President Signs Bills Lifting Pharmacist ‘Gag Clauses’ on Drug Prices

Earlier this week, President Trump signed two bipartisan bills into law that will allow pharmacists to tell patients they can save money on drugs by paying cash or trying a lower-cost alternative. At issue was the “broken” drug pricing system in the U.S. that was forcing patients to make decisions, which could have negatively impacted their health.

The bills, the Patient Right to Know Act and the Know the Lowest Price Act, prohibit health insurers and pharmacy benefit managers from using “gag clauses” that prevent pharmacists from sharing with patients the lower-cost options when they are purchasing medically necessary medication. In addition, the legislation ensures the Federal Trade Commission will have the necessary authorities to combat anti-competitive pay-for-delay settlement agreements between manufacturers of biological reference products and follow-on biologicals. The Patient Right to Know Act would apply similar “gag clause” protections to Medicare and MA plans.

Under the new legislation, pharmacists will be allowed, though not required, to tell patients about lower-cost options. If pharmacists don’t tell, then patients will have to ask about the cost of the medication. However, some pharmaceutical industry experts say although eliminating the gag clause is a step toward consumer transparency, it doesn’t address the issue of lowering actual drug costs, making it unclear how much of a tangible effect the legislation will have.

According to research published in JAMA in March, people with Medicare Part D drug insurance overpaid for prescriptions by $135 million in 2013. Copayments in those plans were higher than the cash price for nearly 1 in 4 drugs purchased in 2013. For 12 of the 20 most commonly prescribed drugs, patients overpaid by more than 33 percent.

Yet some critics say eliminating gag orders doesn’t address the causes of high drug prices. “As a country, we’re spending about $450 billion on prescription drugs annually,” said Steven Knievel, who works on drug price issues for Public Citizen, a consumer advocacy group. The modest savings gained by paying the cash price “is far short of what needs to happen to actually deliver the relief people need.”