H.F. 680 Section 1. Section 507B.2, subsection 1, Code 2019, is 1 amended to read as follows: 2 1. “Person” shall mean any individual, corporation, 3 association, partnership, reciprocal exchange, interinsurer, 4 fraternal beneficiary association, and any other legal entity 5 engaged in the business of insurance, including insurance 6 producers and adjusters. “Person” shall also mean any 7 corporation operating under the provisions of chapter 514 , 8 and any benevolent association as defined and operated under 9 chapter 512A , and any pharmacy benefit manager pursuant to 10 section 510C.1 . For purposes of this chapter , corporations 11 operating under the provisions of chapter 514 and chapter 512A 12 shall be deemed to be engaged in the business of insurance. 13 Sec. 2. Section 507B.3, Code 2019, is amended by adding the 14 following new subsection: 15 NEW SUBSECTION . 3. A person who violates a provision in 16 chapter 510C.1 shall be deemed to have committed an unfair 17 trade practice under this chapter. 18 Sec. 3. NEW SECTION . 510C.1 Pharmacy benefit managers —— 19 retail pharmacies. 20 1. As used in this section, unless the context otherwise 21 requires: 22 a. “Commissioner” means the commissioner of insurance or the 23 commissioner’s designee. 24 b. “Cost sharing” means any copayment, coinsurance, 25 deductible, or other out-of-pocket expense requirement. 26 c. “Covered person” , “health benefit plan” , and “health 27 carrier” mean the same as defined in section 514J.102. 28 d. “Otherwise qualified retail pharmacy” means a retail 29 pharmacy that meets the requirements established by a pharmacy 30 service administrative organization. 31 e. “Pharmacy” and “prescription drug” mean the same as 32 defined in section 155A.3. 33 f. “Pharmacy benefit manager” means a person who, pursuant 34 to a contract or other relationship with a health carrier, 35 -1- HF 680 (2) 88 ko/lh/md 1/ 6

H.F. 680 either directly or through an intermediary, manages a 1 prescription drug benefit provided by the health carrier and is 2 certified pursuant to section 510B.2. 3 g. “Pharmacy benefit manager’s retail pharmacy network” means 4 retail pharmacies who have contracted with a pharmacy benefit 5 manager to dispense or sell prescription drugs, other than 6 specialty drugs, to covered persons of a health carrier. 7 h. “Prescription drug benefit” means a health benefit plan 8 providing for third-party payment or prepayment of prescription 9 drugs. 10 i. “Retail pharmacy” means a pharmacy that is open to the 11 general public, dispenses prescription drugs to the general 12 public, and makes face-to-face consultations available 13 between licensed pharmacists and the general public to whom 14 prescription drugs are dispensed. 15 j. “Specialty drug” means a prescription drug that is 16 designated as a specialty drug by a health carrier and that has 17 either of the following characteristics: 18 (1) The drug has received an orphan drug designation by the 19 United States food and drug administration. 20 (2) The drug’s manufacturer or the United States food and 21 drug administration restricts distribution of the drug to a 22 limited number of distributors. 23 2. a. An otherwise qualified retail pharmacy that requests 24 to enter into a contract with a pharmacy benefit manager to 25 participate in the pharmacy benefit manager’s retail pharmacy 26 network and that accepts the pharmacy benefit manager’s 27 standard terms, conditions, formularies, and requirements 28 relating to dispensing fees, payments, reimbursement amounts, 29 and other pharmacy services shall be considered part of the 30 pharmacy benefit manager’s retail pharmacy network for purposes 31 of a covered person’s right to choose where to obtain the 32 covered person’s prescription drugs, other than a specialty 33 drug. 34 b. It shall be a violation of this section for a pharmacy 35 -2- HF 680 (2) 88 ko/lh/md 2/ 6

H.F. 680 benefit manager to refuse to accept an otherwise qualified 1 retail pharmacy that meets the criteria in paragraph “a” as a 2 part of the pharmacy benefit manager’s retail pharmacy network. 3 It shall also be a violation of this section for a health 4 carrier which has contracted with the pharmacy benefit manager 5 to refuse to accept an otherwise qualified retail pharmacy that 6 meets the criteria in paragraph “a” as a part of the pharmacy 7 benefit manager’s retail pharmacy network. 8 c. A contractual relationship entered into by an otherwise 9 qualified retail pharmacy and a pharmacy benefit manager 10 establishing the otherwise qualified retail pharmacy as part of 11 the pharmacy benefit manager’s retail pharmacy network shall be 12 renewed annually unless otherwise agreed to by the otherwise 13 qualified retail pharmacy, the pharmacy benefit manager, and 14 the health carrier. 15 d. If a pharmacy benefit manager or a health carrier 16 considers a retail pharmacy not to be otherwise qualified, the 17 pharmacy benefit manager or the health carrier may file an 18 appeal relating to the retail pharmacy’s qualifications with 19 the insurance commissioner. 20 e. A pharmacy benefit manager that enters into a contractual 21 relationship with an otherwise qualified retail pharmacy 22 establishing the otherwise qualified retail pharmacy as part 23 of the pharmacy benefit manager’s retail pharmacy network, and 24 a health carrier whose prescription drug benefit the pharmacy 25 benefit manager is managing, shall not do any of the following: 26 (1) Require a covered person to obtain any prescription 27 drug, other than a specialty drug, exclusively from a mail 28 order pharmacy. 29 (2) Impose any cost sharing or other condition on a covered 30 person electing to use the retail pharmacy to obtain the 31 covered person’s prescription drug, other than a specialty 32 drug, if the cost sharing or other condition is not imposed 33 upon a covered person electing to use a mail order pharmacy to 34 obtain the same prescription drug. 35 -3- HF 680 (2) 88 ko/lh/md 3/ 6

H.F. 680 (3) Restrict a prescription drug, other than a specialty 1 drug, dispensed by the retail pharmacy to a covered person to a 2 minimum or maximum quantity limit, or impose any requirement 3 related to refills, if the limitations or requirements are not 4 also imposed on the same prescription drug dispensed by a mail 5 order pharmacy. 6 (4) Require a covered person to pay in whole or in part for 7 any prescription drug, other than a specialty drug, dispensed 8 to the covered person by the retail pharmacy and require the 9 covered person to seek reimbursement, if the same requirement 10 is not imposed on a covered person for a prescription drug 11 dispensed by a mail order pharmacy. 12 (5) Impose any administrative burden, term, condition, 13 or requirement related to a covered person electing to use a 14 retail pharmacy that materially or unreasonably interferes with 15 the covered person’s right to obtain a prescription drug, other 16 than a specialty drug, from the retail pharmacy. 17 3. The commissioner may take any action within the 18 commissioner’s authority to enforce compliance with this 19 section and may assess a pharmacy benefit manager and a health 20 carrier a fine of up to ten thousand dollars for each violation 21 of subsection 2. 22 4. Failure of a pharmacy benefit manager or of a health 23 carrier to comply with any provision of this section shall be 24 an unfair trade practice under section 507B.3, subsection 3. 25 5. A pharmacy benefit manager or a health carrier may appeal 26 any decision of the commissioner in accordance with chapter 27 17A. 28 6. A pharmacy benefit manager shall reimburse the division 29 for all costs associated with any examination, investigation, 30 review, or audit of the pharmacy benefit manager, and a health 31 carrier shall reimburse the division for all costs associated 32 with any examination, investigation, review, or audit of the 33 health carrier. 34 7. The commissioner may adopt rules pursuant to chapter 17A 35 -4- HF 680 (2) 88 ko/lh/md 4/ 6

H.F. 680 to administer this section. 1 Sec. 4. Section 514C.5, Code 2019, is amended by striking 2 the section and inserting in lieu thereof the following: 3 514C.5 Prescription drug benefits. 4 1. Notwithstanding the uniformity of treatment requirements 5 of section 514C.6, a policy, contract, or plan providing for 6 third-party payment or prepayment of prescription drug benefits 7 shall not impose any terms, conditions, or requirements upon 8 a person covered under the policy, contract, or plan for 9 prescription drugs, other than a specialty drug as defined 10 in section 510C.1, dispensed by a retail pharmacy which are 11 different from the terms, conditions, or requirements imposed 12 for prescription drugs, other than a specialty drug as defined 13 in section 510C.1, dispensed by a mail order pharmacy. 14 2. This section applies to the following classes of 15 third-party payment provider policies, contracts, or plans 16 delivered, issued for delivery, continued, or renewed in this 17 state on or after January 1, 2020: 18 a. Individual or group accident and sickness insurance 19 providing coverage on an expense-incurred basis. 20 b. An individual or group hospital or medical service 21 contract issued pursuant to chapter 509, 514, or 514A. 22 c. An individual or group health maintenance organization 23 contract regulated under chapter 514B. 24 d. A plan established pursuant to chapter 509A for public 25 employees. 26 3. This section shall not apply to accident-only, 27 specified disease, short-term hospital or medical, hospital 28 confinement indemnity, credit, dental, vision, Medicare 29 supplement, long-term care, basic hospital and medical-surgical 30 expense coverage as defined by the commissioner, disability 31 income insurance coverage, coverage issued as a supplement 32 to liability insurance, workers’ compensation or similar 33 insurance, automobile medical payment insurance, the medical 34 assistance program pursuant to chapter 249A, the Iowa health 35 -5- HF 680 (2) 88 ko/lh/md 5/ 6

H.F. 680 and wellness plan pursuant to chapter 249N, or the healthy and 1 well kids in Iowa program pursuant to chapter 514I. 2 4. The commissioner of insurance may adopt rules pursuant to 3 chapter 17A to administer this section. 4 Sec. 5. APPLICABILITY. The following apply to a health 5 benefit plan that is delivered, issued for delivery, continued, 6 or renewed in this state on or after January 1, 2020: 7 The section of this Act enacting requirements for pharmacy 8 benefit managers, retail pharmacies, and participation in 9 pharmacy benefit manager retail pharmacy networks. 10 -6- HF 680 (2) 88 ko/lh/md 6/ 6