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House passes bills prohibiting pharmacy gag clauses on drug prices

The Patient Right to Know Drug Prices Act and the Know the Lowest Price Act are expected to get President Trump's signature.

Susan Morse, Managing Editor


On Tuesday, the U.S. House of Representatives unanimously passed two bills that would prevent pharmacy benefit managers from putting gag clauses into contracts with pharmacies. The gag clauses restrict the pharmacist from telling customers they could pay less for a prescription if they paid the full price of the drug out-of-pocket rather than using their insurance and paying the copay amount.

The Patient Right to Know Drug Prices Act applies to group plans sponsored by employers and plans offered in the individual market. 

The Know the Lowest Price Act applies to Medicare Advantage and Medicare Part D plans.

Both bills passed the Senate unanimously earlier this month and are headed to the President Trump's desk to be signed into law.  The President has expressed his support for the legislation.


Beyond consumers paying more than necessary, the practice costs the Centers for Medicare and Medicaid Services money. Earlier this year, CMS Administrator Seema Verma sent a letter to all Medicare Part D plan sponsors telling them the agency's existing policy requires them to ensure enrollees pay the lesser of the Part D negotiated price or copay, or be subject to CMS compliance actions.

Also, Part D plan sponsors must tell their network pharmacies to disclose the price of the lowest cost generic version of the drug.

This was part of the president's plan to promote drug price transparency in his blueprint unveiled in May, Verma said.


PBM's get a share of the transaction when patients use their insurance.

Prescription drug spending has been rising, with Health and Human Services Secretary Alex Azar, a former pharmaceutical executive, saying all benefit from high drug prices except patients.

Nearly 60 percent of Americans, including roughly 90 percent of seniors, take prescription drugs.  A study published in the Journal of the American Medical Association found that 23 percent of prescriptions filled through insurance ended up costing more for customers than if they had paid out-of-pocket.


"Who would think that using your debit card to buy your prescription drugs would be less expensive than using your insurance card?  It's counterintuitive," said Senator Susan Collins of Maine, sponsor of the Patient Right to Know Drug Prices Act and a cosponsor of the Know the Lowest Price Act. "Americans have the right to know which payment method provides the most savings when purchasing their prescription drugs."

A 2016 industry survey found that nearly 20 percent of pharmacists were limited by gag clauses more than 50 times per month, according to information on Collins' website.

"It's wrong that a person overpays for their medication simply because their pharmacist is not allowed to tell them they could pay a lower price with cash instead of insurance," said Senator Debbie Stabenow of Michigan.

Support for ending the gag clause restriction has come from numerous organizations including the National Community Pharmacists Association, the American Medical Association, the Alliance for Transparent and Affordable Prescriptions, the ERISA Industry Committee, the Pharmaceutical Care Management Association, America's Health Insurance Plans and patient groups.

Twitter: @SusanJMorse
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