Bipartisan Bill to Prohibit “Gag Clauses” That Can Cause Consumers to Overpay for Prescriptions Passes Senate

A recent study of 9.5 million prescriptions found that one in four consumers overpaid

More than forty organizations support Senators Collins and McCaskill’s bill

Click HERE to watch Senator Collins’ floor remarks

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Washington, D.C. – By a vote of 98-2, the Senate passed legislation today authored by U.S. Senators Susan Collins (R-ME) and Claire McCaskill (D-MO) to remove barriers that can prevent patients from paying the lowest possible prices for their prescription drugs. 

The Patient Right to Know Drug Prices Act would prohibit the use of “gag clauses” by health insurers and pharmacy benefit managers, an egregious practice that conceals lower prescription drug prices from some patients at the pharmacy, causing consumers to needlessly overpay.  The bill, which was cosponsored by a bipartisan group of 24 Senators, now heads to the House of Representatives for consideration.

“Insurance is intended to save consumers money.  Gag clauses that prevent pharmacists from telling patients how to pay the lowest possible price for their prescription drugs do the opposite,” said Senator Collins.  “A recent study of 9.5 million insurance claims found that 23 percent of customers overpaid for their prescriptions when using insurance. Our bipartisan legislation to stop this egregious practice will help lower the cost of prescription drugs, saving consumers money and improving health care.”

“Nearly one in four Americans pay more for their prescriptions than they need to—and at a time when drug prices are skyrocketing and Missourians are struggling to pay for their prescriptions, that’s just unacceptable,” Senator McCaskill said. “I’m proud to have worked across the aisle to get this commonsense fix done that will help Missourians better afford their prescriptions, and I hope this bill moves quickly to the President’s desk.”

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.  The Patient Right to Know Drug Prices Act 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.

A separate bill Senators Debbie Stabenow (D-MI), Collins, McCaskill, John Barrasso (R-WY), Bill Cassidy (R-LA), and Ron Wyden (D-OR) introduced, the Know the Lowest Price Act, would provide this same protection for individuals who are covered by Medicare Advantage and Medicare Part D plans.  Their legislation passed the Senate unanimously earlier this month.

During a Senate Health Committee hearing last year, Senator Collins referenced a report that was broadcast by NBC “Nightly News,” which highlighted the issue of “pharmacy gag clauses.”  A 2016 industry survey found that nearly 20 percent of pharmacists were limited by gag clauses more than 50 times per month.  A study published in the Journal of the American Medical Association that reviewed 9.5 million insurance claims found that 23 percent of prescriptions filled through insurance ended up costing more for customers than if they had paid out of pocket. 

Nearly 60 percent of Americans, including roughly 90 percent of seniors, take prescription drugs.  In 2016, Americans spent as much as $340 billion on prescription drugs, including $45 billion out of pocket.

More than forty organizations support banning this unfair restriction, including the National Community Pharmacists Association, the American Medical Association, the Alliance for Transparent and Affordable Prescriptions, the ERISA Industry Committee, the Pharmaceutical Care Management Association, and America’s Health Insurance Plans.

Senators Barrasso, Stabenow, and Cassidy joined Senators Collins and McCaskill in introducing the Patient Right to Know Drug Prices Act in March.  It was also cosponsored by Senators Tina Smith (D-MN), Joe Donnelly (D-IN), Dianne Feinstein (D-CA), Lisa Murkowski (R-AK), Bob Menendez (D-NJ), Tammy Baldwin (D-WI), John Kennedy (R-LA), Maggie Hassan (D-NH), Richard Blumenthal (D-CT), Roger Wicker (R-MS), Shelley Moore Capito (R-WV), Heidi Heitkamp (D-ND), Deb Fischer (R-NE), Lamar Alexander (R-TN), John Boozman (R-AR), Angus King (I-ME), Sherrod Brown (D-OH), Martin Heinrich (D-NM), Chuck Grassley (R-IA), and Tom Udall (D-NM).

This legislation is a continuation of Senators Collins and McCaskill’s work to reduce the cost of prescription drugs.  In 2015, Senators Collins and McCaskill launched the Senate’s first bipartisan investigation into the causes, impacts, and potential solutions to egregious price spikes for certain off-patent drugs.  They released a report on their investigation in 2016.  Following their investigation, Senators Collins and McCaskill authored a bill to improve generic competition and lower the cost of prescription drugs that was signed into law as part of the FDA Reauthorization Act.