Ban on Pharmacy Gag Clauses

On Wednesday, October 10, 2018, President Trump signed legislation that bans pharmacy gag clauses. This action, listed in the President’s drug pricing blueprint, is just the latest in lowering the cost for American patients. In support of the President’s enactment of two bills into law, HHS Secretary Alex Azar released the following statement: “This bipartisan legislative accomplishment was secured by President Trump’s historic leadership on drug pricing. The President’s drug-pricing blueprint called for ending gag clauses. Within a week of the blueprint’s release, HHS informed Medicare plans that they are unacceptable, and now Congress has responded to the President’s call by formally banning them. “American patients should know: You can always ask your pharmacist whether you’re getting the best deal on the prescription drugs you need. This is just one step in the President’s plans to deliver better healthcare to Americans at lower prices, efforts that have already involved more action to bring down drug prices than any previous President has taken.” The two bills that were signed are S. 2553, the Know the Lowest Price Act of 2018, and S. 2554, the Patient Right to Know Drug Prices Act. Know the Lowest Price Act of 2018: This bill prohibits a prescription drug plan under Medicare or Medicare Advantage from restricting a pharmacy from informing an enrollee of any difference between the price, copayment, or coinsurance of a drug under the plan and a lower price of the drug without health-insurance coverage. (Such restrictions are commonly referred to as gag clauses.) Patient Right to Know Drug Prices Act: This bill seeks to ensure that health insurance issuers and group health plans do not prohibit or punish pharmacy providers, directly or indirectly, from providing certain information to enrollees. This bill also inserts language into the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 to define language surrounding biological and biosimilar products.  A “pharmacy gag clause” is a tactic under which a pharmacist may not inform customers about options that would cost less for a certain product: using their health insurance or paying fully out of pocket. These clauses are usually instituted by an insurer or pharmacy benefit manager (PBM). They’re put in for cases in which most consumers would save money by paying out of pocket . The end of this longstanding practice will bring about real change in the prescription drug market.

Brian Shiozawa, MD Regional Director U.S. Department of Health and Human Services