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Iowa House sends PBM reform bill to governor's desk

Iowa House sends PBM reform bill to governor's desk

Yahoo13-05-2025
DES MOINES, Iowa — The Iowa House on Monday passed the pharmacy benefit manager (PBM) reform bill and sent it to the governor's desk.
PBMs are entities that negotiate the prices for prescription drugs between pharmacies and insurance companies, handle reimbursements to pharmacies, and determines where a patient can get their medications from. Champions for the reform bill say that the current practices of PBMs are detrimental and have resulted in numerous pharmacies closing across the state.
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The reform bill, SF 383, passed the House 75 to 15. It requires PBMs to reimburse pharmacies based on the National Average Drug Acquisition Cost for prescription drugs and to reimburse pharmacies with a professional dispensing fee.
Following the passage of the bill, the Iowa Pharmacy Association released a statement thanking the Legislature for protecting Iowa pharmacies and their patients.
We commend the Iowa House for recognizing the urgent need to address PBM middlemen abuses. This bill is a critical step toward protecting Iowa's local pharmacies and ensuring accountability for PBMs, whose practices have forced Iowa pharmacies to shutter their doors and countless Iowans to lose healthcare access.
With states nationwide enacting similar reforms, we're grateful the House and Senate have paved the way for Governor Reynolds to sign this bill and safeguard Iowa's pharmacies and the patients they serve.
Iowa Pharmacy Association CEO Kate Gainer
The bill is now eligible to be signed into law by Governor Kim Reynolds.
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Waiting for pharmacy benefit manager reform from Washington? Here's what to do now.
Waiting for pharmacy benefit manager reform from Washington? Here's what to do now.

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Waiting for pharmacy benefit manager reform from Washington? Here's what to do now.

If you're frustrated with your pharmacy benefit manager (PBM), join the club. A recent survey found that three-fifths of large-company benefit leaders said their PBM contracts were opaque, overly complicated, and contained clauses that profit the PBM at the expense of employers and patients. Thankfully, you're not stuck. Washington is working on PBM reform, one of the rare issues for which there is agreement between both parties in Congress and the Trump administration. Of course, consensus isn't always enough to create legislation, and any passed law will take time to come into force. A recently-enacted bill in Colorado addresses some of these issues, but will not apply to many large employer-sponsored plans. What follows is a guide to the problems with PBM contracts, the reform proposals, and two approaches to addressing the existing issues that don't require waiting on Washington: Finding a new generation of PBM committed to more transparency; and Negotiating a more transparent arrangement with your current PBM. The problem with large PBMs Pharmacy benefit managers were created to reduce employer costs, yet over time they have evolved in ways that often incentivize increases in plan sponsor and employee costs: Vertical Integration: Nearly 80% of the prescription market (which totaled $600 billion in 2023) is controlled by PBMs run by the three largest health insurance carriers: CVS Caremark (owns Aetna), OptumRX (owned by UnitedHealth Group), and Express Scripts (owned by Cigna). Spread pricing: PBMs charge employers more than they pay pharmacies for drugs, keeping the difference. Drug company rebates: These payments are often in return for PBMs steering business to their products and can include other undisclosed fees. Misaligned Incentives: By favoring their own specialty and mail-order (or retail) pharmacies, PBMs may be restricting competition and limiting their interest in negotiating the lowest pharmacy markups. A recent FTC study found that PBMs often charged employers a markup for specialty drugs distributed through their affiliated pharmacies of more than 100% — and sometimes more than 1,000%. Recently, the big PBMs have started joint ventures to manufacture their own generic and biosimilar drugs, creating another potential conflict. Secrecy: PBM common practices such as spread pricing, rebates, contractual gag clauses, price list manipulation and others have created an environment ripe with opaqueness and confusion for employers. The proposed legislation Congress has been looking closely at PBM reform for several years, and a detailed bipartisan bill was removed from last December's stop-gap budget after Elon Musk tweeted that it was too long. Leading committees are now working to pass something similar. Indeed, two bills that passed Committee last year were reintroduced: The Prescription Pricing for the People Act directs the Federal Trade Commission to complete its ongoing study of PBM practices. The Pharmacy Benefit Manager (PBM) Transparency Act bans spread pricing, incentivizes PBMs to pass 100% of the rebates they receive to plan sponsors, encourages transparency, and requires annual reporting by PBMs of their pricing, reimbursement, and rebate practices. Other proposals go further, including the Patients Before Monopolies Act, which would ban PBMs and insurance companies from owning a pharmacy. The states have been busy as well, increasing their oversight of PBM practices through new legislation and reporting requirements. Unintended consequences of all of this are a concern for consultants and employers looking to control costs. In Colorado, Governor Polis signed HB 25-1094 into law in May. Effective in 2027, this law will regulate how PBMs can earn income, how they structure their formulary, and how they reimburse unaffiliated versus PBM-affiliated pharmacies, among other changes. Unfortunately, this new law won't apply to many large employer-sponsored healthcare programs. So large employers in Colorado are still left to design their own pharmacy strategy. Switching to a transparency-oriented PBM In recent years, more employers have switched their pharmacy programs to a new crop of PBMs who are unaffiliated with large insurers—including Navitus Health Solutions, Rightway Rx, Capital Rx, and SmithRx—and offer a more transparent business model. The advantages Pass-through pricing: Employers get the full benefit of network discounts and rebates, and instead of spread pricing, they pay a disclosed administrative fee per prescription. Fewer conflicts: The independent PBMs are less likely to have pharmacy operations or other business interests that differ from those of employers. Transparent disclosures: Employers get access to granular information about the pricing of each prescription rather than the opaque summaries provided by the large PBMs. Aggressive cost management: The independent PBMs emphasize lower net cost options in their formularies and have strict prior authorization requirements for more expensive drugs. The disadvantages Negotiating intermediaries: Since the upstart PBMs are small, many band together by using rebate aggregators, entities that negotiate lower prices with drug companies. But these negotiations have a downside: They can obscure the details of drug company rebates, especially since most of the aggregators are owned by the same insurance conglomerates that own the big PBMs. Potential disruption: Changing PBMs means employees must adjust to a new formulary, pharmacy network, and prior authorization procedures. Members may also object to the stricter utilization controls these companies use. Buying power: Smaller PBMs do not have the volume that the larger players do and are also unable to take on the risk of aggressive discount and rebate guarantees which can lead to a financial arrangement that appears to be less advantageous for employers. Renegotiating with your existing PBM Many companies that have investigated using a more transparent PBM ultimately decide that the advantages of sticking with a large provider outweigh the frustrations and potential conflicts. They are: Convenience: Dealing with one company that provides medical benefits, pharmacy benefits, and mail-order pharmacy service can be easier for employers and plan members alike. Lower effective prices: Some employers find that the greater bargaining clout of the large PBMs delivers good value even if the mechanics of their arrangements remain murky. Increased transparency efforts: Faced with the prospect of increased regulation, CVS Caremark, Express Scripts, and OptumRX have all announced programs that disclose more information about pricing and pass more of their rebates to employers. As they are just being instituted, their real-world impact remains to be seen. In any case, employers and their advisors can't afford to wait to scrutinize their PBM's business practices and press for more advantageous contracts. The time is now to: Look at the fine print: A typical PBM contract may specify high-level drug discounts, rebates, and dispensing fees. 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An experienced broker or consultant will help you sort through those complex contracts designed to confuse. And if Washington does end up passing PBM reform, that advisor will also be able to adapt your plan to take maximum advantage of the new rules. To learn more, contact Chris Mast, an actuary and benefits consultant with Alliant Employee Benefits in Greenwood Village, CO. Mast has worked with employers across Colorado and the US for more than 20 years. He can be reached at Alliant's Pharmacy team is made up of industry experts, pharmacists, and data specialists who provide marketplace perspective and insights, vendor capabilities, and practical knowledge to secure the best pricing and contract arrangements. Our buying power and partnerships enable us to support your benefits strategy, pharmacy program, and cost management throughout the entire program lifecycle. Learn more about Alliant at

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