Why Iowa PBM SF 383 law is Important.

It has come to our attention that Iowa companies recently communicated with its employees regarding Senate File 383 (SF 383), the new pharmacy benefit manager (PBM) law effective July 1st, and its potential impact on prescription costs. We understand our Medicap Pharmacy locations were specifically mentioned in this communication, and as we were not consulted prior to its dissemination, we wish to proactively provide accurate information and address any misconceptions.

The primary objective of SF 383 is to foster a more equitable and transparent prescription drug market in Iowa. This legislation aims to curb the predatory practices of PBMs that have historically disadvantaged community pharmacies, ultimately harming patients, employers, and taxpayers. While no legislation is perfect, SF 383 represents a significant stride towards ensuring Iowans maintain access to essential medications within their local communities. As several studies of shown, community pharmacies are vital to the overall health of residents by providing lifesaving medications, consultations, and vaccinations. Patients see their pharmacist four times more than their doctors, thus making community pharmacies critical to maintaining and improving care for Iowans.

ADDRESSING CONCERNS OF SF 383

A few local businesses and organizations including Iowa State Bank, Iowa Association of Business and Industry, and the Iowa Laborers District Council Health and Welfare fund, are claiming that the new law will raise healthcare costs for businesses by millions of dollars. No empirical data has been provided to support these statements, and these businesses’ employees are at risk of losing critical healthcare access in their communities. By blocking the law, all Iowa businesses will continue to be ripped off by PBMs through spread-pricing and having their employees forced to use PBM controlled pharmacies. These vertically integrated PBMs will control the market, eliminate competition and drive-up medication costs without SF 383.

Impact on pharmacies: Dispelling INFORMATION

During the first two weeks of the law being in effect, our pharmacies have seen no change in net reimbursements. While the SF 383 mandated $10.68 dispensing fee is being paid to the pharmacies, the amount the pharmacies are reimbursed for the medications has gone down, as a result of a shift to NADAC pricing, as PBMs control that pricing as well. How are healthcare costs increasing if pharmacies aren’t making any additional money?

In reality, even with SF 383, Iowa community pharmacies remain vulnerable to predatory PBM practices and persistently low reimbursements. If this critical legislation is undermined or blocked, independent pharmacies across the state and patient access to vital medications will suffer immensely. SF 383 is not a cure-all, but a necessary step to fix a deeply flawed system. Significant profits regrettably continue to flow to PBMs while many community pharmacies struggle financially.

UNDERSTANDING PBMS

Pharmacy Benefit Managers were originally established to help health plans negotiate better drug pricing. However, due to a lack of transparency, they have evolved into some of the most profitable entities in the healthcare industry. Three dominant PBMs control over 85% of the market and have expanded to own both health insurance companies and their own pharmacies.

This vertical integration creates inherent conflicts of interest, allowing PBMs to manipulate pricing and reimbursement structures, often steering patients towards their owned pharmacies and paying non-affiliated pharmacies less than the cost of medications. According to a 3 Axis Advisors study, PBM-affiliated pharmacies are making 31x higher than non-affiliated pharmacies in West Virginia. How is this fair? Do you really want the only market option to be PBM owned pharmacies?

We welcome the opportunity to discuss this new law further and explore how Medicap Pharmacy can partner with local businesses to provide genuine prescription savings and optimal care for your employees.