Congress Passes Bills Banning Gag Clauses

Congress has passed two bills to ban “gag clauses” in contracts between pharmacies and insurance companies or pharmacy benefit managers (PBMs). The legislation, supported by President Donald Trump, received widespread bipartisan support in both houses of Congress.

Gag clauses in pharmacy contracts prevent pharmacists from informing patients when the out-of-pocket cost of a prescription drug is the same or lower than what they would pay for the drug through their insurance plan. The new bills prohibit gag clauses in Medicare and Medicare Advantage policies, as well as employer-based and individual plans. However, neither piece of legislation requires pharmacists to inform consumers of cheaper options; the patient is responsible for asking about the less-expensive option.

According to the Pharmaceutical Care Management Association, a PBM trade group that supported the bills, gag clauses are increasingly rare in pharmacy contracts. Consumer advocates predicted that the legislation would have limited impact, emphasizing that while the ban on gag clauses will likely reduce overpayment for pharmaceuticals, it does not address the root cause of high drug costs.

“As a country, we’re spending about $450 billion on prescription drugs annually,” said Steven Knievel of consumer advocacy group Public Citizen in a statement to Kaiser Health News. The money saved by banning gag clauses, he said, “is far short of what needs to happen to actually deliver the relief people need.”

Sources: Kaiser Health News, October 10, 2018; The Washington Post, October 10, 2018.