H-1324

   Amend Senate File 383, as amended, passed, and reprinted by the Senate, as follows:
   1.  By striking everything after the enacting clause and inserting: 
<DIVISION I
PHARMACY BENEFITS MANAGERS

   Section 1.  Section 510B.1, Code 2025, is amended by adding the following new subsections:
   NEW SUBSECTION.  11A.  “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.  11B.  “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.  21A.  “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.  21B.  “Spread pricing” means a pharmacy benefits manager charges a third-party payor more for prescription drugs dispensed to a covered person than the amount the pharmacy benefits manager reimburses the pharmacy for dispensing the prescription drugs to a covered person.
   NEW SUBSECTION.  22A.  “Wholesale acquisition cost” means the same as defined in 42 U.S.C. §1395w-3a(c)(6)(B).
   Sec. 2.  NEW SECTION.  510B.4B  Prohibited conduct.
   1.  A pharmacy benefits manager shall not require a covered person, as a condition of payment or reimbursement, to purchase pharmacy services, including prescription drugs, exclusively through a mail order pharmacy. This subsection shall not apply to a specialty drug.
   2.  A pharmacy benefits manager shall not 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 subsection may file a complaint with the commissioner and the commissioner shall, in consultation with the board of pharmacy, make a determination if the covered prescription drug meets the definition of specialty drug.
   Sec. 3.  Section 510B.8, Code 2025, is amended by adding the following new subsection:
   NEW SUBSECTION.  3.  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.
   Sec. 4.  Section 510B.8B, Code 2025, is amended to read as follows:
   510B.8B  Pharmacy benefits manager affiliates managers —— reimbursement 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 reimbursement amount shall be calculated on a per unit basis based on the same generic product identifier or generic code number.
   2.  a.  A pharmacy benefits manager shall not reimburse any 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 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.
   b.  In addition to the reimbursement under paragraph “a”, an agreement executed by a pharmacy benefits manager and a pharmacy may, at the discretion of the pharmacy, require the pharmacy benefits manager to reimburse the pharmacy a professional dispensing fee for all prescription drugs dispensed by the pharmacy in an amount not to exceed ten dollars and sixty-eight cents if any of the following apply:
   (1)  The pharmacy has gross annual revenue of less than two hundred fifty million dollars. For purposes of determining a pharmacy’s gross annual revenue under this subparagraph, the gross revenue of all pharmacies under common ownership shall be aggregated.
   (2)  The pharmacy has gross annual revenue of two hundred fifty million dollars or greater and is located at least ten miles away from the nearest pharmacy. For purposes of determining a pharmacy’s gross annual revenue under this subparagraph, the gross revenue of all pharmacies under common ownership shall be aggregated.
   c.  Paragraphs “a” and “b” do not apply to either of the following:
   (1)  A specialty drug dispensed by a pharmacy located in this state.
   (2)  A pharmacy located in this state that is a covered entity as defined under 42 U.S.C. §256b.
   3.  Each pharmacy located in the state shall participate in the national average drug acquisition cost survey for all prescription drugs dispensed by the pharmacy.
   Sec. 5.  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 unless paragraph “b” applies.
   b.  The pharmacy benefits manager may use direct or indirect spread pricing only if the difference between the amount the third-party payor pays the pharmacy benefits manager for a prescription drug and the amount the pharmacy benefits manager reimburses the dispensing pharmacy or dispensing health care provider for the prescription drug is passed through by the pharmacy benefits manager to the person contracted to receive third-party payor services.
   c.  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.
   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. 6.  NEW SECTION.  510B.8E  Appeals and disputes.
   1.  A pharmacy benefits manager shall provide a reasonable process to allow a pharmacy to appeal a reimbursement rate for a specific prescription drug if the pharmacy benefits manager violates section 510B.8A or 510B.8B.
   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 manager 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, 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.
   b.  If the pharmacy benefits manager denies a pharmacy’s appeal, the pharmacy may submit the denial to the commissioner for examination.
   Sec. 7.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2026.
   Sec. 8.  APPLICABILITY.  This division of this Act applies to pharmacy benefits managers, health carriers, third-party payors, 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

   Sec. 9.  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 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.
   Sec. 10.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2026.>
   2.  Title page, by striking line 3 and inserting <organizations, and including effective date and applicability provisions.>

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COOLING of Linn