Senators target 'gag clauses' that hide potential savings on prescriptions

Senators target 'gag clauses' that hide potential savings on prescriptions
© Greg Nash

A bipartisan group of senators introduced a bill Thursday to ban "gag clauses" that can hide potential savings on prescriptions from consumers at the pharmacy counter.

The clauses, which keep pharmacies from proactively telling customers they could save money on a prescription if they paid out of pocket instead of through insurance, has sometimes been included in contracts between pharmacies, insurers and companies that manage drug benefits for employers called pharmacy benefit managers (PBMs). 

“Insurance is intended to save consumers money. Gag clauses in contracts that prohibit pharmacists from telling patients about the best prescription drug prices do the opposite,” Sen. Susan CollinsSusan Margaret CollinsThe Hill's Morning Report - In exclusive interview, Trump talks Biden, Iran, SCOTUS and reparations Hillicon Valley: Senate bill would force companies to disclose value of user data | Waters to hold hearing on Facebook cryptocurrency | GOP divided on election security bills | US tracking Russian, Iranian social media campaigns Stephen King: 'It's time for Susan Collins to go' MORE (R-Maine) said in a statement Thursday.

ADVERTISEMENT

Collins unveiled the bill going after gag clauses on Thursday along with Sens. Claire McCaskillClaire Conner McCaskillConservatives spark threat of bloody GOP primaries Congress needs to work to combat the poverty, abuse and neglect issues that children face Lobbying world MORE (D-Mo.), Debbie StabenowDeborah (Debbie) Ann Stabenow It's time to let Medicare to negotiate drug prices Trump judicial nominee says he withdrew over 'gross mischaracterizations' of record Trump judicial nominee withdraws amid Republican opposition: report MORE (D-Mich.), John BarrassoJohn Anthony BarrassoTrump proposal nixes review of long-term climate impacts Bipartisan senators propose forcing EPA to set drinking water standard for 'forever chemicals' Trump hails D-Day veterans in Normandy: 'You are the pride of our nation' MORE (R-Wyo.) and Bill CassidyWilliam (Bill) Morgan CassidyThe Hill's Morning Report - In exclusive interview, Trump talks Biden, Iran, SCOTUS and reparations Overnight Health Care — Sponsored by Campaign for Tobacco-Free Kids — Trump issues order to bring transparency to health care prices | Fight over billions in ObamaCare payments heads to Supreme Court The Hill's Morning Report - Crunch time arrives for 2020 Dems with debates on deck MORE (R-La.).

The bill would prohibit insurers and pharmacy benefit managers from restricting a pharmacy's ability to tell customers the difference in price between a prescription purchased with insurance or out of pocket. 

It would apply to plans offered through the individual market and by private employers. 

Collins used the example of a customer using his insurance to pay $129 for a drug when he could have paid $18 out of pocket. 

"Americans have the right to know which payment method — insurance or cash — would provide the most savings when purchasing prescription drugs," she said.

A recent study published in the Journal of the American Medical Association that reviewed 9.5 million insurance claims found that 23 percent of prescriptions filled through insurance ended up costing more for customers than if they would have paid out of pocket.

The overpayments totaled $135 million for 2013, or $10.51 per covered member on average.

The study noted that some pharmacists are contractually prevented from alerting patients when their copay exceeds the drug's out-of-pocket price.

 

A second bill introduced by Barrasso and Cassidy with Sen. Ron WydenRonald (Ron) Lee WydenOvernight Health Care — Sponsored by Campaign for Tobacco-Free Kids — Trump issues order to bring transparency to health care prices | Fight over billions in ObamaCare payments heads to Supreme Court Senate set to bypass Iran fight amid growing tensions Overnight Defense: House passes T spending package with defense funds | Senate set to vote on blocking Saudi arms sales | UN nominee defends climate change record MORE (D-Ore.) would provide the same protections for individuals covered by Medicare Advantage and Medicare Part D. 

The Pharmaceutical Care Management Association, which represents PBMs, said the issue has already been addressed in the marketplace. 

“We support the patient always paying the lowest cost at the pharmacy counter, whether it’s the cash price or the copay. This is standard industry practice in both Medicare and the commercial sector," PCMA said in a statement. 

"We would oppose contracting that prohibits drugstores from sharing with patients the cash price they charge for each drug.  These rates are set entirely at the discretion of each pharmacy and can vary significantly from drugstore to drugstore. Fortunately, to the degree this issue was ever rooted in more than anecdotal information, it has been addressed in the marketplace.”

A 2016 survey from the National Community Pharmacists Association found that 59 percent of pharmacists surveyed had encountered a gag clause at least 10 times in the last month. 

The bill comes as Congress and the Trump administration ratchet up their scrutiny of rising drug prices, especially the role that pharmacy benefit managers play. 

Food and Drug Administration Commissioner Scott Gottlieb criticized pharmacy benefit managers last week for not passing along the savings they get from rebates from drug manufacturers on to customers.