Iowa state capitol
The Iowa Senate last week passed a 340B nondiscrimination bill 49-1, sending it to Gov. Kim Reynolds. The House passed it earlier 98-0.

Iowa Set to Enact Nation’s 25th 340B Nondiscrimination Law

The Iowa Senate last week passed a House-approved bill banning pharmacy benefit manager and payor discrimination against 340B covered entities and their contract pharmacies, including reimbursing the entities at a lower rate than non-340B providers.

The Senate voted 49-1 on April 20 to pass House File 423. The House passed it 98-0 on March 7. Gov. Kim Reynolds (R) has 30 days to sign or veto the bill. If she signs it, Iowa will become the 25th state with a law prohibiting discriminatory 340B reimbursement, according to information compiled by Ryan White Clinics for 340B Access. State Rep. Brian Best (R) sponsored HF 423 and state Sen. Mike Klimesh (R) sponsored an identical companion bill.

Iowa community health center’s lauded the bill’s passage. “Maintaining the integrity of the 340B program is critical for ensuring Iowans, particularly those in rural areas, are able to have access to affordable medications,” said Katie Owens, senior director of engagement at the Iowa Primary Care Association. “We are thankful for the unanimous, bipartisan support of this bill from our state legislators.”

According to an Iowa Legislative Services Agency analysis, HF 423:

  • Prohibits plans, carriers, third-party administrators (TPAs), and pharmacy benefits managers (PBMs) from providing discriminatory reimbursement amounts for prescription drugs or dispensing fees on the basis of a covered entity or a contract pharmacy’s status as a covered entity or contract pharmacy.
  • Prohibits discrimination on the basis of participation in a 340B drug program, in addition to the status as a covered entity or a contract pharmacy, for the following:
    • Imposing contractual terms and conditions, as specified in the bill.
    • Placing restrictions or imposing requirements on an individual that chooses to obtain a covered outpatient drug from a covered entity of a contract pharmacy.
    • Refusing to contract with a covered entity or a contract pharmacy based on any criteria that is not applied equally.
    • Imposing restrictions that interfere with the ability to maximize discounts through participation in the 340B program.
  • Permits the state Commissioner of Insurance to take enforcement action under the
    commissioner’s authority to enforce compliance. After notice and hearing, the
    commissioner may issue any order or impose any penalty pursuant to state law upon finding a violation of the bill.
  • Establishes that a violation of this bill violates Iowa law pertaining to
    unfair or deceptive acts or practices in the business of insurance.
  • Permits the commissioner to adopt rules implementing the provisions of this bill.
  • Clarifies that if any provisions of this bill are in conflict with applicable state or federal law, that the state or federal law will prevail to the extent necessary to eliminate the conflict.

Some 340B advocates say the bill appears to have conflicting passages about whether or under what circumstances 340B participants can be required to use claim modifiers to identify 340B-purchased drugs.

One paragraph says PBMs and payors may not require mandatory disclosure either directly or through a third party, except as required by federal law, “of prescription orders that are filled with covered outpatient drugs obtained through the 340B program.”

But another paragraph says that language “shall not be construed to prohibit modifiers or other identifiers on claims to identify whether a drug was purchased through the 340B program or to prevent duplication of rebates.”

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