Nationwide Push on to Remove Gag from Pharmacists

Pharmacy gag ruleIf some U.S. lawmakers have their way, gag clauses that prohibit pharmacies from telling customers how they can save money on their prescription drugs could be prohibited nationwide, a move that supporters say will result in more transparency and lower costs.

On June 20, the Senate Health Committee is set to vote on a bipartisan bill introduced by Senator Susan Collins of Maine. The Patient Right to Know Drug Prices Act and the Know the Lowest Price Act would ban clauses in contracts entered into by pharmacies, insurers and pharmacy benefit management companies that keep pharmacies from proactively telling customers they can save money on a prescription drug if they pay for it out of pocket, instead of through their insurer.

The legislation is part of a larger push to ban such gag clauses. According to a report issued earlier this month by the Prescription Drug Resource Center at least 21 states, including Florida, have enacted laws prohibiting gag clauses.

Although Pharmacy Benefit Management Companies (PBMs) initially started out processing claims, their role has grown over the years to that of middlemen involved in everything from drug utilization review to deciding how much pharmacies will be reimbursed. PBMs that negotiate drug prices between drug companies and insurers receive a rebate from the drug company for ensuring their medications are included in an insurer’s formulary. However, those rebates often are not passed along to consumers and instead are pocketed by the PBM.

In places were these gag clauses are legal, pharmacy benefit managers can end contracts or impose penalties on pharmacies that violate it, a practice seen by many as contributing to increasing healthcare costs.

A study published in March in the Journal of the American Medical Association found that patients had overpaid for their prescriptions 23 percent of the time with an average overpayment of $7.69 in 2013. Overpayments were greater on brand drugs than on generic. Aggregate overpayments totaled $135 million, or $10.51 per covered member.

In addition to legislative action, the Centers for Medicare & Medicaid Services earlier this month sent a letter to those health plans participating in Medicare Part D, reminding them that “Our existing policy requires plan sponsors to ensure enrollees pay the lesser of the Part D negotiated price or copay, or be subject to CMS compliance actions.” And that “Part D sponsors must require their network pharmacies to disclose any differential between the price of a Part D drug and the price of the lowest cost therapeutically-equivalent generic version of that drug.”

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It is not intended as professional advice and should not be construed as such.