Fiscal Note
Fiscal Services Division
SF 2231 – Pharmacy Benefits Managers (LSB5519SV)
Staff Contact: Xavier Leonard (515.725.0509) xavier.leonard@legis.iowa.gov
Fiscal Note Version – New
Description
Senate File 2231 relates to pharmacy benefits managers (PBMs), pharmacies, and prescription
drug benefits. The Bill does the following:
• Defines terms; requires rulemaking; clarifies language; adds additional duties to PBMs,
health carriers, and the Iowa Insurance Division in the Department of Commerce; and
makes changes to PBM reimbursements.
• Prohibits a covered person from making a cost-sharing payment at the point of sale for a
prescription drug in an amount that exceeds the maximum allowable cost (MAC) for that
drug. The MAC is the maximum amount a pharmacy will be reimbursed by a PBM or a
health carrier for a prescription drug.
• Prevents PBMs from prohibiting pharmacies from disclosing or selling lower-cost drug
options to covered persons.
• Applies prescription drug copayments to the covered person’s deductible.
• Allows a covered person to fill prescription drug orders at any pharmacy in the State,
provided that the pharmacy accepts the same terms and conditions of the covered person’s
health benefit plan. Prohibits PBMs from changing cost-sharing and additional fees based
on the pharmacy.
• Prohibits PBMs from requiring purchases exclusively through a mail-order pharmacy.
• Calculates a covered person’s cost-sharing at the point of sale to ensure the covered person
does not pay more than the cost of a drug after rebates have been applied.
• Requires PBMs to include moneys paid by, or on the behalf of, a covered person when
calculating the covered person’s cost-sharing.
• Allows a pharmacy to decline to fill a prescription if the maximum the pharmacy may charge
for the prescription is less than the pharmacy’s acquisition cost.
• Prohibits a PBM from paying a reimbursement to a pharmacy or pharmacist less than the
national average drug acquisition cost for each drug.
• Requires a PBM to reimburse a dispensing fee no less than the Iowa Medicaid enterprise
provider fee schedule. Requires a PBM to reimburse all in-state pharmacies at the rate the
PBM reimburses its affiliates for dispersing the same prescription drug.
Background
Cost-sharing payments are out-of-pocket cost obligations imposed by a health benefit plan on a
covered person. These include but are not limited to coverage limits, copayments, coinsurance,
and deductibles.
Currently, as a cost-saving measure, Wellmark supplies specialty drugs that are obtained via
mail order through restricted outlets. This impacts the State of Iowa Plan.
The Commissioner of Insurance is responsible for ensuring parties subject to laws related to
cost-sharing payments law are in compliance.
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Senate File 2231 is estimated to impact approximately 25.8% of the population (822,000). This
includes individual coverage, fully insured small and large employer groups, self-insured public
employees, and the State of Iowa Plan.
Of the population covered by insurance plans not regulated by Iowa law, approximately 45.2%
are covered by government-sponsored health insurance, 23.0% are covered by employer
coverage that is governed by the federal Employee Retirement Income Security Act of 1974
(ERISA), and the remaining 6.0% are uninsured.
Source: Iowa Insurance Division, Department of Commerce
State of Iowa Plan
Assumptions
• Prescription drug utilization by insured individuals will increase 0.5% annually.
• Prescription drug cost will increase 8.5% annually.
• Reducing point-of-sale price by 100.0% of all rebates will increase utilization of generic and
brand-name drug prescriptions. Between 0.5% and 1.5% of generic drug prescriptions will
move to a brand-name alternative over the course of a year.
• There will be a 1.0% to 3.0% increase in brand-name prescriptions filled.
• The PBM affiliate provisions in the Bill are estimated to increase costs for the State of Iowa
Plan by 5.3%. The MAC provisions will increase the amount reimbursed per unit for filling
prescriptions. This language is estimated to increase costs for the State of Iowa Plan group
by 6.6%. There is overlap of the increased cost between the Bill language affecting both the
affiliate pharmacies and the MAC.
• The supply of specialty drugs solely through mail-order pharmacies is not allowed under the
Bill. The discontinuance of this cost-saving measure will raise the costs of specialty drugs
by approximately 6.0%. For the State of Iowa Plan group, specialty drugs account for
30.0% of drug expenses. Drug-related claims for the State of Iowa Plan group, specifically,
are estimated to increase by 1.8%.
• There will be an increase of $10.30 per prescription for increased dispensing fees.
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• The State of Iowa Plan generates approximately 640,000 prescriptions annually.
Fiscal Impact
Senate File 2231 is expected to increase claim liabilities for the State of Iowa Plan between
$20.6 million and $30.8 million annually. This corresponds to an increase between 6.2% and
9.3% in total claim spending.
The estimated cost increases due to SF 2231 are broken down as follows:
• An increase of approximately $3.0 million due to prescription drug copayments counting
toward a covered individual’s deductible.
• An increase of between $4.0 million and $11.0 million for anticipated changes in utilization
(switching from generic to brand-name drugs).
• An increase of between $5.3 million and $8.5 million for higher reimbursement levels for
pharmacies.
• An increase of approximately $1.7 million for removing the requirement of purchasing
certain prescriptions solely through mail-order pharmacies.
• An increase of approximately $6.6 million ($10.30 multiplied by 640,000 prescriptions) for
dispensing fee reimbursements.
Board of Regents
Assumptions
• The Board of Regents, included in Self-Insured Public Employees, generates approximately
987,000 prescriptions annually.
• There will be an increase of $10.00 per prescription for increased dispensing fees.
Fiscal Impact
Senate File 2231 is expected to increase claim liabilities for the Board of Regents self-funded
health plans by approximately $25.0 million annually.
The estimated cost increases due to SF 2231 are broken down as follows:
• An increase of approximately $9.9 million ($10 multiplied by 987,000 prescriptions) for
dispensing fee reimbursements.
• An increase of approximately $15.1 million for higher reimbursement levels for pharmacies.
Iowa Insurance Division, Department of Commerce
Assumption
Additional examination and enforcement actions as carried out by the Insurance Division will
require the Division to add 2.0 full-time equivalent (FTE) positions for an Insurance Examiner
Specialist and an Insurance Complaint Analyst.
Fiscal Impact
The total cost to the Commerce Revolving Fund is approximately $200,000 and 2.0 FTE
positions annually. This cost is for an Insurance Examiner Specialist FTE position, with a salary
of approximately $110,000, and an Insurance Complaint Analyst, with a salary of approximately
$90,000, for the purposes of examining and enforcing compliance with the provisions of the Bill.
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Sources
Board of Regents
Insurance Division, Department of Commerce
Wellmark
/s/ Holly M. Lyons
March 1, 2022
Doc ID 1287258
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
www.legis.iowa.gov
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Statutes affected:
Introduced: 505.26, 510B.1, 510B.4, 510B.5, 510B.6, 510B.7, 510B.8, 155A.17, 507B.7