A recent surge in pharmacy closures across Iowa, with 29 pharmacies shutting their doors in 2024, is contributing to the rise of rural "pharmacy deserts," areas with limited access to essential medication services.
The surge of closures has fueled concerns about the impact of Pharmacy Benefit Managers (PBMs) on rural communities. PBMs, companies that act as intermediaries among drug manufacturers, pharmacies, and health insurers, are facing increased scrutiny for their role in rising drug costs and the decline of independent pharmacies.
“The three dominant players of PBMs wield immense power in the market,” said Matt Osterhaus, former president of the American Pharmacists Association and Iowa Pharmacy Association. “Their practices, including often paying pharmacies less than the cost of medications, are squeezing independent pharmacies and limiting patient access.”
One key issue is "spread pricing," which occurs when PBMs receive higher reimbursement rates from insurers than they pay to pharmacies. According to the Congressional Budget Office, this practice could cost federal taxpayers $1 billion over 10 years.
The lack of transparency in the current system allows millions of drug rebate dollars to flow to the PBMs, while patient copays and employer health care costs increase.
To address these concerns, Iowa lawmakers have introduced House Study Bill (HSB) 99, a bill described by Osterhaus as “the most comprehensive PBM bill in the nation.” The legislation aims to curb abusive PBM practices and includes a ban on spread pricing within the state's Medicaid managed care programs.
HSB 99 is crucial for our rural communities. The bill will level the playing field for independent pharmacies, allowing them to compete fairly and continue providing vital health care services to residents. The bill will also provide an important choice of service to consumers who want patient-centered care and need expert medical advice along with their prescriptions.
The bill passed the House Commerce Committee unanimously on Feb. 17, 2025. HSB 99 now moves to the House floor for consideration.
