Drug Pricing Transparency Prevails in Iowa

A federal district court has dismissed a lawsuit brought by pharmacy benefits managers (PBMs) against drug pricing transparency legislation in Iowa.

Last September, the Pharmaceutical Care Management Association (PCMA), which represents the nation’s leading PBMs, filed a complaint against an Iowa state law related to generic drug pricing and reimbursement.

The lawsuit challenged the legality of H.F. 2297, an act related to the regulation of PBMs that was passed unanimously by both chambers of the Iowa legislature and signed into law by Gov. Terry Branstad on March 14, 2014.

H.F. 2297 requires PBMs to be transparent about their methods for determining reimbursement for generic drugs. It also affords the state’s insurance commissioner authority to request information from PBMs in Iowa.

A US district court dismissed many of PCMA’s claims against these reforms in February 2015. The court then rejected the trade group’s entire case on September 8, 2015, “concluding that the state has a legitimate interest in regulating PBMs in order to preserve the health of its citizens,” stated Douglas Hoey, RPh, MBA, CEO of the National Community Pharmacists Association (NCPA), which worked with the Iowa Pharmacy Association to defend H.F. 2297.

This ruling holds a place in the heated national conversation about soaring generic drug costs and their effect on both community pharmacists and patients.

A national survey conducted by the NCPA revealed that 87% of pharmacists said it took at least 1 month for reimbursement rates to adjust in accordance with an increased drug acquisition cost.

Nearly 10% of generic drugs more than doubled in price between July 2013 and July 2014 alone.

“The cost of many generic drugs has skyrocketed by 1000% or more virtually overnight, but PBM corporations may wait months before they update reimbursement rates,” Hoey stated. “This situation forces pharmacies to absorb losses of $100 or more per prescription and jeopardizes patients' access to medication.”

Legislation has been introduced in Congress to rein in escalating generic drug prices. The Medicaid Generic Drug Price Fairness Act would require drug manufacturers to pay a rebate to Medicaid when their generic prices increase at a rate that outpaces inflation.

Hoey is optimistic that the court ruling in Iowa is just the beginning of a widespread regulatory change that holds both manufacturers and PBMs accountable for rising drug prices.

“The court’s dismissal of PCMA’s entire case should serve as an extremely helpful precedent against PCMA’s claims challenging the legality of similar transparency laws throughout the country and in support of states’ ability to regulate PBMs,” he said.