Legislation Signed Into Law Prohibiting 'Gag Clauses' for Pharmacies

Insurers and pharmacy benefit managers (PBMs) can no longer restrict pharmacies from providing drug price information to customers. On Wednesday, during a live webcast from the White House, President Trump signed into law a pair of bipartisan bills that has made 'gag clauses' in contracts an illegal practice.

"These clauses prevent pharmacists from telling patients about more affordable options for prescription drugs," said Trump, who called the gag clauses "unjust." "Our citizens deserve to know the lowest price."

The Patient Right to Know Drug Prices Act prohibits insurers and PBMs from restricting a pharmacy’s ability to provide drug price information to a plan enrollee when there is a difference between the cost of the drug under the plan and the cost of the drug when purchased without insurance. Under current contracts with ‘gag clauses,’ pharmacists are prohibited from proactively sharing with customers if their prescription would cost less if they paid out-of-pocket, rather than utilizing an insurance plan. Pharmacists face significant penalties for disobeying these clauses.^1-2

The Know the Lowest Price Act provides the same protection for individuals who are covered by Medicare Advantage and Medicare Part D plans.¹

Paul W. Abramowitz, PharmD, ScD (Hon.), FASHP, CEO of the American Society of Health-System Pharmacists (ASHP), who attended the bill signings at the White House, expressed his and the organization's support for the laws.³

"ASHP, independently and as a lead member for of the Steering Committee for the Campaign for Sustainable RxPricing, has long advocated for measures that would improve transparency in drug pricing," said Abramowitz, in a prepared statement.³ "We applaud Congress and the President for enacting legislation that will help pharmacists identify less expensive alternatives for their patients."

The 2 new laws had received bipartisan support in the House and Senate. "If there’s anything that’s bipartisan, it’s lowering drug prices," said Trump.

Legislation targeting 'gag clauses', as well as overpayments, for lowering patient expenses had been recommended by researchers with a study published in JAMA.³

Overpayments at point-of-sale were common with 23% of all prescriptions and 28% of generic prescriptions affected, according to the study's data. Study authors wrote that the insurer or PBM retains the difference when patients are overcharged.^1,4 The researchers also noted that increased cost may exacerbate a patient’s inability to adhere to a prescription and elevate the risk of negative outcomes.⁴

According to an earlier statement from the office of Sen. Susan Collins (R-ME), an author on both bills along with Sen. Claire McCaskill (D-MO), several health care organizations supported the legislation including the National Community Pharmacists Association (NCPA), the American Medical Association, the Alliance for Transparent and Affordable Prescriptions, the ERISA Industry Committee, the Pharmaceutical Care Management Association, and America’s Health Insurance Plans.

In addition to addressing gag clauses, Trump said the pair of bills signed into law will lower drug prices. Supply and demand, which he said was not in place prior to the new laws, will now have an effect on the cost of prescription medications to consumers.

"Our citizens deserve to know the lowest price. They’ll be able to see prices and see where to go. As they leave pharmacies, those pharmacies will be dropping their prices," said Trump.

Lawmakers Unanimously Approve Bills to Prohibit 'Gag Clauses' for Pharmacists

Reference

• Bipartisan Bills to Prohibit “Gag Clauses” That Cause Consumers to Overpay for Prescription Drugs Head to President’s Desk [news release]. Washington, DC; September 25, 2018; Senator Susan Collins website. https://www.collins.senate.gov/newsroom/bipartisan-bills-prohibit-%E2%80%9Cgag-clauses%E2%80%9D-cause-consumers-overpay-prescription-drugs-head. Accessed September 26, 2018.
• Bipartisan Bill to Prohibit “Gag Clauses” That Can Cause Consumers to Overpay for Prescriptions Passes Senate [news release]. Washington, DC; September 17, 2018; Senator Susan Collins website. https://www.collins.senate.gov/newsroom/bipartisan-bill-prohibit-%E2%80%9Cgag-clauses%E2%80%9D-can-cause-consumers-overpay-prescriptions-passes. Accessed September 26, 2018.
• ASHP CEO Attends White House Bill Signing on Pharmacy Gag Clause [news release]. Bethesda, MD; October 10, 2018: ASHP website. https://www.ashp.org/news/2018/10/10/ashp-ceo-attends-white-house-bill-signing-on-pharmacy-gag-clause. Accessed October 10, 2018.
• Van Nuys K. Joyce G. Ribero R. Goldman D. Frequency and Magnitude of Co-payments Exceeding Prescription Drug Costs. JAMA. 2018;319(10):1045-1047. doi:10.1001/jama.2018.0102. Accessed September 26, 2018.