Senators Attempt to Lower Drug Costs at Pharmacy Counter

Lawmakers are pushing forward a proposal that bans “gag clauses” preventing pharmacists from sharing when a drug is cheaper for a patient without using insurance.

Sen. Susan Collins
AP Photo/Andrew Harnik
July 31, 2018, 8 p.m.

State and federal lawmakers want all pharmacists to be able to tell customers they could pay less for a drug if they don’t use their insurance.

Right now, under so-called "pharmacy gag clauses," some pharmacists are barred from telling customers when they could save money on prescriptions by paying cash instead of with insurance. These provisions, included in contracts between pharmacy benefit managers and pharmacies, prevent pharmacists from disclosing if the cost of the drug is cheaper when paid for out of pocket.

The Senate Health, Education, Labor, and Pensions Committee cleared a bill last week that would ban such arrangements, following the trend of 22 state laws enacted between 2016 and May of this year.

Senators decided to target these contract arrangements this year as one part of their efforts to lower consumer spending on drugs. Health experts call the legislation a good start, but say that more action will be needed in order to reach full transparency and cut into the overpayment of drugs.

The Trump administration supports a similar proposal for Medicare Part D plans. Groups commenting this month on the ban included in the White House drug-price blueprint raised concerns about the burden this would put on pharmacists, the unintended financial consequences that may arise from paying out of pocket, and possible adverse clinical effects from removing a layer of medication management.

An analysis by the University of Southern California’s Leonard D. Schaeffer Center for Health Policy and Economics released in March found that in 2013, patients in the sample studied overpaid for prescriptions by $135 million. This occurred when patients’ copayments exceeded the total cost of the drug to the insurer or pharmacy benefit manager.

Karen Van Nuys, a professor at USC who coauthored the study, said prohibiting gag clauses on pharmacists could help make a dent in overpayments of drugs.

“This legislation banning gag clauses is an important step towards protecting consumers against overpaying for prescription drugs,” Van Nuys said in a statement to National Journal. “We found that overpayments due to clawbacks amounted to $135 million in 2013 in our dataset alone—if our data are representative, commercially insured U.S. patients overpaid by more than $2 billion in 2013.

“While we didn’t study gag clauses per se, since gag clauses are an important facilitator of overpayments I’d expect banning them to take a big bite out of that amount going forward,” she added.

More action to guarantee this information is passed on to consumers will likely need to follow Sen. Susan Collins’s legislation, experts say. Georgetown University health policy analyst and political scientist Jack Hoadley noted, for instance, that the bill does not require a conversation between a pharmacist and a patient about cheaper alternatives.

“The reality is it’s going to take a combination of eliminating the gag clause and sort of convincing consumers that it’s worth having a conversation from time to time, either because a particular drug seems particularly expensive, or because they just want sort of a general review with their pharmacist to say, ‘Are there alternatives to the things I’m taking that would be less expensive?”’ Hoadley said.

But some pharmacists may not need the additional nudge. Trish Riley, executive director of the National Academy for State Health Policy, said it was pharmacists who insisted on the change. “For most states, I don’t think anybody felt there was a need to compel pharmacists, because it was the pharmacists who oftentimes were the voice of wanting to get this change because they felt unable to help their customers fully,” Riley said.

While several experts and advocacy groups are supportive of the ban on “gag clauses,” there could also be some downsides if patients pay outside of their insurance. “One of the services your insurance coverage and your PBM provides is they’re looking at your drugs as a whole and trying to identify any potential drug interactions or things like that to alert you of,” Hoadley said.

Several health- and patient-advocacy groups—including the Patient Access Network Foundation and the Community Access National Network—wrote in comments on the White House drug-price plan that patients need to know the full picture of how paying out of pocket could affect them financially.

“[P]atients will need to be educated about the impact of paying for a drug outside of their health plan and understand the implications for meeting deductibles and [out-of-pocket] caps,” the groups wrote on July 16. “We further wish to acknowledge that pharmacists have many responsibilities and burdens and that patient education about OOP implications related to going outside of a health plan should not be placed on the community pharmacy staff.”

The National Community Pharmacists Association, which supported the general suggestion of banning gag clauses, said there are many other provisions often included in contracts between PBMs and pharmacists that should be addressed.

“Those include overly broad confidentiality provisions, non-disparagement clauses, and requirements that the pharmacy charge insured patients what the PBM tells them to charge,” the NCPA said. “Moreover, PBMs sometimes use veiled threats and intimidation to discourage pharmacies from expressing concerns to patients and plan sponsors about their prescription drug benefit. NCPA urges this administration to examine all contract provisions that prevent the pharmacist from discussing drug costs with patients.”

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