Senate File 383 - Reprinted SENATE FILE 383 BY COMMITTEE ON HEALTH AND HUMAN SERVICES (SUCCESSOR TO SSB 1074) (As Amended and Passed by the Senate April 28, 2025 ) A BILL FOR An Act relating to pharmacy benefits managers, pharmacies, 1 prescription drugs, and pharmacy services administrative 2 organizations, and including applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 SF 383 (4) 91 nls/ko/mb

S.F. 383 DIVISION I 1 PHARMACY BENEFITS MANAGERS 2 Section 1. Section 510B.1, Code 2025, is amended by adding 3 the following new subsections: 4 NEW SUBSECTION . 11A. “National average drug acquisition 5 cost” means the monthly survey of retail pharmacies conducted 6 by the federal centers for Medicare and Medicaid services 7 to determine average acquisition cost for Medicaid covered 8 outpatient drugs. 9 NEW SUBSECTION . 11B. “Pass-through pricing” means a 10 model of prescription drug pricing in which payments made 11 by a third-party payor to a pharmacy benefits manager for 12 prescription drugs are equivalent to the payments the pharmacy 13 benefits manager makes to the dispensing pharmacy or dispensing 14 health care provider for the prescription drugs, including any 15 professional dispensing fee. 16 NEW SUBSECTION . 16A. “Pharmacy chain” means an entity that 17 has twenty or more pharmacies under common ownership or control 18 located in at least twenty or more states. 19 NEW SUBSECTION . 21A. “Retail pharmacy” means a pharmacy 20 that is not a pharmacy chain or a publicly traded entity, and 21 that does not exclusively provide mail order dispensing of 22 prescription drugs. 23 NEW SUBSECTION . 21B. “Specialty drug” means a drug used 24 to treat chronic and complex, or rare medical conditions and 25 that requires special handling or administration, provider care 26 coordination, or patient education that cannot be provided by a 27 nonspecialty pharmacy or pharmacist. 28 NEW SUBSECTION . 22A. “Wholesale acquisition cost” means the 29 same as defined in 42 U.S.C. §1395w-3a(c)(6)(B). 30 Sec. 2. Section 510B.4, Code 2025, is amended by adding the 31 following new subsection: 32 NEW SUBSECTION . 4. A pharmacy benefits manager, health 33 carrier, health benefit plan, or third-party payor shall not 34 discriminate against a pharmacy or a pharmacist with respect to 35 -1- SF 383 (4) 91 nls/ko/mb 1/ 10

S.F. 383 participation, referral, reimbursement of a covered service, or 1 indemnification if a pharmacist is acting within the scope of 2 the pharmacist’s license, as permitted under state law, and the 3 pharmacy is operating in compliance with all applicable laws 4 and rules. 5 Sec. 3. NEW SECTION . 510B.4B Prohibited conduct —— pharmacy 6 rights. 7 1. A pharmacy benefits manager shall not do any of the 8 following: 9 a. If a pharmacy or pharmacist has agreed to participate 10 in a covered person’s health benefit plan, prohibit or limit 11 the covered person from selecting a pharmacy or pharmacist of 12 the covered person’s choice, or impose a monetary advantage 13 or penalty that would affect a covered person’s choice. 14 A monetary advantage or penalty includes a copayment or 15 coinsurance variation, a reduction in reimbursement for 16 services, a promotion of one participating pharmacy over 17 another, or comparing the reimbursement rates of a pharmacy 18 against mail order pharmacy reimbursement rates. 19 b. Deny a pharmacy or pharmacist the right to participate as 20 a contract provider under a health benefit plan if the pharmacy 21 or pharmacist agrees to provide pharmacy services that meet 22 the terms and requirements of the health benefit plan and the 23 pharmacy or pharmacist agrees to the terms of reimbursement 24 set forth by the third-party payor for similarly classified 25 pharmacies. 26 c. Impose upon a pharmacy or pharmacist, as a condition 27 of participation in a third-party payor network, any course 28 of study, accreditation, certification, or credentialing that 29 is inconsistent with, more stringent than, or in addition to 30 state requirements for licensure or certification, and the 31 administrative rules adopted by the board of pharmacy. 32 d. Unreasonably designate a prescription drug as a 33 specialty drug to prevent a covered person from accessing 34 the prescription drug, or limiting a covered person’s access 35 -2- SF 383 (4) 91 nls/ko/mb 2/ 10

S.F. 383 to the prescription drug, from a pharmacy or pharmacist that 1 is within the health carrier’s network. A covered person or 2 pharmacy harmed by an alleged violation of this paragraph may 3 file a complaint with the commissioner, and the commissioner 4 shall, in consultation with the board of pharmacy, make a 5 determination as to whether the covered prescription drug meets 6 the definition of a specialty drug. 7 e. Require a covered person, as a condition of payment 8 or reimbursement, to purchase pharmacy services, including 9 prescription drugs, exclusively through a mail order pharmacy. 10 f. Impose upon a covered person a copayment, reimbursement 11 amount, number of days of a prescription drug supply for 12 which reimbursement will be allowed, or any other payment 13 or condition relating to purchasing pharmacy services from 14 a pharmacy that is more costly or restrictive than would be 15 imposed upon the covered person if such pharmacy services were 16 purchased from a mail order pharmacy, or any other pharmacy 17 that can provide the same pharmacy services for the same cost 18 and copayment as a mail order service. 19 2. a. If a third-party payor providing reimbursement to 20 covered persons for prescription drugs restricts pharmacy 21 participation, the third-party payor shall notify, in writing, 22 all pharmacies within the geographical coverage area of the 23 health benefit plan restriction, and offer the pharmacies 24 the opportunity to participate in the health benefit plan at 25 least sixty days prior to the effective date of the health 26 benefit plan restriction. All pharmacies in the geographical 27 coverage area of the health benefit plan shall be eligible to 28 participate under identical reimbursement terms for providing 29 pharmacy services and prescription drugs. 30 b. The third-party payor shall inform covered persons of 31 the names and locations of all pharmacies participating in 32 the health benefit plan as providers of pharmacy services and 33 prescription drugs. 34 c. A participating pharmacy shall be entitled to announce to 35 -3- SF 383 (4) 91 nls/ko/mb 3/ 10

S.F. 383 the pharmacy’s customers that the pharmacy participates in the 1 health benefit plan. 2 3. The commissioner shall not certify a pharmacy benefits 3 manager or license an insurance producer that is not in 4 compliance with this section. 5 4. A covered person or pharmacy injured by a violation 6 of this section may maintain a cause of action to enjoin the 7 continuation of the violation. 8 Sec. 4. Section 510B.8, Code 2025, is amended by adding the 9 following new subsections: 10 NEW SUBSECTION . 3. A pharmacy benefits manager shall not 11 impose different cost-sharing or additional fees on a covered 12 person based on the pharmacy at which the covered person fills 13 a prescription drug order. 14 NEW SUBSECTION . 4. For the purpose of reducing premiums, 15 one hundred percent of all rebates received by a pharmacy 16 benefits manager shall be passed through to the health carrier, 17 or to the employee plan sponsor as permitted by the federal 18 Employee Retirement Income Security Act of 1974, 29 U.S.C. 19 §1001, et seq. 20 NEW SUBSECTION . 5. A pharmacy benefits manager shall 21 include any amount paid by a covered person, or on behalf of 22 a covered person, when calculating the covered person’s total 23 contribution toward the covered person’s cost-sharing. 24 NEW SUBSECTION . 6. Any amount paid by a covered person for 25 a prescription drug shall be applied to any deductible imposed 26 on the covered person by the covered person’s health benefit 27 plan in accordance with the health benefit plan’s coverage 28 documents. 29 NEW SUBSECTION . 7. If a covered person’s policy, contract, 30 or plan providing for third-party payment or prepayment of 31 health or medical expenses qualifies as a high-deductible 32 health plan under section 223 of the Internal Revenue Code, 33 and a copayment, coinsurance, or deductible paid by the 34 covered person as a cost-sharing requirement under this chapter 35 -4- SF 383 (4) 91 nls/ko/mb 4/ 10

S.F. 383 would result in the covered person becoming ineligible for a 1 health savings account associated with the covered person’s 2 high-deductible health plan, subsection 5 shall apply only 3 after the covered person satisfies the covered person’s minimum 4 deductible, except for items or services determined to be 5 preventive care under section 223(c)(2)(C) of the Internal 6 Revenue Code. 7 Sec. 5. Section 510B.8B, Code 2025, is amended to read as 8 follows: 9 510B.8B Pharmacy benefits manager affiliates managers —— 10 reimbursement reimbursements . 11 1. A pharmacy benefits manager shall not reimburse any 12 pharmacy located in the state in an amount less than the amount 13 that the pharmacy benefits manager reimburses a pharmacy 14 benefits manager affiliate for dispensing the same prescription 15 drug as dispensed by the pharmacy. The reimbursement amount 16 shall be calculated on a per unit basis based on the same 17 generic product identifier or generic code number. 18 2. A pharmacy benefits manager shall not reimburse any 19 retail pharmacy located in the state in an amount less than the 20 most recently published national average drug acquisition cost 21 for a prescription drug on the date that the prescription drug 22 is administered or dispensed. If the most recently published 23 national average drug acquisition cost for the prescription 24 drug is unavailable on the date that the prescription drug is 25 administered or dispensed, a pharmacy benefits manager shall 26 not reimburse any retail pharmacy located in the state in 27 an amount less than the wholesale acquisition cost for the 28 prescription drug on the date that the prescription drug is 29 administered or dispensed. 30 3. In addition to the reimbursement required under 31 subsection 2, a pharmacy benefits manager shall reimburse the 32 retail pharmacy or pharmacist a professional dispensing fee in 33 the amount of ten dollars and sixty-eight cents. 34 4. a. A pharmacy benefits manager shall submit a quarterly 35 -5- SF 383 (4) 91 nls/ko/mb 5/ 10

S.F. 383 report to the commissioner of all drugs reimbursed at ten 1 percent or more below the national average drug acquisition 2 cost, and all drugs reimbursed at ten percent or more above the 3 national average drug acquisition cost, for each prescription 4 drug appearing on the national average drug acquisition cost 5 list on the day the prescription drug was dispensed. 6 b. For each prescription drug included in the report, a 7 pharmacy benefits manager shall include all of the following 8 information: 9 (1) The month the prescription drug was dispensed. 10 (2) The quantity of the prescription drug dispensed. 11 (3) The amount the pharmacy was reimbursed. 12 (4) If the dispensing pharmacy was an affiliate of the 13 pharmacy benefits manager. 14 (5) If the prescription drug was dispensed pursuant to a 15 government health plan. 16 (6) The average national drug acquisition cost for the month 17 the prescription drug was dispensed. 18 c. The report shall exclude drugs dispensed pursuant to 42 19 U.S.C. §256b. 20 d. A copy of the report shall be published on the pharmacy 21 benefits manager’s public internet site for twenty-four months 22 after the date the report is submitted to the commission. 23 5. This section shall not apply to a pharmacy that operates 24 in a state-owned facility. 25 Sec. 6. NEW SECTION . 510B.8D Pharmacy benefits manager 26 contracts. 27 1. All contracts executed, amended, adjusted, or renewed 28 on or after July 1, 2025, that apply to prescription drug 29 benefits on or after January 1, 2026, between a pharmacy 30 benefits manager and a third-party payor, or between a person 31 and a third-party payor, shall include all of the following 32 requirements: 33 a. The pharmacy benefits manager shall use pass-through 34 pricing. 35 -6- SF 383 (4) 91 nls/ko/mb 6/ 10

S.F. 383 b. Payments received by a pharmacy benefits manager for 1 services provided by the pharmacy benefits manager to a 2 third-party payor or to a pharmacy shall be used or distributed 3 pursuant to the pharmacy benefits manager’s contract with 4 the third-party payor or with the pharmacy, or as otherwise 5 required by law. 6 2. Unless otherwise prohibited by law, subsection 1 shall 7 supersede any contractual terms to the contrary in any contract 8 executed, amended, adjusted, or renewed on or after July 1, 9 2025, that applies to prescription drug benefits on or after 10 January 1, 2026, between a pharmacy benefits manager and a 11 third-party payor, or between a person and a third-party payor. 12 Sec. 7. NEW SECTION . 510B.8E Appeals and disputes. 13 1. A pharmacy benefits manager shall provide a reasonable 14 process to allow a pharmacy to appeal any matter. 15 2. The appeals process must include all of the following: 16 a. A dedicated telephone number at which a pharmacy may 17 contact the pharmacy benefits manager and speak directly with 18 an individual who is involved with the appeals process. 19 b. A dedicated electronic mail address or internet site for 20 the purpose of submitting an appeal directly to the pharmacy 21 benefits manager. 22 c. A period of no less than thirty business days after the 23 date of a pharmacy’s initial submission of a clean claim during 24 which the pharmacy may initiate an appeal. 25 3. The pharmacy benefits manger shall respond to an appeal 26 within seven business days after the date on which the pharmacy 27 benefits manager receives the appeal. 28 a. If the pharmacy benefits manager grants a pharmacy’s 29 appeal related to a reimbursement rate, the pharmacy benefits 30 manager shall do all of the following: 31 (1) Adjust the reimbursement rate of the prescription drug 32 that is the subject of the appeal and provide the national drug 33 code number that the adjustment is based on to the appealing 34 pharmacy. 35 -7- SF 383 (4) 91 nls/ko/mb 7/ 10

S.F. 383 (2) Reverse and resubmit the claim that is the subject of 1 the appeal. 2 (3) Make the adjustment pursuant to subparagraph (1) 3 applicable to all of the following: 4 (a) Each pharmacy that is under common ownership with the 5 pharmacy that submitted the appeal. 6 (b) Each pharmacy in the state that demonstrates the 7 inability to purchase the prescription drug for less than the 8 established reimbursement rate. 9 b. If the pharmacy benefits manager denies a pharmacy’s 10 appeal, the pharmacy benefits manager shall do all of the 11 following: 12 (1) Provide the appealing pharmacy the national drug 13 code number and the name of a wholesale distributor licensed 14 pursuant to section 155A.17 from which the pharmacy can obtain 15 the prescription drug at or below the reimbursement rate. 16 (2) If the prescription drug identified by the national 17 drug code number provided by the pharmacy benefits manager 18 pursuant to subparagraph (1) is not available below the 19 pharmacy acquisition cost from the wholesale distributor from 20 whom the pharmacy purchases the majority of its prescription 21 drugs for resale, the pharmacy benefits manager shall adjust 22 the reimbursement rate above the appealing pharmacy’s pharmacy 23 acquisition cost, and reverse and resubmit each claim affected 24 by the pharmacy’s inability to procure the prescription drug 25 at a cost that is equal to or less than the previously appealed 26 reimbursement rate. 27 Sec. 8. SEVERABILITY. The provisions of this division of 28 this Act are severable pursuant to section 4.12. 29 Sec. 9. APPLICABILITY. This division of this Act applies 30 to pharmacy benefits managers, health carriers, third-party 31 payors, and health benefit plans that manage a prescription 32 drug benefit in the state on or after July 1, 2025. 33 DIVISION II 34 PHARMACY SERVICES ADMINISTRATIVE ORGANIZATIONS AND WHOLESALE 35 -8- SF 383 (4) 91 nls/ko/mb 8/ 10

S.F. 383 DISTRIBUTION OF PRESCRIPTION DRUGS 1 Sec. 10. PHARMACY SERVICES ADMINISTRATIVE ORGANIZATIONS AND 2 WHOLESALE DISTRIBUTION OF PRESCRIPTION DRUGS —— REPORT. 3 1. By January 1, 2026, the commissioner of insurance, or 4 the commissioner of insurance’s designee, shall review pharmacy 5 services administrative organizations and the wholesale 6 distribution of prescription drugs, and submit a report to the 7 general assembly containing the commissioner’s findings and 8 recommendations. The report shall include, at a minimum, all 9 of the following: 10 a. A description and analysis of the prescription drug 11 wholesale distribution supply chain, including the market 12 concentration for the wholesale distribution of prescription 13 drugs, margins in the wholesale distribution of prescription 14 drugs, and the competition in the wholesale distribution of 15 prescription drugs. 16 b. A description of the role that pharmacy services 17 administrative organizations serve in the prescription drug 18 supply chain. 19 c. A description and analysis of the relationships between 20 pharmacy services administrative organizations, prescription 21 drug wholesalers, and retail pharmacies, including but 22 not limited to standard contracting terms, fees charged to 23 pharmacies, and contractual restrictions and limitations 24 applicable to retail pharmacies. 25 2. a. The commissioner of insurance shall submit the report 26 under subsection 1 in a manner that does not publicly disclose 27 any of the following: 28 (1) The identity of a specific pharmacy services 29 administrative organization or prescription drug wholesaler. 30 (2) The price charged to a specific pharmacy for a specific 31 prescription drug. 32 b. Information provided by the commissioner under this 33 section that may reveal the identity of a specific pharmacy 34 services administrative organization or prescription drug 35 -9- SF 383 (4) 91 nls/ko/mb 9/ 10