Independent pharmacies have long faced mounting pressure from pharmacy benefit managers (PBMs), whose various business practices, including reimbursement practices, prior authorization hurdles, and opaque business models, can threaten both independent pharmacy viability and sustainability, as well as patient access to care. Over the past several years, many states across the country have begun to push back, enacting new laws to enhance oversight of PBMs and to protect independent community pharmacies.
Iowa has joined this movement in a meaningful way. In recent years, the state has enacted several laws and regulatory requirements aimed at bringing PBM operations into the open and establishing clearer, fairer rules of engagement with pharmacies.
This article explains Iowa's new PBM oversight framework, highlights what independent pharmacies need to know and considers the broader implications for pharmacies nationwide.
PBMs in Iowa: Subject to Third-Party Administrator (TPA) Regulation
At the foundation of Iowa's PBM oversight regime is a requirement that any PBM doing business in the state must obtain a Third-Party Administrator (TPA) certificate under Iowa Code Chapter 510. This means PBMs are regulated under the same framework that applies to other administrators of health benefit programs.
What this means in practice:
- TPA Certificate Required – No PBM may legally operate in Iowa without obtaining a certificate of authority from the Iowa Insurance Division.
- Annual Reporting Obligations – By July 1st of each year, PBMs must file a TPA annual report through OPTins (the online filing platform used by regulators). These reports must include the financial and operational information set forth in Iowa Administrative Code 191-58.11.
- Accountability Through Transparency – The TPA framework ensures that PBMs are no longer able to operate entirely in the shadows. Regulators will have data on their practices, and pharmacies and patients should ultimately benefit from the increased scrutiny.
For independent pharmacies, this is significant because it establishes a paper trail that regulators can use to evaluate PBM practices — something pharmacies have long called for.
NADAC-Based Reimbursement and Dispensing Fees
Perhaps the most impactful provision for independent pharmacies is Senate File 383 (SF 383), which directly addresses reimbursement.
- NADAC Reimbursement Standard – PBMs must reimburse any retail pharmacy located in Iowa at the National Average Drug Acquisition Cost (NADAC) rate. This is a critical step away from opaque, proprietary maximum allowable cost (MAC) lists, which PBMs have historically controlled with little oversight.
- Mandatory Dispensing Fee – In addition to ingredient cost reimbursement, PBMs must pay pharmacies a dispensing fee of $10.68 per prescription.
- Retail Pharmacy Defined – The law clarifies that a “retail pharmacy” is not a chain, not publicly traded, and not exclusively mail order. In other words, this provision is designed for independents.
Why this matters:
Independent pharmacies have long argued that PBM reimbursement often falls below acquisition cost, threatening their viability. By tying reimbursement to NADAC — a transparent, CMS-published benchmark — and mandating a fair dispensing fee, Iowa has taken a step toward sustainable reimbursement.
This provision is being closely watched by pharmacy advocates in other states. If Iowa demonstrates that a fair reimbursement model can be implemented without disrupting access or inflating costs, it could set a national precedent.
Quarterly Complaint Reporting
PBMs are now required to file quarterly complaint reports with the Iowa Insurance Division. These are due on:
- January 31
- April 30
- July 31
- October 31
The reports must include all complaints as defined by Iowa Administrative Code rule 191-59.2, and they must be submitted electronically
For pharmacies, this is a vital tool. If a pharmacy believes a PBM is engaging in unfair, deceptive, or illegal practices, that complaint can become part of an official record. Over time, the accumulation of complaints gives regulators a clearer picture of how PBMs are treating Iowa pharmacies.
Annual PBM Reporting Requirements
Separate from the TPA report, PBMs must also file an annual PBM-specific report under Iowa Code section 510C.2, due by February 15 each year.
This report requires PBMs to disclose details about:
- Their rebate practices
- Spread pricing models
- Overall financial arrangements with payors and pharmacies
Again, this level of transparency represents a sea change. Independent pharmacies, payors, and regulators have long struggled to get reliable data about PBM operations. With annual reports required, Iowa is building a repository of PBM information that can be used to inform further policy action.
Prior Authorization Form Standardization
Another important piece of Iowa's PBM oversight law requires the use of a single prior authorization form. Health carriers, PBMs, and other payors must create, use and submit a standard form to the commissioner for approval.
For pharmacies, this could reduce administrative burden. Instead of juggling multiple, often confusing prior authorization forms, prescribers and pharmacies will have a streamlined process. While it doesn't eliminate prior authorization, it simplifies compliance.
Complaint and Enforcement Channels
Iowa has also created clear complaint channels:
- Pharmacies can report suspected violations of Iowa PBM law to the Iowa Insurance Division.
- Consumers can submit complaints about their pharmacy benefits as well.
This dual channel ensures that both stakeholders most affected by PBM practices — pharmacies and patients — have a direct line to regulators.
Electronic Reporting
All PBM filings — whether annual, quarterly, or TPA-related — must be submitted through OPTins (OPTins is Iowa's electronic system for submission of PBM reports, etc.). Paper submissions are no longer accepted.
For independent pharmacies, this is worth noting primarily because it underscores how serious Iowa is about enforcement. PBMs cannot plead ignorance or hide behind administrative loopholes. The reporting infrastructure is already built and fully electronic.
Why Iowa's Actions Matter Nationally
Iowa is not alone in moving to rein in PBMs. States like Arkansas, West Virginia, and Louisiana have also enacted strong PBM regulations. But Iowa's approach — tying reimbursement to NADAC plus a fixed dispensing fee — is noteworthy.
For independent pharmacies outside Iowa, there are several takeaways:
- Model Legislation – Iowa's NADAC-based reimbursement law could serve as a model for other states. Independent pharmacy advocates should be prepared to push their legislatures to consider similar bills.
- Momentum – Each state that passes PBM reform adds to the national momentum. When multiple states adopt parallel measures, it becomes harder for PBMs to argue that reforms are unworkable.
- Federal Implications – Congress and federal regulators are watching state-level experiments closely. If Iowa demonstrates positive outcomes, it could accelerate federal PBM reform.
What Independent Pharmacies Should Do Now
For pharmacies in Iowa:
- Stay Informed – Monitor the Iowa Insurance Division's PBM oversight webpage regularly.
- Report Issues – Use the complaint channels if you encounter PBM noncompliance. Each complaint builds the case for stricter enforcement.
- Document Reimbursements – Keep detailed records of reimbursements and dispensing fee payments. If PBMs fail to comply with NADAC + $10.68, you will have evidence to support enforcement action.
For pharmacies outside Iowa:
- Educate Your Legislators – Share Iowa's reforms with your state lawmakers as an example of how states can stand up for independent pharmacies.
- Join Advocacy Organizations – State pharmacy associations, NCPA, and grassroots pharmacy coalitions are all pushing PBM reform nationwide. Your voice adds weight.
- Track Compliance Trends – As more states implement PBM oversight, data will become available about how PBMs respond. Use this data to inform advocacy in your state.
Conclusion: A Call to Action
Iowa's new PBM oversight laws are more than just regulatory housekeeping — they are yet another shift toward fairness and transparency in the pharmacy benefit space. By requiring PBM certification and reporting, mandating NADAC-based reimbursement with a fair dispensing fee, standardizing prior authorization forms and providing clear complaint channels, Iowa has given independent pharmacies tools they have long lacked.
But these laws will only be effective if pharmacies engage. Independent pharmacies in Iowa must document issues, file complaints and hold PBMs accountable under the new framework. Meanwhile, pharmacies in other states should use Iowa as a case study to press their own legislators for similar reforms. Having qualified legal counsel to aid in this is essential.
The survival of independent pharmacy depends on pushing back against PBM practices that undervalue care and jeopardize patient access. Iowa has shown that reform is possible. Now it's up to independent pharmacies everywhere to ensure that momentum continues.
Your voice matters. Use it — in Iowa and beyond.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
