Wellmark Blue Cross and Blue Shield has filed a lawsuit against Iowa’s insurance commissioner, challenging the enforcement of a newly enacted state law that regulates pharmacy benefit managers and the administration of prescription drug benefits.
The lawsuit, filed on Oct. 14 in an Iowa federal court, claims that the legislation violates the First Amendment and the Employee Retirement Income Security Act. The lawsuit stems from the Iowa court’s previous ruling in a case involving the Iowa Association of Business and Industry, which had sought to block the bill, and a ruling in July that partially found the law to be invalid.
While the court granted a preliminary injunction in that case and blocked the law’s enforcement against certain plaintiffs, Wellmark argues that the injunction does not extend to other entities like itself, which were not part of the previous lawsuit. Wellmark claims that the enforcement of the new law would harm its business and members by imposing significant costs and regulatory burdens, especially those tied to provisions the court previously found unconstitutional, including anti-referral and anti-promotion requirements for pharmacies and PBMs.
The complaint also argues that many provisions of the law violate ERISA’s preemption provisions and impose regulations that interfere with the administration of ERISA plans. Wellmark has requested an injunction to block enforcement of the provisions that have been enjoined in the other lawsuit, as well as additional provisions that affect its role in administering ERISA-covered plans.
The company is also seeking relief from the increased administrative costs and financial strain that would allegedly result from complying with the new law, including a mandated dispensing fee for pharmacies and limitations on cost-sharing structures for prescription drug benefits. Wellmark claims that the law would force it to modify existing contracts and policies, leading to potentially severe disruptions in its operations.
