Bills to Ban Pharmacy ‘Gag Clauses’ Signed Into Law

Bills to Ban Pharmacy ‘Gag Clauses’ Signed Into Law

Our Thinking / Healthcare /

Bills to Ban Pharmacy ‘Gag Clauses’ Signed Into Law
Calendar11 October 2018

President Donald Trump has signed a pair of bills aimed at increasing drug pricing transparency — the first such legislation to become law since his administration rolled out its strategy to tackle the cost of prescription medicines in May. The bills prohibit so-called “gag clauses” in health plan contracts that prevent pharmacists from telling customers they could save money on drugs by paying out of pocket rather using their insurance benefit.

One of the bills (S 2553) would apply to Medicare’s prescription drug plans, and the other (S 2554) would apply to private group and individual plans.

Although the prevalence of “gag clauses” is unclear, a growing number of states have passed legislation prohibiting pharmacy benefit managers (PBMs) and insurers from including them in pharmacy contracts. The new federal law’s supporters also point to a Journal of the American Medical Association study from earlier this year, based on 2013 data, that found that prescription drug claims for 12 of the 20 most commonly prescribed drugs in the US often had copayments that exceeded the average retail price.

S 2554, the “Patient Right to Know Drug Prices Act,” also includes new reporting requirements for makers of biopharmaceuticals intended to prevent “pay for delay” deals in which brand-name biologic companies pay the makers of generic versions to stay off the market for some period of time. Companies that make brand name and generic versions of other types of drugs already file such disclosures.

Congress is unlikely to do much more legislating on drug prices this year. The Trump administration, however, is considering whether it can require companies to disclose the prices of drugs in advertisements. That policy won strong bipartisan support in a government spending bill recently passed by the Senate, but the provision was stripped from the final measure by House Republican members.

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