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SF 383

Dayton roundabout bond issue and appropriation

2025-2026 Regular Session Introduced by John Hoffman

SF 383 requires PBMs to use pass-through pricing, pass 100% of rebates to plans, and tighten reimbursements, boosting price transparency and protecting pharmacies.

Referred to Capital Investment
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Bill Summary · SF 383

Summary — SF 383 (2025): Regulation of Pharmacy Benefits Managers (PBMs)

Status and timeline
- Introduced: Feb 19, 2025.
- Passed Senate: Apr 28, 2025. Passed House: May 12, 2025. Sent to Governor May 19, 2025.
- Signed into law by Governor Kim Reynolds: June 11, 2025.
- Applicability: many provisions apply to PBMs and relevant contracts beginning July 1, 2025 (with contract requirements applying to prescription drug benefits on or after Jan 1, 2026).

Purpose
SF 383 establishes new regulations and transparency requirements for pharmacy benefits managers (PBMs), strengthens protections for retail and independent pharmacies, and changes pricing, reimbursement, reporting, and appeal rules to increase accountability in the prescription drug supply chain.

Key definitions added
- National Average Drug Acquisition Cost (NADAC): CMS monthly survey of retail pharmacy acquisition cost for Medicaid outpatient drugs.
- Pass‑through pricing: PBM payments from a third‑party payor equal payments the PBM makes to the dispensing pharmacy (including dispensing fee).
- Spread pricing: when a PBM charges a payor more than it reimburses a dispensing pharmacy.

Major substantive provisions
- Non‑discrimination / pharmacy participation
- PBMs, health carriers, health benefit plans, and third‑party payors may not discriminate against pharmacies or pharmacists in participation, referral, reimbursement, or indemnification when operating lawfully.
- Prohibits PBMs from forcing covered persons to use mail‑order pharmacies (with specialty‑drug carve‑outs in some amendments).
- Limits PBM ability to designate drugs as “specialty” to restrict access; commissioner, with Board of Pharmacy, can make specialty determinations on complaint.

  • Reimbursement rules

    • PBMs must not reimburse an in‑state pharmacy less than the most recently published NADAC for a drug on the dispense date; if NADAC unavailable, use the wholesale acquisition cost (WAC).
    • Professional dispensing fee: PBMs must reimburse eligible retail pharmacies up to $10.68 per prescription in many versions/sections (with eligibility tied to revenue/size or geography in some amendments).
    • PBM must reimburse not less than amounts paid to PBM affiliates for the same drug.

  • Pricing model and contracts

    • Contracts executed/amended/renewed on/after July 1, 2025 (for benefits starting Jan 1, 2026) must require pass‑through pricing unless narrow conditions permitting spread pricing are met (spread allowed only where the difference is passed through to a contracted recipient). Some amendment versions prohibit spread pricing outright.
    • Payments received by PBMs must be used/distributed consistent with contract terms or law; statutory requirements generally supersede contrary contract terms.

  • Rebates, cost‑sharing, deductibles

    • PBMs must pass 100% of all rebates through to the health carrier or to an ERISA plan sponsor (for purposes of reducing premiums).
    • Any amount paid by or on behalf of a covered person counts toward that person’s total contribution and deductible; high‑deductible health plan rules include an exception so application does not jeopardize HSA eligibility until minimum deductible is met (per amendment language).

  • Transparency, reporting, appeals, and enforcement

    • Quarterly PBM reports to the Insurance Commissioner of drugs reimbursed ≥10% above or ≤10% below NADAC; some versions require public posting for 24 months. Commissioner may request additional confidential information (HIPAA compliant).
    • PBMs must provide a reasonable appeals process for pharmacies disputing reimbursement rates. If a denial prevents a pharmacy from obtaining product at or below the reimbursed rate, PBM must provide NDC and a licensed wholesale distributor or adjust reimbursement above pharmacy acquisition cost and reverse/resubmit affected claims.
    • Insurance Commissioner may refuse certification of non‑complying PBMs and may deny licensing to insurance producers not in compliance. A covered person or pharmacy may seek injunctive relief for violations.

  • Study / report requirement (selected amendment)

    • Commissioner of Insurance to review pharmacy services administrative organizations (PSAOs) and prescription drug wholesale distribution and report findings/recommendations to the General Assembly by Jan 1, 2026; report may be confidential in parts.

Who is affected
- PBMs, health carriers, employer plan sponsors, third‑party payors.
- Retail pharmacies, especially independent and rural pharmacies (size/geography‑based dispensing fee eligibility appears targeted to smaller/local pharmacies).
- Patients/covered persons (cost sharing, pharmacy choice, deductible application).
- State entities: State of Iowa health plan, Iowa Insurance Division (IID), Board of Regents (higher education plans).
- Pharmaceutical wholesalers and PSAOs via reporting and potential scrutiny.

Fiscal and implementation impacts
- Iowa Insurance Division estimates need for 4.0 FTEs (~$600,000 annually) to implement/enforce PBM provisions (positions to start FY2026).
- State of Iowa health plan cost impact varies across LSA fiscal note versions:
- Estimated net annual increase beginning FY2026 ranges across analyses from roughly $3.9 million to $10.0 million (low‑ and high‑end estimates depend on assumptions about NADAC savings, dispensing fee allocations, prohibition of exclusive pharmacy arrangements, and whether copay coupon provisions apply).
- Additional annual member out‑of‑pocket increases estimated between about $742,000 and $1.2 million due to changes in dispensing fee treatment and copay interactions.
- Fiscal impact to Board of Regents and other employers is uncertain but anticipated to be significant in some notes.

Enforcement and remedies
- Administrative enforcement by the Insurance Commissioner; private injunctive relief permitted for injured covered persons or pharmacies. Contractual provisions contrary to statute are generally preempted.

Related legislation
- Companion: HF 312.

Notes / context
- The bill underwent multiple amendments during floor action (H‑ and S‑series amendments) that modified definitions, dispensing‑fee eligibility, spread‑pricing rules, and reporting/appeal details. The Governor signed the enrolled bill on June 11, 2025; implementation details will be clarified through rulemaking and guidance from the Iowa Insurance Division and coordination with the Board of Pharmacy.

Compiled from official sources — confirm details with the bill’s official record.

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