PBM Bill: Business Reactions & Governor Decision
- Iowa Gov.Kim Reynolds is considering Senate File 383, legislation designed to regulate pharmacy benefit managers (PBMs) and lower prescription drug costs.
- Brett Barker, a pharmacist and the bill's sponsor, contends that SF 383 aims to address rising costs associated with PBMs, companies that manage prescription drug benefits for health...
- “The bill is intended to remove some of those perverse incentives from the system, provide additional openness, allow patients to choose their health care provider, make sure that...
Iowa’s SF 383, designed to lower pharmacy costs by regulating pharmacy benefit managers (PBMs), faces staunch opposition despite support from some pharmacies and the bill’s sponsor, Rep. Brett Barker. Business groups claim the bill will inflate healthcare expenses, potentially costing Iowans an extra $340 million yearly, citing mandated dispensing fees and other factors. However, Barker argues that similar measures in other states have proven cost-neutral or even reduced costs for payers. Hy-Vee and Hartig Drug support the bill, highlighting its benefits for rural healthcare and pharmacy access. This report on News Directory 3 delves into the key points of the PBM bill debate: the claims, counterclaims, and the potential implications for Iowa.Discover what’s next as Governor Reynolds considers her decision.
Iowa Bill Aiming to Lower Pharmacy costs draws Business Backlash
Updated May 26, 2025
Iowa Gov.Kim Reynolds is considering Senate File 383, legislation designed to regulate pharmacy benefit managers (PBMs) and lower prescription drug costs. The bill, already passed by the Iowa House and Senate, faces opposition from business groups who argue it will drive up health care costs for employers and their employees.
Rep. Brett Barker, a pharmacist and the bill’s sponsor, contends that SF 383 aims to address rising costs associated with PBMs, companies that manage prescription drug benefits for health insurance plans. Barker said PBM practices have led to the closure of 200 small pharmacies in Iowa over the past decade.
“The bill is intended to remove some of those perverse incentives from the system, provide additional openness, allow patients to choose their health care provider, make sure that dollars actually benefit payers and patients, and make sure the pharmacy gets reimbursed for what it costs to dispense prescription drugs to Iowans,” Barker told the Business Record.
Barker dismissed concerns about increased costs, stating that similar measures in other states have proven cost-neutral or have reduced costs for payers. He added that the Iowa Legislature would review the bill’s provisions if evidence of cost increases emerges.
Though, several business groups, including the Iowa association of Business and Industry (ABI), the iowa Bankers Association, the iowa Business Council, and the National Federation of Independent Business, jointly issued a statement on May 12, claiming SF383 would cost Iowans an additional $340 million annually.
ABI President Nicole Crain said,“This legislation,if signed into law,will considerably raise health care costs for employers and employees.” Crain identified several cost drivers, including a mandated dispensing fee of $10.68 for most pharmacies, allowing any pharmacy to handle specialty drugs, and allowing pharmaceutical companies to offer copay coupons.
Hy-Vee Inc., which operates 152 pharmacies in Iowa, supports the bill. “As an employer trying to manage health care costs for our 28,000 employees in Iowa, we support this bill becuase it ensures Iowans can access the medications and health care services they need,” said Hy-Vee spokesperson Tina Potthoff.
charlie Hartig, CEO of Hartig Drug, which has 23 pharmacies across the state, echoed this sentiment. He said current reimbursement rates from PBMs are unsustainable, and the bill would level the playing field, giving Iowans more choice.
Kate Gainer, executive vice president and CEO of the Iowa Pharmacy Association, pointed to a January 2025 Federal Trade Commission report that showed PBMs charge notable markups for critical specialty generic drugs. She said the report showed the big three PBMs paid themselves $7.3 billion above the National Average Drug Acquisition Cost over a six-year period.
What’s next
If signed by Gov. Reynolds, most provisions of SF 383 would take effect on July 1. The Iowa Insurance Division will oversee the PBMs, and lawmakers will monitor any analyses developed in the coming months and years. The legislation also directs the Iowa Insurance Division to submit a report on the wholesale prescription drug market and the role of pharmacy services administrative organizations in the drug supply chain.