If you’re a fan of winter sports, you might be in luck…because we may have a snowball effect emerging.
It all started when Arkansas Governor Sarah Huckabee Sanders signed a law on April 16 saying any company that owns a pharmacy benefit manager (PBM) would be prohibited from also owning or operating pharmacies in the state. That’s seemingly bad news for the Big 3 PBMs—Cigna Group’s Express Scripts, CVS’s Caremark, and UnitedHealth’s Optum Rx, which collectively control nearly 80% of the market—seeing as they all also operate pharmacy chains.
Now the state of Iowa wants to get in on the action, with Governor Kim Reynolds signing a law on June 11 to change how PBMs operate in the state.
The current practice, the Iowa governor wrote in a letter, gives PBMs “outsized power.outsized power over which medications patients receive and what they pay—often resulting in unaffordable drug costs, difficult choices for families, and reimbursement below pharmacy acquisition cost,” she wrote in a letter.
Tell me more. Under the Iowa law, PBMs cannot stop patients from using certain in-network pharmacies. They also can’t reimburse their own pharmacies more for dispensing the same drugs and must adhere to current national average drug costs.
Further, rebates negotiated with drugmakers will need to “pass through” to health plan clients to ensure PBMs are sharing the savings and not just profiting from the arrangement, according to Healthcare Dive.
Navigate the healthcare industry
Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.
“We believe the legislation will result in higher costs for Iowa patients. By restricting the tools PBMs use to control costs, drug companies get even more of an advantage to increase profits and make health plans and patients pay more,” Pharmaceutical Care Management Association spokesperson Greg Lopes told us.
Other states weigh in. As late as last week, Louisiana lawmakers were working through a proposal that would go into effect in 2027 to ban PBMs from owning pharmacies in the state. CVS reportedly later sent texts to customers claiming the legislation “threatens to close your CVS pharmacy,” according to NOLA.com.
On June 12, the state’s Senate killed the bill, though the governor could still call a special session.
PBMs react. Following the Arkansas law passed, CVS and Cigna filed two separate lawsuits on May 29 against the state. CVS threatened to close its 23 retail pharmacies in the state, and Cigna said it would likely end up shuttering some stores.
In response to the Iowa law, CVS Caremark spokesperson Phillip Blando told us the PBM “is committed to making affordable, high-quality pharmacy benefits available to Iowa employers and consumers” and the company believes the law allows it to “coordinate pharmacy services to contribute to lower prescription drug costs and better outcomes.”
Express Scripts and Optum Rx did not immediately respond to a request for comment.