The Pharmaceutical Care Management Association (PCMA), the national association representing America’s pharmacy benefit managers (PBMs), today filed a lawsuit in Iowa federal court challenging a sweeping new Iowa law that restricts tools used by PBMs to lower prescription drug costs for the state’s employers and consumers.

The law—HF 2297—forces PBMs to overpay for generic drugs by severely restricting the use of Maximum Allowable Cost (MAC) lists that keep generic drug costs reasonable. PBM customers, like employers and public programs, rely on MAC lists to prevent overpayments to drugstores. Specifically the new law:

  • Forces employers, unions and public programs to pay drugstores more for certain drugs.
  • Makes it harder to reduce drug benefit costs when less expensive generics come to market.
  • Entitles drugstores to extra “retroactive” payments if they claim past reimbursements weren’t large enough.

“This mandate forces Iowa employers, unions and public programs to pay drugstores above-market rates. It’s a giveaway to the drugstore lobby that will raise Iowa’s prescription drug costs by $55 million a year with no upside,” said PCMA President and CEO Mark Merritt.

MAC lists are widely used by health plans and PBMs to reduce costs for private-sector clients, union health and welfare funds, Medicaid and Medicare Part D. Forty-five state Medicaid programs now use MAC lists, up from 26 states in 1999.