Congress wants to take the 'gag' off of pharmacists. Here's what that means for providers.

Read Advisory Board's take: The 3 ways pharmacists can help lower drug costs.

Congress last week took initial steps toward eliminating a little-known insurance clause that prevents pharmacists from informing patients when their prescription drugs could be purchased for less without insurance.

About gag clauses

The so-called "pharmacy gag clause" is sometimes included in contracts between insurers, pharmacies, and PBMs, and they prevent pharmacies from proactively informing customers that they would save on a prescription drug by paying for it out-of-pocket rather than by using their insurance, because their copayments are higher than what the drug actually costs their insurer or PBMs. As such, the clauses sometimes can lead to patients overpaying for prescription drugs.

Researchers from USC Schaeffer have estimated that about 23% of prescriptions filled in 2013 involved a patient paying a copay that was more than $2.00 higher than the average amount that their insurer would have paid for the drug. The researchers estimated that the average patient overpayment in 2013 equaled $7.69, with patients more often overpaying for generic drugs than brand-name drugs. Patient overpayments totaled approximately $135 million in 2013, the researchers estimated.

Lawmakers advance bills to ban gag clauses

The issue has gained prominence in recent months, particularly as consumers increasingly are being urged to be savvier shoppers. President Trump in the drug pricing blueprint he released in May called on Congress to eliminate gag clauses in Medicare Part D plans, and last week Congress moved on that issue.

The Senate on Wednesday unanimously voted to pass a bill, called the Know the Lowest Price Act, that would prohibit the use of gag clauses in Medicare Part D and Medicare Advantage plans.

Lawmakers on the House Energy and Commerce Committee's Health Subcommittee on Friday unanimously voted to pass a separate draft bill that would ban private insurers from using pharmacy gag clauses.

According to CQ Health, the gag "clauses are a relatively easy target for Congress, in part because PBMs, drugmakers, and insurers say they don't condone the practice."

Sen. Bill Cassidy (R-La.), who helped introduce the Senate measure, in a statement said, "[E]liminating gag clauses [would] giv[e] patients more power to lower their health care costs" by "mak[ing] prices transparent so patients can save money with less expensive prescriptions."

Rep. Michael Burgess (R-Texas) said, "While gag clauses are already prohibited in Medicare, it is important that we protect consumers by putting this in statute." He added that lawmakers should send legislation to eliminate gag clauses in private health plans "to [Trump's] desk as soon as possible" (Leonard, Washington Examiner, 9/5; King, Washington Examiner, 9/7; Van Nuys et al., USC Schaeffer, 3/12; Clason, CQ News, 9/5 [subscription required]; Williams,  CQ News, 9/7 [subscription required]).

Advisory Board's take

Lindsay Conway, Managing Director, Pharmacy Executive Forum

While the passage of this new law has not attracted too much attention so far, it has important implications for providers. Namely, we know that patients' adherence to their medication regimens is inversely correlated with the price of the drug. When adherence falters, outcomes can suffer. Therefore, in order to ensure the best outcomes for patients, all providers should educate themselves about drug prices so they can advise patients on how to find the best prices available to them.

To do this, partnering with a pharmacist (when possible) can be a great solution. While many people don't realize that their pharmacists can be a useful resource for lowering their out-of-pocket costs, they can be invaluable for both ensuring patients can access their medications and take them as directed. Three of the most common ways that pharmacists can help include:

  1. Recommending therapeutic substitutions. Pharmacists can often identify when a generic or lower-cost brand equivalent is available. In some cases, even just changing the dose (e.g. taking two 30 mg pills instead of one 60 mg) or method of administration (pill vs. oral liquid) can have a big impact on price without impacting outcomes.
  2. Recommending another pharmacy with lower prices. Although this approach is contrary to the pharmacies' business interests, many pharmacists will alert their patients to the availability of tools, such as GoodRx, which help patients compare prices. 
  3. Recommending that the patient pay cash instead of using their insurance. While this approach isn't widely applicable, there are drugs—especially high-cost brand name drugs—which may be less expensive if the patient pays the cost in full rather than using their insurance and paying coinsurance or deductible.

When discussing the implications of this ruling, it's important to note that this new law would only apply to Medicare Fee-for-Service and Medicare Advantage patients. Commercially insured patients, conversely, may still not be able to get advice from pharmacists about the cheapest way to buy prescriptions. We'll have to see if Congress acts to expand these protections to commercial patients in the future.

Lowering costs is not the only way pharmacists can play an impactful role in health systems. To learn six other ways that providers can use pharmacists to improve patient outcomes and reduce overall spending, make sure to download our infographic on the six ways your pharmacists can save the day.

Download the Infographic

Then, download our research briefing on Integrated Pharmacy Models in Primary Care to learn how five organizations around the country have integrated pharmacists into care teams to improve outcomes and reduce avoidable spending.

Read the Briefing


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