H.F. 423 Section 1. Section 507B.4, subsection 3, Code 2023, is 1 amended by adding the following new paragraph: 2 NEW PARAGRAPH . u. 340B drug program. Any violation of 3 chapter 510D by a group health plan, a health carrier that 4 offers group or individual health insurance coverage, a 5 third-party administrator, or a pharmacy benefits manager. 6 Sec. 2. NEW SECTION . 510D.1 Definitions. 7 As used in this chapter, unless the context otherwise 8 requires: 9 1. “340B program” means the program created pursuant to 10 the Veterans Health Care Act of 1992, Pub. L. No. 102-585, 11 §602, and codified as section 340B of the federal Public Health 12 Services Act. 13 2. “Commissioner” means the commissioner of insurance. 14 3. “Contract pharmacy” means a pharmacy that has executed a 15 contract with a covered entity to dispense covered outpatient 16 drugs, purchased by the covered entity through the 340B 17 program, to eligible patients of the covered entity. 18 4. “Covered entity” means the same as defined in 42 U.S.C. 19 §256b(a)(4). 20 5. “Group health plan” means the same as defined in section 21 513B.2. 22 6. “Medicaid managed care organization” means an entity 23 acting pursuant to a contract with the department of health and 24 human services to administer the medical assistance program 25 under chapter 249A, and that meets the definition of “health 26 maintenance organization” under section 514B.1. 27 7. “Pharmacy benefits manager” means the same as defined in 28 section 510B.1. 29 8. “Similarly situated entity or pharmacy” means an entity 30 or pharmacy located in Iowa that is of a generally comparable 31 size, and that operates in a market with similar demographic 32 characteristics, including population size, density, 33 distribution, and vital statistics, and reasonably similar 34 economic and geographic conditions. 35 -1- LSB 1106HV (2) 90 ko/rn 1/ 6

H.F. 423 9. “Third-party administrator” means the same as defined in 1 section 510.11. 2 Sec. 3. NEW SECTION . 510D.2 340B drug program —— contract 3 pharmacies and covered entities. 4 1. Group health plans, health carriers that offer 5 group or individual health insurance coverage, third-party 6 administrators, and pharmacy benefits managers shall not 7 discriminate against a covered entity or a contract pharmacy 8 by reimbursing the covered entity or the contract pharmacy 9 for a prescription drug or a dispensing fee in an amount 10 less than the group health plan, health carrier, third-party 11 administrator, or pharmacy benefits manager reimburses a 12 similarly situated entity or pharmacy that is not a covered 13 entity or a contract pharmacy. 14 2. a. Group health plans, health carriers that offer 15 group or individual health insurance coverage, third-party 16 administrators, and pharmacy benefits managers shall not, 17 on the basis that an entity is a covered entity or that a 18 pharmacy is a contract pharmacy, or that a covered entity or 19 contract pharmacy participate in the 340B program, impose 20 any of the following contractual terms and conditions on the 21 covered entity or the contract pharmacy that differ from those 22 imposed on a similarly situated entity or pharmacy that is not 23 a covered entity or a contract pharmacy: 24 (1) Fees or other assessments that are not required by state 25 law or the Iowa administrative code. 26 (2) Chargebacks, clawbacks, or other reimbursement 27 adjustments that are not required by state law or the Iowa 28 administrative code. 29 (3) Professional dispensing fees that are not required by 30 state law or the Iowa administrative code. 31 (4) Restrictions or requirements related to participation 32 in standard or preferred pharmacy networks. 33 (5) Requirements related to the frequency or scope of 34 audits. 35 -2- LSB 1106HV (2) 90 ko/rn 2/ 6

H.F. 423 (6) Requirements related to inventory management systems 1 that utilize generally accepted accounting principles. 2 (7) Requirements related to mandatory disclosure either 3 directly or through a third party, except disclosures required 4 by federal law, of prescription orders that are filled with 5 covered outpatient drugs obtained through the 340B program. 6 b. Paragraph “a” , subparagraphs (1) and (2), shall not be 7 construed to prohibit adjustments for overpayments or other 8 errors associated with an adjudicated claim. 9 c. Paragraph “a” , subparagraph (7), shall not be construed 10 to prohibit modifiers or other identifiers on claims to 11 identify whether a drug was purchased through the 340B program 12 or to prevent duplication of rebates. 13 3. Group health plans, health carriers that offer 14 group or individual health insurance coverage, third-party 15 administrators, and pharmacy benefits managers shall not do 16 any of the following on the basis that an entity is a covered 17 entity or that a pharmacy is a contract pharmacy, or that a 18 covered entity or a contract pharmacy participates in the 340B 19 program: 20 a. Place any restrictions or impose any requirements on 21 an individual that chooses to obtain a covered outpatient 22 drug from a covered entity or a contract pharmacy, whether in 23 person, via courier or the United States post office, or any 24 other form of delivery. 25 b. Refuse to contract with a covered entity or a contract 26 pharmacy based on any criteria that is not applied equally to a 27 contract with a similarly situated entity or pharmacy that does 28 not participate in the 340B drug program. 29 c. Impose any restriction or condition on a covered entity 30 that interferes with the covered entity’s ability to maximize 31 the value of the discounts obtained by the covered entity 32 through the covered entity’s participation in the 340B drug 33 program. 34 Sec. 4. NEW SECTION . 510D.3 Enforcement. 35 -3- LSB 1106HV (2) 90 ko/rn 3/ 6

H.F. 423 1. The commissioner may take any enforcement action under 1 the commissioner’s authority to enforce compliance with this 2 chapter. 3 2. After notice and hearing, the commissioner may issue any 4 order or impose any penalty pursuant to section 507B.7 upon a 5 finding that a group health plan, a health carrier that offers 6 group or individual health insurance coverage, a third-party 7 administrator, or a pharmacy benefits manager violated this 8 chapter. 9 3. A violation of this chapter shall be an unfair or 10 deceptive act or practice in the business of insurance pursuant 11 to section 507B.4, subsection 3. 12 Sec. 5. NEW SECTION . 510D.4 Rules. 13 The commissioner of insurance may adopt rules as necessary 14 to implement the chapter. 15 Sec. 6. NEW SECTION . 510D.5 Conflict of laws. 16 If any provision of this chapter is inconsistent or in 17 conflict with applicable state or federal law or rule, or the 18 state Medicaid plan, the applicable state or federal law or 19 rule, or the state Medicaid plan, shall prevail to the extent 20 necessary to eliminate the inconsistency or conflict. 21 Sec. 7. NEW SECTION . 510D.6 Applicability. 22 This chapter shall apply to covered entities, contract 23 pharmacies, group health plans, health carriers that offer 24 group or individual health insurance coverage, third-party 25 administrators, and pharmacy benefits managers, but shall not 26 apply to their operations under a contract with the state 27 Medicaid agency or a Medicaid managed care organization, 28 regardless of whether the covered entity or contract pharmacy 29 is eligible to retain the 340B discounts generated by the 30 covered entities and contract pharmacies. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill relates to contract pharmacies and covered 35 -4- LSB 1106HV (2) 90 ko/rn 4/ 6

H.F. 423 entities that participate in the 340B program. The bill 1 defines “340B program”, “contract pharmacy”, and “covered 2 entity”. 3 Group health plans (plans), health carriers that offer group 4 or individual health insurance coverage (carriers), third-party 5 administrators (administrators), and pharmacy benefits managers 6 (PBM) are prohibited from discriminating against a covered 7 entity or a contract pharmacy by reimbursing the covered 8 entity or the contract pharmacy for a prescription drug or 9 a dispensing fee in an amount less than the plan, carrier, 10 administrator, or PBM reimburses a similarly situated entity or 11 pharmacy that is not a covered entity or a contract pharmacy. 12 “Similarly situated entity or pharmacy” is defined in the bill. 13 Plans, carriers, administrators, and PBMs shall not, on the 14 basis that an entity is a covered entity or that a pharmacy 15 is a contract pharmacy, or that a covered entity or contract 16 pharmacy participates in the 340B program, impose certain 17 contractual terms and conditions, as described in the bill, on 18 the covered entity or contract pharmacy that differ from those 19 imposed on a similarly situated entity or pharmacy that is not 20 a covered entity or a contract pharmacy. Plans, carriers, 21 administrators, and PBMs are also prohibited from, on the 22 basis that an entity is a covered entity or that a pharmacy is 23 a contract pharmacy, or that a covered entity or a contract 24 pharmacy participates in the 340B program, placing restrictions 25 or imposing requirements on individuals that choose to obtain 26 a covered outpatient drug from a covered entity or a contract 27 pharmacy, whether in person, via courier or the United States 28 post office, or any other form of delivery; refusing to 29 contract with a covered entity or a contract pharmacy based on 30 any criteria that is not applied equally to a contract with a 31 similarly situated entity or pharmacy that does not participate 32 in the 340B program; or imposing any restriction or condition 33 on a covered entity that interferes with the covered entity’s 34 ability to maximize the value of the discounts obtained by the 35 -5- LSB 1106HV (2) 90 ko/rn 5/ 6

H.F. 423 covered entity through the covered entity’s participation in 1 the 340B program. 2 “Group health plan” and “third-party administrator” are 3 defined in the bill. 4 The commissioner of insurance (commissioner) may take any 5 enforcement action under the commissioner’s authority to 6 enforce compliance with the bill. After notice and hearing, 7 the commissioner may issue any order or impose any penalty 8 pursuant to Code section 507B.7 upon a finding that a plan, a 9 carrier, an administrator, or a PBM violated any provision of 10 the bill. 11 A violation of the bill shall be an unfair or deceptive 12 act or practice in the business of insurance pursuant to Code 13 section 507B.4(3). 14 The commissioner may adopt rules as necessary to implement 15 the bill. 16 If any provision of the bill is inconsistent or in conflict 17 with applicable state or federal law or rule, or the state 18 Medicaid plan, the state or federal law or rule, or the 19 state Medicaid plan, shall prevail to the extent necessary to 20 eliminate the inconsistency or conflict. 21 The bill applies to covered entities, contract pharmacies, 22 plans, carriers, administrators, and PBM, but shall not apply 23 to their operations under a contract with the state Medicaid 24 agency or a Medicaid managed care organization, regardless of 25 whether the covered entity or contract pharmacy is eligible to 26 retain the 340B discounts generated by the covered entities and 27 contract pharmacies. “Medicaid managed care organization” is 28 defined in the bill. 29 -6- LSB 1106HV (2) 90 ko/rn 6/ 6