiny from both pharmacies and lawmakers nationwide for reimbursing pharmacies at rates lower than the cost of acquiring medications.
- Senate File 383, which passed both chambers with bipartisan support, aims to regulate their practices in response to a wave of pharmacy closures across Iowa.
Catch up quick: The legislation includes a $10.68 minimum dispensing fee to be paid to pharmacies by PBMs, a provision supporters say is crucial to keeping small-town pharmacies afloat.
- More than 200 have closed in Iowa since 2014, including a record 31 last year, according to the Iowa Pharmacy Association.
Driving the news: The Iowa Association of Business and Industry (ABI), Iowa Bankers Association, Iowa Business Council and National Federation of Independent Business jointly issued a statement soon after the bill passed the Iowa Senate late Monday, calling it the costliest health care mandate in state history.
- The groups unsuccessfully backed an amendment that would have limited the dispensing fee to independent pharmacies with annual revenues of less than $250 million.
- The version of the bill that’s now before Reynolds could cost Iowans an additional $340 million annually via higher costs for prescription drugs and insurance, they estimate.
Stunning stat: Hy-Vee, Iowa’s largest pharmacy retailer, is projected to receive an additional $66 million annually under the bill, according to ABI, which used data from the Kaiser Family Foundation for its estimate…