March 16, 2018

Cassidy, Colleagues Introduce Bipartisan Legislation to Prohibit “Gag Clauses” That Cause Consumers to Pay Higher Prices for Prescription Drugs

WASHINGTON—U.S. Senator Bill Cassidy, M.D. (R-LA), a member of the Senate Health, Education, Labor and Pensions (HELP) Committee, joined several of his colleagues in introducing two bipartisan bills to remove barriers that prevent patients from paying the lowest possible price for prescription drugs. These bills would prohibit health insurers and pharmacy benefit managers from using “pharmacy gag clauses”—an egregious practice that some companies use to conceal prices from patients at the pharmacy. This causes many consumers to needlessly overpay for their prescription.

Pharmacy gag clauses forbid pharmacists from proactively telling consumers if their prescription would cost less if they paid for it out of pocket rather than using their insurance plan. Pharmacists who disobey these clauses face significant penalties.

Cassidy joined Susan Collins (R-ME), John Barrasso (R-WY), Claire McCaskill (D-MO), and Debbie Stabenow (D-MI) in introducing the Patient Right to Know Drug Prices Act, which would prohibit an insurer or pharmacy benefit manager from restricting a pharmacy’s ability to provide drug price information to a plan enrollee when there is a difference between the cost of the drug under the plan and the cost of the drug when purchased without insurance. This bill would apply to plans offered through exchanges and by private employers. 

Cassidy also joined Stabenow, Collins, McCaskill, Barrasso, and Ron Wyden (D-OR) in introducing the Know the Lowest Price Act, which would provide the same protection for individuals who are covered by Medicare Advantage and Medicare Part D plans.

“Gag clauses increase drug costs by thwarting market force, forcing patients to pay more,” said Dr. Cassidy. “Eliminating gag clauses lets patients know the true cost of drugs and saves patients money.”

Nearly 60 percent of Americans, including roughly 90 percent of seniors, take prescription drugs.  In 2016, Americans spent nearly $330 billion on retail prescription drugs, including $45 billion out of pocket and another $139 billion paid by the government through Medicare, Medicaid, and other programs.  Spending on retail prescription drugs amounted to nearly 10 percent of all health expenditures.

“Insurance is intended to save consumers money. Gag clauses in contracts that prohibit pharmacists from telling patients about the best prescription drug prices do the opposite,” said Collins. “Multiple reports have exposed how this egregious practice has harmed consumers, such as one customer who used his insurance to pay $129 for a drug when he could have paid $18 out of pocket. Americans have the right to know which payment method – insurance or cash – would provide the most savings when purchasing prescription drugs. By prohibiting gag clauses, our legislation would take concrete action to lower the cost of prescription drugs, saving consumers money.”

“Your pharmacist should be able to tell you if there’s a cheaper way to get the prescription drugs you need. It’s outrageous that current practice prevents that, and our bipartisan bill would change it,” said McCaskill. “With prescription drug costs rising, Missourians should have access to transparent pricing information so they can make an informed decision that’s best for their families.”

“It’s outrageous that companies can stop pharmacists from telling customers how to pay less for their prescriptions,” said Stabenow. “Customers have the right to know the lowest price available to them at the pharmacy. There is still a lot of work to be done to lower the cost of prescription drugs but our legislation is an important step forward.”