We’ve stated before that our medical system is a broken one and here is more proof: as it stands right now, many pharmacists are forced by their Big Pharma contracts to remain silent about the cost of drugs purchased with insurance versus cash. For example, a consumer might pay $125 under an insurance plan for an influenza drug that would have cost $100 if purchased with cash.

And these clauses exist for one reason only: money. And much of it benefits drug benefit managers.

Thankfully, states across the country are trying to block the “gag clauses” which prohibit pharmacists from “telling customers that they could save money by paying cash for prescription drugs rather than using their health insurance.”1 In fact, at least five states have adopted laws to make sure pharmacists can inform their patients about less costly ways to obtain their medicines and at least a dozen others are considering legislation to prohibit gag clauses.2)

Now, while pharmacy benefit managers say they keep consumer costs down by negotiating prices with drug manufacturers and retail drugstores, and thus the gag clauses are necessary, The White House Council of Economic Advisers said that “large pharmacy benefit managers ‘exercise undue market power’ and generate ‘outsized profits for themselves.’”3

And for that reason, lawmakers are getting involved.

This year in Connecticut, a bipartisan measure took effect- introduced by the top Democrat Martin M. Looney, and the top Republican, Len Fasano- which prohibits the gag clauses. Fasano said, “This is information that consumers should have but that they were denied under the somewhat arbitrary and capricious contracts that pharmacists were required to abide by.”4

And Connecticut isn’t alone:

  • A new law in North Carolina says pharmacists “shall have the right” to provide insured customers with info about their insurance copayments and less costly alternatives.
  • A new Georgia law says that pharmacists cannot be penalized for disclosing such information to a customer.
  • Maine adopted a similar law as Georgia.
  • In North Dakota, a new law explicitly bans gag orders. It says that a pharmacy or pharmacist may provide information that “may include the cost and clinical efficacy of a more affordable alternative drug if one is available.” 5 It also states that a pharmacy benefit manager or insurer may not charge a copayment that exceeds the actual cost of a medication. (That last bit caused the Pharmaceutical Care Management Association to file suit in federal court because they claim it imposes “onerous new restrictions on pharmacy benefit managers”6 and that it could require the disclosure of “proprietary trade secrets,” including information about how drug prices are set.)7
  • And in Arkansas, Gov. Asa Hutchinson announced plans to call for a special session of the state Legislature in order to authorize the regulation of pharmacy benefit managers by the state’s Insurance Department.

Some have called the practice “uncommon” while others claim it’s actually relatively common in the industry. Regardless, it’s a terrible practice that needs to end.

Sources and References

  1. Boston, February 24, 2018.
  2. Boston, February 24, 2018.
  3. Boston, February 24, 2018.
  4. Boston, February 24, 2018.
  5. Boston, February 24, 2018.
  6. Boston, February 24, 2018.
  7. Boston, February 24, 2018.