On June 30, 2025, the Southern District of Iowa granted an ex parte temporary restraining order (“TRO”) that prevented Senate File 383 (“SF383”) from going into effect on July 1, 2025 – for now. This Order comes after a coalition of Iowa businesses[1] (“Plaintiffs”) filed suit on June 23, 2025, challenging the constitutionality of SF383, a newly enacted bi-partisan bill designed to reign in the control Pharmacy Benefit Managers (“PBMs”) exert over the market.
The lawsuit, along with the accompanying request for a TRO, contends that SF383 is unenforceable because it is preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”) and infringes upon the First Amendment right to free speech. Since the monumental U.S. Supreme Court decision Rutledge v. PCMA, several states, including Iowa, have taken steps to enact reasonable PBM regulations. These legislative efforts are grounded in the understanding, as clarified by the Rutledge decision, that such reasonable regulations do not violate certain federal laws like ERISA and are therefore likely to withstand legal challenges.
However, in granting the Plaintiffs’ request for a TRO, the Southern District of Iowa determined that the Plaintiffs were likely to succeed on the merits of their case based on both preemption under ERISA and a First Amendment violation. First, the Court found that the provisions of SF383 exceed the permissible scope of regulation outlined in Rutledge, concluding that SF383 “reaches beyond price control and requires sponsors to structure their plans in particular ways” which “directly and indirectly controls health plans’ relationships with pharmacies” therefore “barring health plans and PBMs alike from exercising distinctions between pharmacies as to ‘participation, referral, reimbursement of a covered service, or indemnification.’” See Iowa Ass’n of Business and Industry, et al. v. Ommen, No. 4:25-cv-00211, Dkt. 17, 16-17 (S.D. Iowa Jun. 30, 2025) (Ebinger, U.S.D.J.).
Second, the Court concluded that the Plaintiffs are likely to succeed in proving that SF383 violates the First Amendment. The Court stated that there was “no substantial interest in the suppression of factually accurate reimbursement rate information from covered persons” and found, at most, “a potential indirect rather than direct advancement of Iowa’s broader purpose of promoting rural pharmacies in the suppression of truthful comparative pricing information.” Id. at 17-18.
This decision comes as a blow to independent pharmacies and pharmacists across Iowa where Senate File 383 received broad support from them, which led to the Iowa Pharmacy Association, along with over 180 pharmacists and pharmacy students lobbying for the Bill at the Iowa Capitol. They argued that the PBM model forces local pharmacies to operate at a loss, limits patient choice, and drives pharmacy closures. As previously identified by Frier Levitt in our article on this topic, key provisions from this bill include:
(1) prohibiting PBMs from limiting patients’ choice of pharmacies;
(2) ensuring equal access for contracting pharmacies;
(3) prohibiting additional or excessive credentialing requirements;
(4) preventing higher copayments or smaller reimbursements based on pharmacy choice;
(5) ensuring patients are not required to use mail-order pharmacies;
(6) requiring PBMs to reimburse pharmacies at fair rates; and
(7) establishing a structed appeals process for pharmacies.
It is critical to note, however, that this Order is temporary. Specifically, this Court Order is valid for just two weeks, during which time the State of Iowa will be able to substantively dispute Plaintiffs’ arguments in hopes of permitting this law to go into wide-spread effect. Continue following Frier Levitt for ongoing updates as this case proceeds through litigation.
How Frier Levitt Can Help Pharmacies with PBM Issues
Frier Levitt represents pharmacies nationwide in challenging PBM audits, network access denials (including DIR fees and MAC reimbursement), and other critical aspects of the pharmacy-PBM relationship. Our attorneys have deep experience navigating state and federal PBM laws and advocating for pharmacy rights.
If your pharmacy is facing unfair PBM practices or needs legal guidance on state pharmacy laws, contact Frier Levitt to speak with a knowledgeable PBM litigation and pharmacy law attorney.
[1] This coalition currently comprises: (1) Iowa Association of Business and industry; (2) Iowa Bankers Benefit Plan; (3) Iowa Laborers District Council Health and Welfare Fund; (4) Des Moines Orthopaedic Surgeons PC; and (5) Iowa Spring Manufacturing & Sales Company.
