Iowa Business Groups Sue State Over New Pharmacy Benefit Manager Law

A coalition of Iowa businesses and organizations, led by the Iowa Association of Business and Industry (ABI), has filed a federal lawsuit challenging Senate File 383, a new state law regulating pharmacy benefit managers (PBMs) set to take effect July 1. The law aims to protect rural pharmacies by requiring PBMs to reimburse pharmacies at or above the drug acquisition cost and imposing a $10.68 dispensing fee for prescriptions filled by independent and rural pharmacies, measures supporters say will help struggling pharmacies stay afloat. However, the plaintiffs argue the law violates federal regulations, specifically the Employee Retirement Income Security Act (ERISA), and infringes on commercial free speech by restricting employers from informing employees about cost-saving options, which they claim will raise healthcare costs for businesses across Iowa by millions. The lawsuit contends the law disrupts prescription drug coverage and imposes burdensome regulations that could increase insurance costs and interfere with federally governed employee benefit plans. This legal action reflects ongoing tensions between efforts to support small pharmacies and concerns about broader impacts on business health plans and costs. The state insurance commissioner is named as the defendant, and the plaintiffs seek injunctions to block the law's enforcement.