H.F. _____ Section 1. Section 510B.1, Code 2024, is amended by adding 1 the following new subsections: 2 NEW SUBSECTION . 11A. “Pass-through pricing” means a 3 model of prescription drug pricing in which payments made 4 by a third-party payor to a pharmacy benefits manager for 5 prescription drugs are any of the following: 6 a. Equivalent to the payments the pharmacy benefits manager 7 makes to the dispensing pharmacy or dispensing health care 8 provider for the prescription drugs, including any professional 9 dispensing fee. 10 b. Passed through by the third-party payor or by the 11 pharmacy benefits manager to the dispensing pharmacy or 12 dispensing health provider, and the payments are not offset by 13 any reconciliation. 14 NEW SUBSECTION . 21A. “Spread pricing” means a model of 15 prescription drug pricing in which a pharmacy benefits manager 16 charges a third-party payor more for prescription drugs 17 dispensed to a covered person than the amount the pharmacy 18 benefits manager reimburses the pharmacy for dispensing the 19 prescription drugs to a covered person. 20 Sec. 2. Section 510B.4, Code 2024, is amended by adding the 21 following new subsection: 22 NEW SUBSECTION . 4. A pharmacy benefits manager, health 23 carrier, health benefit plan, or third-party payor shall not 24 discriminate against a pharmacy or a pharmacist with respect to 25 participation, referral, reimbursement of a covered service, 26 or indemnification if a pharmacist is acting within the scope 27 of the pharmacist’s license and the pharmacy is operating in 28 compliance with all applicable laws and rules. 29 Sec. 3. NEW SECTION . 510B.8D Pharmacy benefits manager 30 contracts —— spread pricing. 31 1. All contracts executed, amended, adjusted, or renewed 32 on or after July 1, 2024, that apply to prescription drug 33 benefits on or after January 1, 2025, between a pharmacy 34 benefits manager and a third-party payor, or between a person 35 -1- LSB 5093YC (8) 90 nls/ko 1/ 5

H.F. _____ and a third-party payor, shall include all of the following 1 requirements: 2 a. The pharmacy benefits manager shall use pass-through 3 pricing unless paragraph “b” applies. 4 b. The pharmacy benefits manager may use direct or indirect 5 spread pricing only if the difference between the amount the 6 third-party payor pays the pharmacy benefits manager for a 7 prescription drug and the amount the pharmacy benefits manager 8 reimburses the dispensing pharmacy or dispensing health care 9 provider for the prescription drug is passed through by the 10 pharmacy benefits manager to the person contracted to receive 11 third-party payor services. 12 c. Payments received by a pharmacy benefits manager for 13 services provided by the pharmacy benefits manager to a 14 third-party payor or to a pharmacy shall be used or distributed 15 pursuant to the pharmacy benefits manager’s contract with 16 the third-party payor or with the pharmacy, or as otherwise 17 required by law. 18 2. Unless otherwise prohibited by law, subsection 1 shall 19 supersede any contractual terms to the contrary in any contract 20 executed, amended, adjusted, or renewed on or after July 1, 21 2024, that applies to prescription drug benefits on or after 22 January 1, 2025, between a pharmacy benefits manager and a 23 third-party payor, or between a person and a third-party payor. 24 Sec. 4. NEW SECTION . 510B.8E Appeals and disputes. 25 1. A pharmacy benefits manager shall provide a reasonable 26 process to allow a pharmacy to appeal a maximum allowable cost 27 or reimbursement rate for a specific prescription drug for any 28 of the following reasons: 29 a. The pharmacy benefits manager violated section 510B.8A. 30 b. The maximum allowable cost or the reimbursement rate is 31 below the pharmacy acquisition cost. 32 2. The appeals process must include all of the following: 33 a. A dedicated telephone number at which a pharmacy may 34 contact the pharmacy benefits manager and speak directly with 35 -2- LSB 5093YC (8) 90 nls/ko 2/ 5

H.F. _____ an individual who is involved with the appeals process. 1 b. A dedicated electronic mail address or internet site for 2 the purpose of submitting an appeal directly to the pharmacy 3 benefits manager. 4 c. A period of no less than thirty business days after the 5 date of a pharmacy’s initial submission of a clean claim during 6 which the pharmacy may initiate an appeal. 7 3. The pharmacy benefits manger shall respond to an appeal 8 within seven business days after the date on which the pharmacy 9 benefits manager receives the appeal. 10 a. If the pharmacy benefits manager grants a pharmacy’s 11 appeal, the pharmacy benefits manager shall do all of the 12 following: 13 (1) Adjust the maximum allowable cost or the reimbursement 14 rate of the prescription drug that is the subject of the appeal 15 and provide the national drug code number that the adjustment 16 is based on to the appealing pharmacy. 17 (2) Permit the appealing pharmacy to reverse and resubmit 18 the claim that is the subject of the appeal. 19 (3) Make the adjustment pursuant to subparagraph (1) 20 applicable to all of the following: 21 (a) Each pharmacy that is under common ownership with the 22 pharmacy that submitted the appeal. 23 (b) Each pharmacy in the state that demonstrates the 24 inability to purchase the prescription drug for less than the 25 established maximum allowable cost or reimbursement rate. 26 b. If the pharmacy benefits manager denies a pharmacy’s 27 appeal, the pharmacy benefits manager shall do all of the 28 following: 29 (1) Provide the appealing pharmacy the national drug 30 code number and the name of a wholesale distributor licensed 31 pursuant to section 155A.17 from which the pharmacy can obtain 32 the prescription drug at or below the maximum allowable cost 33 or reimbursement rate. 34 (2) If the prescription drug identified by the national drug 35 -3- LSB 5093YC (8) 90 nls/ko 3/ 5

H.F. _____ code number provided by the pharmacy benefits manager pursuant 1 to subparagraph (1) is not available below the pharmacy 2 acquisition cost from the wholesale distributor from whom the 3 pharmacy purchases the majority of its prescription drugs for 4 resale, the pharmacy benefits manager shall adjust the maximum 5 allowable cost or the reimbursement rate above the appealing 6 pharmacy’s pharmacy acquisition cost, and permit the pharmacy 7 to reverse and resubmit each claim affected by the pharmacy’s 8 inability to procure the prescription drug at a cost that is 9 equal to or less than the previously appealed maximum allowable 10 cost or the reimbursement rate. 11 Sec. 5. APPLICABILITY. This Act applies to pharmacy 12 benefits managers that manage a prescription drug benefit in 13 the state on or after July 1, 2024. 14 EXPLANATION 15 The inclusion of this explanation does not constitute agreement with 16 the explanation’s substance by the members of the general assembly. 17 This bill relates to pharmacy benefits managers (PBMs), 18 pharmacies, and prescription drug pricing. 19 The bill prohibits a PBM from discriminating against 20 a pharmacy or a pharmacist with regards to participation, 21 referral, reimbursement of a covered service, or 22 indemnification if a pharmacist acts within the scope of 23 the pharmacist’s license and the pharmacy is operating in 24 accordance with all applicable laws and rules. 25 The bill requires all contracts executed, amended, adjusted, 26 or renewed on or after July 1, 2024, which are applicable 27 to prescription drug benefits on or after January 1, 2025, 28 between a PBM and a third-party payor, or between a person 29 and a third-party payor, to use a pass-through pricing model; 30 to exclude terms that allow for spread pricing unless the 31 entire amount of the difference caused by spread pricing is 32 passed through by the pharmacy benefits manager; and to ensure 33 that payments received in relation to providing services to 34 a third-party payor or a pharmacy are used or distributed 35 -4- LSB 5093YC (8) 90 nls/ko 4/ 5

H.F. _____ pursuant to the PBM’s contract with the third-party payor or 1 with the pharmacy, or as otherwise required. “Pass-through 2 pricing” and “spread pricing” are defined in the bill. 3 The bill requires a PBM to provide a process for pharmacies 4 to appeal a maximum allowable cost, or a reimbursement made 5 under a maximum allowable cost list. The requirements for the 6 appeal process are detailed in the bill. 7 The bill applies to pharmacy benefits managers that manage 8 a prescription drug benefit in the state on or after July 1, 9 2024. 10 -5- LSB 5093YC (8) 90 nls/ko 5/ 5