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LUGPA Policy Brief: Iowa’s PBM Reform Law and Its Implications for Patient Access and Independent Providers

October 2025

Iowa’s Senate File 383 (SF 383), enacted in 2024, aims to increase transparency and fairness in Pharmacy Benefit Manager (PBM) operations. The law includes provisions addressing patient choice, pharmacy reimbursement, rebate pass-through, and specialty drug designations. It seeks to address market consolidation and cost concerns in the prescription drug supply chain—issues that can affect patient access to medications frequently used in urology care.

The law is currently under review by the U.S. Court of Appeals for the Eighth Circuit following a legal challenge that raised concerns about potential ERISA preemption and First Amendment implications. Several pharmacy organizations have filed an amicus brief defending the law, arguing it aligns with existing U.S. Supreme Court precedent.

Key Provisions of SF 383

  • Patient Choice: PBMs must allow patients to use any in-network pharmacy and may not steer them to PBM-owned pharmacies.
  • Fair Reimbursement: PBMs must reimburse independent pharmacies on terms comparable to their affiliated pharmacies.
  • Dispensing Fees and Network Access: Requires PBMs to offer network participation to all qualified pharmacies and pay a set dispensing fee.
  • Rebate Transparency: Manufacturer rebates must be passed through to health plan clients.
  • Specialty Drug Designations: Restricts PBMs from limiting access to specialty drugs through selective classifications.

Legal and Policy Context

The Rutledge v. PCMA (2020) decision affirmed that certain state PBM regulations are not preempted by ERISA when they do not alter plan design. Iowa’s case tests how that precedent applies to broader PBM reforms.

A district court upheld the rebate pass-through provision but enjoined others. Both sides appealed. Pharmacy associations argue PBMs act as third-party administrators rather than plan entities, and that states have authority to regulate their business practices.

This case reflects a broader national discussion: all 50 states have enacted PBM-related laws, and the Federal Trade Commission continues to study PBM market practices, including spread pricing and patient steering.

Relevance to Urology Practices

Independent urology practices rely on accessible, affordable pharmaceutical distribution channels. PBM reimbursement and dispensing policies can affect:

  • Timely access to medications for prostate cancer and other urologic conditions.
  • Pharmacy availability, particularly in rural areas.
  • Coordination of care with local and specialty pharmacies.

Since 2014, Iowa has experienced significant pharmacy closures, highlighting the broader impact of reimbursement and market pressures on access to care.

Considerations Moving Forward

  • The Eighth Circuit’s decision could clarify how far states may go in regulating PBMs without conflicting with federal law.
  • Federal policymakers may look to Iowa’s experience as a model when considering national PBM transparency or competition reforms.
  • Continued monitoring of PBM litigation and FTC findings will help assess the effects of such regulations on patients, providers, and drug pricing.

Iowa’s SF 383 represents one of the most comprehensive state efforts to reform PBM practices and improve transparency in the pharmaceutical market. The Eighth Circuit’s ruling will have implications for state authority, market competition, and patient access to essential medications—issues of ongoing importance to independent healthcare providers, including urology practices.