Senate Study Bill 3079 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES BILL) A BILL FOR An Act relating to the regulation of pharmacy benefits 1 managers. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5286XD (3) 90 nls/ko

S.F. _____ H.F. _____ Section 1. Section 510B.1, subsection 10, paragraph b, Code 1 2024, is amended to read as follows: 2 b. National average drug acquisition cost. 3 Sec. 2. Section 510B.4, subsection 1, Code 2024, is amended 4 to read as follows: 5 1. A pharmacy benefits manager shall exercise good faith 6 and fair dealing in the performance of the pharmacy benefits 7 manager’s contractual obligations toward a third-party payor 8 or a pharmacy . 9 Sec. 3. NEW SECTION . 510B.4A Retaliation prohibited. 10 A pharmacy benefits manager shall not retaliate against 11 a pharmacy based on the pharmacy’s exercise of any right or 12 remedy under this chapter, including but not limited to filing 13 a complaint with the commissioner or cooperating with the 14 commissioner pursuant to the commissioner’s authority under 15 this chapter. Retaliation prohibited by this section shall 16 include but is not limited to all of the following: 17 1. Terminating or refusing to renew a contract with the 18 pharmacy. 19 2. Subjecting the pharmacy to increased audits. 20 3. Withholding or failing to promptly pay the pharmacy any 21 money owed by the pharmacy benefits manager to the pharmacy. 22 Sec. 4. Section 510B.7, Code 2024, is amended to read as 23 follows: 24 510B.7 Pharmacy networks fees . 25 A pharmacy benefits manager shall not assess, charge, or 26 collect any form of remuneration that passes from a pharmacy 27 or a pharmacist in a pharmacy network to the pharmacy benefits 28 manager including but not limited to claim processing fees, 29 performance-based fees, network participation fees, or 30 accreditation fees. 31 Sec. 5. Section 510B.8A, subsection 2, paragraph b, Code 32 2024, is amended to read as follows: 33 b. Update the maximum allowable cost list within seven 34 calendar days from the date of an increase of ten percent or 35 -1- LSB 5286XD (3) 90 nls/ko 1/ 3

S.F. _____ H.F. _____ more in the pharmacy national average drug acquisition cost 1 of a prescription drug on the list by one or more wholesale 2 distributors doing business in the state . 3 Sec. 6. Section 510C.2, subsection 2, paragraph a, 4 unnumbered paragraph 1, Code 2024, is amended to read as 5 follows: 6 A pharmacy benefits manager shall provide the information 7 pursuant to subsection 1 to the commissioner in a format 8 approved by the commissioner that does not directly or 9 indirectly publicly disclose any of the following: 10 EXPLANATION 11 The inclusion of this explanation does not constitute agreement with 12 the explanation’s substance by the members of the general assembly. 13 This bill relates to the regulation of pharmacy benefits 14 managers (PBMs). Under current law, a PBM owes a duty of good 15 faith and fair dealing to third-party payors. The bill expands 16 that duty to pharmacies. 17 The bill prohibits retaliation by a PBM against a pharmacy 18 based on the pharmacy’s exercise of any right or remedy, or on 19 the pharmacy’s cooperation with the commissioner. Prohibited 20 retaliation includes terminating or refusing to renew a 21 contract with a pharmacy, subjecting a pharmacy to increased 22 audits, or withholding or failing to promptly pay the pharmacy 23 any money owed by the PBM. 24 Current law prohibits a PBM from assessing, charging, 25 or collecting any form of renumeration that passes from a 26 pharmacist in a pharmacy network to the PBM. Under the bill, 27 a PBM is prohibited from assessing, charging, or collecting 28 any form of renumeration that passes from any pharmacist, 29 regardless of whether the pharmacist is in a pharmacy network. 30 Under current law, for each maximum allowable cost list that 31 a PBM uses, a PBM shall update the maximum allowable cost list 32 within seven days from the date of an increase of 10 percent or 33 more in the pharmacy acquisition cost of a prescription drug 34 on the list. Under the bill, for each maximum allowable cost 35 -2- LSB 5286XD (3) 90 nls/ko 2/ 3

S.F. _____ H.F. _____ list that a PBM uses, a PBM shall update the maximum allowable 1 cost list within seven days from the date of an increase of 10 2 percent or more in the national average drug acquisition cost 3 of a prescription drug on the list. 4 The bill requires that the annual report provided by a PBM 5 to the commissioner of insurance regarding prescription drug 6 benefits provided to covered persons of each third-party payor 7 with whom the PBM has contracted during the prior calendar year 8 be in a format that does not publicly disclose the identity of 9 a specific third-party payor, the price charged by a specific 10 pharmaceutical manufacturer for prescription drugs, or the 11 amount of rebates provided for prescription drugs. 12 -3- LSB 5286XD (3) 90 nls/ko 3/ 3