The bill establishes the Iowa Competitive Pharmacy Benefits Managers Marketplace Act, which introduces a reverse auction process for pharmacy benefits managers (PBMs) to enhance competition and reduce costs for self-funded public sector health plans. The Department of Administrative Services (DAS) is tasked with procuring a technology platform capable of conducting these reverse auctions by November 1, 2025. This platform must meet specific requirements, including the ability to automate the evaluation of bids and perform detailed reviews of invoiced claims. The bill prohibits DAS from contracting with any vendor that is a PBM or affiliated with a PBM, ensuring that the auction process remains unbiased.

The first reverse auction is scheduled to be completed by January 1, 2026, with subsequent contracts awarded at least three months before the expiration of existing contracts. The bill also allows for market checks during the contract term to ensure competitive pricing. Additionally, self-funded public sector health plans may opt to conduct their own reverse auctions three years after the initial contract is awarded, while retaining autonomy over their prescription drug formularies. The bill does not apply to certain nonprofit health maintenance organizations and allows DAS to vacate auction outcomes if bids do not meet projected cost trends. The act takes effect immediately upon enactment.