Iowa General Assembly Passes Legislation Regulating Pharmacy Benefit Managers

May 07, 2007, 01:00 ET from National Community Pharmacists Association

    ALEXANDRIA, Va., May 7 /PRNewswire-USNewswire/ -- The Iowa General
 Assembly has unanimously passed legislation that would force pharmacy
 benefit managers (PBMs), the largely unregulated corporations that
 administer the prescription drug benefit portion of health insurance plans
 for employers and unions, to end their deceptive business practices and
 provide better safeguards for patients. A growing number of states are
 enacting PBM bills, such as S.F.512 in Iowa, to require these drug
 middlemen to disclose certain business practices that have been the subject
 of investigations and prosecutions. PBMs influence 80 percent of drug
 coverage in the United States, which is why states such as Iowa are taking
 steps to bring transparency to the business practices of these
     PBMs receive billions of dollars in rebates from drug manufacturers in
 return for dispensing higher-cost brand-name drugs. The majority of those
 rebate savings are not passed along to their clients -- such as private
 health plans and the Medicare Part D program. PBMs also limit patient
 treatment options by offering shrinking and shifting formularies, or lists
 of drugs that are covered for specific groups in a health insurance plan,
 and by requiring burdensome pre-authorizations in order to obtain refills
 or formulary- restricted medications. These bureaucratic policies
 discourage patients from obtaining their medications.
     "The National Community Pharmacists Association wants to see statutes
 that protect both the employers who provide drug benefits for employees and
 retirees, and the consumers who pay the premiums," said NCPA Executive Vice
 President and CEO Bruce Roberts, RPh. "The PBM reform bill passed by the
 Iowa General Assembly contains much-needed provisions that provide for the
 type of transparency and accountability that PBMs owe their customers and
 the public as a whole."
     "Everyone in the drug delivery system is highly regulated and
 scrutinized, except for pharmacy benefits managers. Given the history of
 investigations, litigation, and prosecution of the giant PBMs; consumers
 and policy makers should be asking why PBMs alone should be exempt from
 government oversight," said Roberts. "If PBM's expect to participate in
 public and private prescription drug plans, they owe a fiduciary
 responsibility to patients and taxpayers -- not just to their shareholders.
     The General Assembly's legislation requires PBMs to be certified as a
 third-party administrator and to disclose any conflict of interest issues.
 It also prohibits PBMs from substituting a medication unless it is made for
 medical reasons that benefit the beneficiary or result in financial savings
 to the employer.
     The legislation gives the Insurance Commissioner the ability to adopt
 rules regarding timely payment of pharmacy claims and establish an
 adjudication process for complaints and disputes between PBMs and
     After those initial regulatory steps are undertaken, an interim study
 commission will be created to assess additional disclosure, auditing, and
 enforcement issues.
     "Iowa's new PBM regulation law offers essential protections for
 pharmacies, payers of health care benefits, and most importantly
 consumers," said Thomas Temple, executive vice president and CEO of the
 Iowa Pharmacy Association. "In particular, the new law provides for needed
 regulatory oversight of PBMs by the Insurance Commissioner's Office,
 standards of fairness in PBM-pharmacy contracting practices, and safeguards
 for consumers relative to drug substitution activity."
     Temple added, "The new law also will establish a process for resolving
 disputes between PBMs and pharmacies and creates an Interim Legislative
 Study Committee to address issues related to PBM transparency. The PBM
 regulation bill-a major legislative priority of the Iowa Pharmacy
 Association-received support and endorsement from the Iowa Attorney
 General, organized labor, the Iowa League of Cities, the Health Buyers
 Alliance of Iowa, and several corporate employer groups."
     The bill is currently awaiting a signature from Gov. Chet Culver.
     The National Community Pharmacists Association, founded in 1898,
 represents the nation's community pharmacists, including the owners of more
 than 24,000 pharmacies. The nation's independent pharmacies, independent
 pharmacy franchises, and independent chains dispense nearly half of the
 nation's retail prescription medicines.

SOURCE National Community Pharmacists Association