Iowa groups urge Reynolds to veto pharmacy reform bill
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.
Zoom in: Hy-Vee deferred Axios' request for comment to the Iowa Pharmacy Association, which accused the opponents of using scare tactics and questionable math.
The bill could instead help Iowans save on prescription drugs and protect access to local pharmacies like other states have done, Kate Gainer, CEO of the association, tells Axios.
The big picture: All 50 states have enacted at least one law in the last decade that regulates pharmacy benefit managers, according to the National Academy for State Health Policy.
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