Iowa Law Faces Legal Challenge Days Before Implementation

A coalition of Iowa business groups is suing to block a new state law regulating pharmacy benefit managers (PBMs). The legal action aims to halt the law’s implementation, which is scheduled to take effect in just a week, sparking a dispute over prescription drug costs and pharmacy practices.

Groups Challenge New Pharmacy Benefit Law

The lawsuit, initiated by several business organizations, including the Iowa Association of Business and Industry, contests Senate File 383. This legislation seeks to control PBMs, which act as intermediaries in prescription drug coverage, and the new law guarantees a minimum reimbursement rate and a fee for each prescription.

The plaintiffs in the case—which include the Iowa Bankers Benefit Plan, Iowa Laborers District Council Health and Welfare Fund, and others—claim the law is unconstitutional. They’ve requested a temporary restraining order to postpone its enactment, which is set for July 1st, while the lawsuit proceeds through the courts.

Pharmacists’ Concerns and the Law’s Provisions

Pharmacists had previously voiced concerns to lawmakers, highlighting the issue of insufficient reimbursement rates from PBMs. They asserted that these rates were lower than the cost of dispensing medications, which jeopardized small pharmacies and decreased patient options.

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The lawsuit argues the new law violates the First Amendment by preventing employers from recommending specific pharmacies. Furthermore, it contends that the state law encroaches upon the Employee Retirement Income Security Act, a federal law. Meanwhile, prescription drug spending in the US reached $425 billion in 2023 (CMS 2023).

Legal Implications and Future Steps

The legal battle raises questions about the balance between state regulation and federal law. The outcome will likely affect how pharmacies are compensated and how patients access prescription drugs within the state.

The court’s decision on the temporary restraining order will set the immediate course of action, impacting the law’s implementation timeline. The suit will continue through the legal system.