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October 11, 2018

Trump signs bills to ban 'gag clauses' in Medicare, private health plans

Daily Briefing

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

    President Trump on Wednesday signed into law two bills that prohibit the use of so-called pharmacy "gag clauses" in Medicare and private health plans.

    The clauses sometimes are included in contracts between insurers, pharmacies, and pharmacy benefit managers (PBMs). Such clauses 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. The clauses sometimes can lead to patients overpaying for prescription drugs, because patients' copayments are higher than what the drug actually costs their insurers or PBMs.

    Legislation details

    Both bills aim to ensure pharmacists can tell customers when they could pay less for prescription drugs by not using their insurance. One measure, called the Know the Lowest Price Act (S 2553), will prohibit the use of pharmacy gag clauses in Medicare Part D and Medicare Advantage plans. The law will take effect in two years.

    The second measure, called the Patient Right to Know Drug Prices Act (S 2554), prohibits pharmacy gag clauses in commercial health plans, including those sold through the Affordable Care Act's exchanges. The bill also requires biologic drugmakers to notify the Federal Trade Commission of financial settlements they have reached with biosimilar drugmakers that would delay the market launch of biosimilars. The law took effect immediately.

    Neither law requires that pharmacists tell patients when their prescription would cost less without using insurance, but pharmacists will be able to share that information with patients if they are asked.

    The two measures are the first enacted laws related to Trump's drug pricing blueprint, which called on Congress to eliminate gag clauses in Medicare Part D plans.


    Some observers have said it is unclear whether the new laws will have substantial effects, because some have said the clauses targeted by the legislation are uncommon. Steven Knievel, who works on drug price issues for the consumer advocacy group Public Citizen, said, "As a country, we're spending about $450 billion on prescription drugs annually," and the savings that new laws might generate would be "far short of what needs to happen to actually deliver the relief people need."

    However, others have said the laws will have significant effects, noting that USC Schaeffer Center researchers have estimated that about 23% of prescriptions filled in 2013 involved a patient paying a copayment that was more than $2.00 higher than the average amount that their insurer would have paid for the drug. The researchers also estimated that patient overpayments totaled approximately $135 million in 2013 (Jaffe, Kaiser Health News/NBC News, 10/9; Ehley, "Pulse," Politico, 10/10).

    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.

    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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