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STATE OF IOWA
KIM REYNOLDS
GOVERNOR
June 11, 2025
The Honorable Paul Pate
Secretary of State of Iowa
State Capitol Building
LOCAL
Dear Mr. Secretary,
I hereby transmit Senate File 383, an act relating to pharmacy benefits managers, pharmacies,
prescription drugs, and pharmacy services administrative organizations, and including
applicability provisions.
As Governor of this great state, I have worked tirelessly to transform legacy systems of taxation,
regulation, education, healthcare, workforce, and economic development in an effort to provide
lowans with the best possible return on their investment and continue to move this state forward.
After extensive research and thoughtful conversations with employers and stakeholders on all
sides of this complex issue, I made the decision to sign SF 383 in an effort to continue improving
our healthcare system by bringing greater accountability to the role of Pharmacy Benefit
Managers (PBMs). In enacting this bill into law, Iowa joins Texas, Georgia, Indiana and Montana
that this year passed similar legislation to address this important issue along with several other
states that have done so previously, bringing the total to 32 states.
PBMs play a central role in the pharmaceutical supply chain, negotiating drug prices and access
for millions of Americans. Over time, consolidation has led to three major PBMs controlling
80% of the market and a close affiliation with both insurers and pharmacies. This vertical
integration gives them outsized power over which medications patients receive and what they
pay—often resulting in unaffordable drug costs, difficult choices for families, and reimbursement
below pharmacy acquisition cost.
The new bill takes steps toward addressing these challenges by targeting PBM practices that
harm both patients and independent pharmacies. Local pharmacies, especially in rural areas, are
vital to community health and local hospitals but are being driven out by opaque, one-sided
contracts—evidenced by the closure of 34 rural pharmacies in Iowa last year. Additionally, this
legislation amplifies the rural healthcare bill we passed this session and is a meaningful step
toward a fairer, more transparent, and accessible healthcare system for all.
STATE CAPITOL DES MOINES, IOWA 50319 515.281.5211 WWW.GOVERNOR.IOWA.GOV
But this bill does not signify an end. The complexity and lack of verifiable data made signing
this bill a difficult decision, and my administration will closely monitor implementation to
mitigate and ensure that any unintended consequences for private employers are addressed. We
will also be launching a reverse auction to ensure Iowa's state health plan continues to keep costs
as low as possible for the state and its employees.
Sincerely,
Kim Reynolds
Governor of Iowa
cc: Secretary of the Senate
Clerk of the House
fi!GHT
MMNTAJ
G EN ER AL ASS EM BI
Senate Pile 383
AN ACT
RELATING TO PHARMACY BENEFITS MANAGERS, PHARMACIES,
PRESCRIPTION DRUGS, AND PHARMACY SERVICES ADMINISTRATIVE
ORGANIZATIONS, AND INCLUDING APPLICABILITY PROVISIONS,
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
DIVISION I
PHARMACY BENEFITS MANAGERS
Section 1, Section 510B.1, Code 2025, is amended by adding
the following new subsections:
NEW SUBSECTION. IIA. ^National average drug acquisition
cost" means the monthly survey of retail pharmacies conducted
by the federal centers for Medicare and Medicaid services
to determine average acquisition cost for Medicaid covered
outpatient drugs.
NEW SUBSECTION. IIB. '^Pass-through pricing" means a
model of prescription drug pricing in which payments made
by a third-party payor to a pharmacy benefits manager for
prescription drugs are equivalent to the payments the pharmacy
benefits manager makes to the dispensing pharmacy or dispensing
health care provider for the prescription drugs, including any
professional dispensing fee.
NEW SUBSECTION. 16A. '^Pharmacy chain" means an entity that
has twenty or more pharmacies under common ownership or control
located in at least twenty or more states.
NEW SUBSECTION. 21A, ""Retail pharmacy" means a pharmacy
that is not a pharmacy chain or a publicly traded entity, and
Senate File 383, p. 2
that does not exclusively provide mail order dispensing of
prescription drugs.
NEW SUBSECTION. 21B, ^Specialty drug" means a drug used
to treat chronic and complex, or rare medical conditions and
that requires special handling or administration, provider care
coordination, or patient education that cannot be provided by a
nonspecialty pharmacy or pharmacist.
NEW SUBSECTION. 22A. "^Wholesale acquisition cost" means the
same as defined in 42 U.S.C, §1395w-3a(c)(6)(B).
Sec. 2. Section 510B.4, Code 2025, is amended by adding the
following new subsection:
NEW SUBSECTION, 4. A pharmacy benefits manager, health
carrier, health benefit plan, or third-party payor shall not
discriminate against a pharmacy or a pharmacist with respect to
participation, referral, reimbursement of a covered service, or
indemnification if a pharmacist is acting within the scope of
the pharmacist's license, as permitted under state law, and the
pharmacy is operating in compliance with all applicable laws
and rules.
Sec. 3. NEW SECTION. 510B.4B Prohibited conduct — pharmacy
rights.
1. A pharmacy benefits manager shall not do any of the
following:
a. If a pharmacy or pharmacist has agreed to participate
in a covered person's health benefit plan, prohibit or limit
the covered person from selecting a pharmacy or pharmacist of
the covered person's choice, or impose a monetary advantage
or penalty that would affect a covered person's choice.
A monetary advantage or penalty includes a copayment or
coinsurance variation, a reduction in reimbursement for
services, a promotion of one participating pharmacy over
another, or comparing the reimbursement rates of a pharmacy
against mail order pharmacy reimbursement rates.
b. Deny a pharmacy or pharmacist the right to participate as
a contract provider under a health benefit plan if the pharmacy
or pharmacist agrees to provide pharmacy services that meet
the terms and requirements of the health benefit plan and the
pharmacy or pharmacist agrees to the terms of reimbursement
set forth by the third-party payor for similarly classified
Senate File 383, p. 3
pharmacies•
c. Impose upon a pharmacy or pharmacist, as a condition
of participation in a third-party payor network, any course
of study, accreditation, certification, or credentialing that
is inconsistent with, more stringent than, or in addition to
state requirements for licensure or certification, and the
administrative rules adopted by the board of pharmacy.
d. Unreasonably designate a prescription drug as a
specialty drug to prevent a covered person from accessing
the prescription drug, or limiting a covered person's access
to the prescription drug, from a pharmacy or pharmacist that
is within the health carrier's network, A covered person or
pharmacy harmed by an alleged violation of this paragraph may
file a complaint with the commissioner, and the commissioner
shall, in consultation with the board of pharmacy, make a
determination as to whether the covered prescription drug meets
the definition of a specialty drug.
e. Require a covered person, as a condition of payment
or reimbursement, to purchase pharmacy services, including
prescription drugs, exclusively through a mail order pharmacy.
f. Impose upon a covered person a copayment, reimbursement
amount, number of days of a prescription drug supply for
which reimbursement will be allowed, or any other payment
or condition relating to purchasing pharmacy services from
a pharmacy that is more costly or restrictive than would be
imposed upon the covered person if such pharmacy services were
purchased from a mail order pharmacy, or any other pharmacy
that can provide the same pharmacy services for the same cost
and copayment as a mail order service.
2. a. If a third-party payor providing reimbursement to
covered persons for prescription drugs restricts pharmacy
participation, the third-party payor shall notify, in writing,
all pharmacies within the geographical coverage area of the
health benefit plan restriction, and offer the pharmacies
the opportunity to participate in the health benefit plan at
least sixty days prior to the effective date of the health
benefit plan restriction. All pharmacies in the geographical
coverage area of the health benefit plan shall be eligible to
participate under identical reimbursement terms for providing
Senate File 383, p. 4
pharmacy services and prescription drugs.
b» The third-party payor shall inform covered persons of
the names and locations of all pharmacies participating in
the health benefit plan as providers of pharmacy services and
prescription drugs.
c, A participating pharmacy shall be entitled to announce to
the pharmacy's customers that the pharmacy participates in the
health benefit plan.
3. The commissioner shall not certify a pharmacy benefits
manager or license an insurance producer that is not in
compliance with this section.
4. A covered person or pharmacy injured by a violation
of this section may maintain a cause of action to enjoin the
continuation of the violation.
Sec. 4. Section 510B.8, Code 2025, is amended by adding the
following new subsections:
NEW SUBSECTION. 3. A pharmacy benefits manager shall not
impose different cost-sharing or additional fees on a covered
person based on the pharmacy at which the covered person fills
a prescription drug order.
NEW SUBSECTION. 4. For the purpose of reducing premiums,
one hundred percent of all rebates received by a pharmacy
benefits manager shall be passed through to the health carrier,
or to the employee plan sponsor as permitted by the federal
Employee Retirement Income Security Act of 1974, 29 U.S.C.
§1001, et seq.
NEW SUBSECTION. 5, A pharmacy benefits manager shall
include any amount paid by a covered person, or on behalf of
a covered person, when calculating the covered person's total
contribution toward the covered person's cost-sharing.
NEW SUBSECTION. 6. Any amount paid by a covered person for
a prescription drug shall be applied to any deductible imposed
on the covered person by the covered person's health benefit
plan in accordance with the health benefit plan's coverage
documents.
NEW SUBSECTION. 7. If a covered person's policy, contract,
or plan providing for third-party payment or prepayment of
health or medical expenses qualifies as a high-deductible
health plan under section 223 of the Internal Revenue Code,
Senate File 383, p. 5
and a copayment, coinsurance, or deductible paid by the
covered person as a cost-sharing requirement under this chapter
would result in the covered person becoming ineligible for a
health savings account associated with the covered person's
high-deductible health plan, subsection 5 shall apply only
after the covered person satisfies the covered person's minimum
deductible, except for items or services determined to be
preventive care under section 223(c)(2)(C) of the Internal
Revenue Code.
Sec. 5. Section 510B.8B, Code 2025, is amended to read as
follows:
510B.8B Pharmacy benefits manager affiliates managers —
roimburaemGnt reimbursements.
1. A pharmacy benefits manager shall not reimburse any
pharmacy located in the state in an amount less than the amount
that the pharmacy benefits manager reimburses a pharmacy
benefits manager affiliate for dispensing the same prescription
drug as dispensed by the pharmacy. The reimburaemont amount
shall be calculated on a per unit basis based on the same
generic product identifier or generic code number.
2. A pharmacy benefits manager shall not reimburse any
retail pharmacy located in the state in an amount less than the
most recently published national average drug acquisition cost
for a prescription drug on the date that the prescription drug
is administered or dispensed. If the most recently published
national average drug acquisition cost for the prescription
drug is unavailable on the date that the prescription drug is
administered or dispensed, a pharmacy benefits manager shall
not reimburse any retail pharmacy located in the state in
an amount less than the wholesale acquisition cost for the
prescription drug on the date that the prescription drug is
administered or dispensed.
3. In addition to the reimbursement required under
subsection 2, a pharmacy benefits manager shall reimburse the
retail pharmacy or pharmacist a professional dispensing fee in
the amount of ten dollars and sixty-eight cents.
4. a, A pharmacy benefits manager shall submit a quarterly
report to the commissioner of all drugs reimbursed at ten
percent or more below the national average drug acquisition
Senate File 383, p. 6
cost, and all drugs reimbursed at ten percent or more above the
national average drug acquisition cost, for each prescription
drug appearing on the national average drug acquisition cost
list on the day the prescription drug was dispensed.
b. For each prescription drug included in the report, a
pharmacy benefits manager shall include all of the following
information;
(1) The month the prescription drug was dispensed.
(2) The quantity of the prescription drug dispensed.
(3) The amount the pharmacy was reimbursed.
(4) If the dispensing pharmacy was an affiliate of the
pharmacy benefits manager,
(5) If the prescription drug was dispensed pursuant to a
government health plan.
(6) The average national drug acquisition cost for the month
the prescription drug was dispensed.
c. The report shall exclude drugs dispensed pursuant to 42
U.S.C. §256b.
d. A copy of the report shall be published on the pharmacy
benefits manager^s public internet site for twenty-four months
after the date the report is submitted to the commission.
5. This section shall not apply to a pharmacy that operates
in a state-owned facility.
Sec. 6. NEW SECTION. 510B.8D Pharmacy benefits manager
contracts.
1. All contracts executed, amended, adjusted, or renewed
on or after July 1, 2025, that apply to prescription drug
benefits on or after January 1, 2026, between a pharmacy
benefits manager and a third-party payor, or between a person
and a third-party payor, shall include all of the following
requirements!
a. The pharmacy benefits manager shall use pass-through
pricing.
b. Payments received by a pharmacy benefits manager for
services provided by the pharmacy benefits manager to a
third-party payor or to a pharmacy shall be used or distributed
pursuant to the pharmacy benefits manager's contract with
the third-party payor or with the pharmacy, or as otherwise
required by law.
Senate File 383, p. 7
2. Unless otherwise prohibited by law, subsection 1 shall
supersede any contractual terms to the contrary in any contract
executed, amended, adjusted, or renewed on or after July 1,
2025, that applies to prescription drug benefits on or after
January 1, 2026, between a pharmacy benefits manager and a
third-party payor, or between a person and a third-party payor.
Sec. 7. NEW SECTION. 510B.8E Appeals and disputes.
1. A pharmacy benefits manager shall provide a reasonable
process to allow a pharmacy to appeal any matter.
2. The appeals process must include all of the following:
a, A dedicated telephone number at which a pharmacy may
contact the pharmacy benefits manager and speak directly with
an individual who is involved with the appeals process.
b, A dedicated electronic mail address or internet site for
the purpose of submitting an appeal directly to the pharmacy
benefits manager.
c, A period of no less than thirty business days after the
date of a pharmacy's initial submission of a clean claim during
which the pharmacy may initiate an appeal.
3. The pharmacy benefits manger shall respond to an appeal
within seven business days after the date on which the pharmacy
benefits manager receives the appeal.
a. If the pharmacy benefits manager grants a pharmacy's
appeal related to a reimbursement rate, the pharmacy benefits
manager shall do all of the following:
(1) Adjust the reimbursement rate of the prescription drug
that is the subject of the appeal and provide the national drug
code number that the adjustment is based on to the appealing
pharmacy.
(2) Reverse and resubmit the claim that is the subject of
the appeal.
(3) Make the adjustment pursuant to subparagraph (1)
applicable to all of the following:
(a) Each pharmacy that is under common ownership with the
pharmacy that submitted the appeal.
(b) Each pharmacy in the state that demonstrates the
inability to purchase the prescription drug for less than the
established reimbursement rate.
b. If the pharmacy benefits manager denies a pharmacy's
Senate File 383, p. 8
appeal, the pharmacy benefits manager shall do all of the
following:
(1) Provide the appealing pharmacy the national drug
code number and the name of a wholesale distributor licensed
pursuant to section 155A.17 from which the pharmacy can obtain
the prescription drug at or below the reimbursement rate.
(2) If the prescription drug identified by the national
drug code number provided by the pharmacy benefits manager
pursuant to subparagraph (1) is not available below the
pharmacy acquisition cost from the wholesale distributor from
whom the pharmacy purchases the majority of its prescription
drugs for resale, the pharmacy benefits manager shall adjust
the reimbursement rate above the appealing pharmacy's pharmacy
acquisition cost, and reverse and resubmit each claim affected
by the pharmacy's inability to procure the prescription drug
at a cost that is equal to or less than the previously appealed
reimbursement rate.
Sec. 8. SEVERABILITY, The provisions of this division of
this Act are severable pursuant to section 4.12.
Sec. 9, APPLICABILITY, This division of this Act applies
to pharmacy benefits managers, health carriers, third-party
payers, and health benefit plans that manage a prescription
drug benefit in the state on or after July 1, 2025.
DIVISION II
PHARMACY SERVICES ADMINISTRATIVE ORGANIZATIONS AND WHOLESALE
DISTRIBUTION OF PRESCRIPTION DRUGS
Sec. 10, PHARMACY SERVICES ADMINISTRATIVE ORGANIZATIONS AND
WHOLESALE DISTRIBUTION OF PRESCRIPTION DRUGS — REPORT,
1, By January 1, 2026, the commissioner of insurance, or
the commissioner of insurance's designee, shall review pharmacy
services administrative organizations and the wholesale
distribution of prescription drugs, and submit a report to the
general assembly containing the commissioner's findings and
recommendations. The report shall include, at a minimum, all
of the following:
a. A description and analysis of the prescription drug
wholesale distribution supply chain, including the market
concentration for the wholesale distribution of prescription
drugs, margins in the wholesale distribution of prescription
Senate Pile 383, p. 9
drugs, and the competition in the wholesale distribution of
prescription drugs.
b. A description of the role that pharmacy services
administrative organizations serve in the prescription drug
supply chain.
c. A description and analysis of the relationships between
pharmacy services administrative organizations, prescription
drug wholesalers, and retail pharmacies, including but
not limited to standard contracting terms, fees charged to
pharmacies, and contractual restrictions and limitations
applicable to retail pharmacies.
2. a. The commissioner of insurance shall submit the report
under subsection 1 in a manner that does not publicly disclose
any of the following:
(1) The identity of a specific pharmacy services
administrative organization or prescription drug wholesaler.
(2) The price charged to a specific pharmacy for a specific
prescription drug.
b. Information provided by the commissioner under this
section that may reveal the identity of a specific pharmacy
services administrative organization or prescription drug
wholesaler, or the price charged to a specific pharmacy for a
specific prescription drug, shall be considered a confidential
record.
Jyyiuj
AMY SINCL^^R PAT GRASSLEY.
President of the Senate Speaker of The House
I hereby certify that this bill originated in the Senate and
is known as Senate File 383, Ninety-first General Assembly.
1Approved , 2025ll*^.
W. CHARLES SMITHSON
Secr£tj^y of
Kltt^E^OLDS
Governor