(Iowa Capital Dispatch) Iowa’s law putting new regulations on pharmacy benefits managers is temporarily blocked from enforcement for Wellmark Blue Cross-Blue Shield health plans and insurance policies.
Chief U.S. District Judge Stephanie Rose issued a temporary injunction Wednesday in the case, brought earlier this month by Iowa’s largest health insurer against the state insurance commissioner. The case challenges enforcement of Senate File 383, the measure signed into law in June that regulates certain business practices by PBMs, the entities negotiating prescription drug costs between manufacturers, health insurance companies and pharmacies.
The law restricts PBMs’ ability to set certain cost-sharing rates, fees, or other financial means to incentivize a person to fill their prescription at a certain pharmacy. It also requires independent pharmacies to be reimbursed at the average national acquisition cost of a drug plus a $10.68 dispensing fee.
The law was supported by many advocates and business owners of small and rural pharmacies. Pharmacists and some health care advocates said the PBM practices targeted by the Iowa law contributed to the closure of more than 200 rural and independent pharmacies across the state, including 31 pharmacies that closed in 2024.
But business leaders and health insurance companies have said the measure will lead to higher health care costs for Iowans. The Iowa Association of Business and Industry warned the measure could result in an additional $340 million in costs for private-sector health insurance plans, resulting in an increase of $169 for the average insured Iowans’ pharmaceutical costs each year.
The Iowa Association of Business and Industry also filed a lawsuit in June to block enforcement of the law. Rose, who also oversaw this case, issued a temporary injunction on July 21 applying to plaintiffs of the ABI lawsuit.
In that decision to issue a temporary injunction, Rose wrote that several parts of the PBM law exceed state authority in regulating health care plans, conflicting with the federal Employee Retirement Income Security Act, or ERISA. She also found the law could conflict with First Amendment protections for commercial speech “without adequate constitutional justification.”
Wellmark’s October lawsuit referenced Rose’s decision in the ABI case, saying the injunction order brought into question whether Iowa Insurance Commissioner Doug Ommen can legitimately enforce the state’s PBM law if it conflicts with federal ERISA regulations. The lawsuit specifically pointed to guidance Ommen issued in September that stated he planned to enforce the new law “in its entirety” against entities that are not plaintiffs in the ABI lawsuit.
Rose’s temporary injunction in the Wellmark case pauses the $10.68 dispensing fee for prescriptions filled at pharmacies in Iowa under Wellmark covered plans and policies, including those working through CVS Caremark, the PBM that works with Wellmark.
In a news release on the decision, the company said the preliminary injunction provides benefits like offering “clear compliance guidance” on the law, and shielding more than 1 million Iowans from “significant increases in prescription medication costs” under the law. The company had estimated individuals covered by Wellmark policies would face increased costs of nearly $40 million annually.
The Iowa Insurance Division did not respond a request for comment Friday on the injunction. Provisions of the law not blocked under the court order will continue to be enforced. The temporary injunctions blocking parts of the law, set in the Wellmark and ABI lawsuits, will remain in place until a decision is made on in the cases about the law’s constitutionality.
Photo: Dozens of pharmacists, students and pharmacy owners attended the Senate subcommittee meeting Feb. 5, where Sens. Annette Sweeney, left, Mike Klimesh and Sarah Trone Garriott heard public comments on a bill related to pharmacy benefits managers. (Photo by Robin Opsahl/Iowa Capital Dispatch)
