Eliminating “Gag Clauses” That Keep Patients from Paying the Lowest Price for Prescription Drugs
Americans spend an estimated $340 billion on prescription drugs each year, including a staggering $45 billion out-of-pocket. Because of this enormous expense, one out of five Americans do not fill a prescription because they are unable to afford it.
I witnessed this struggle firsthand just recently at a pharmacy near my home in Bangor. When a couple ahead of me received their prescription, they were told that the copay was going to be $111. They looked at each other, the husband said to his wife, “We can’t afford that,” and they walked away.
I was so disturbed by what I saw that I asked the pharmacist how often this occurs. He told me that it happens every day.
Unfilled prescriptions can have dire consequences for patients. Unable to afford the vital medications their doctors have prescribed, patients are forced to go without, potentially causing their condition to worsen. Some skip doses or hoard pills out of fear that their next refill will be unaffordable. Poignantly, patients are filled with anxiety as they watch prices climb, knowing that they could lose access to medications they need.
That’s why I was troubled to learn from a group of pharmacists in Maine last fall about an egregious practice that can conceal the least costly way to purchase a prescription drug. Known as “gag clauses,” these terms included in some contracts between insurance companies or their pharmacy benefit managers and pharmacies actually prohibit pharmacists from telling consumers if their prescription would cost less if they paid for it out of pocket rather than using their insurance.
These clauses have resulted in some patients paying double, triple, or even more than they should for prescription drugs. In fact, in 2013 alone, consumers overpaid an estimated $135 million due to gag clauses. Many pharmacists express frustration that they are unable to disclose this information unless their customers ask. How can it be that an insurance company’s prescription benefit manager, whose very job is to negotiate prices, is negotiating a price that may actually be higher than the consumer would pay out of pocket?
Shortly after my meeting with the Maine pharmacists, the Senate Health Committee, on which I serve, held a hearing on the cost of prescription drugs where I raised this issue. One witness from the American Pharmacists Association testified that the use of gag clauses is a common practice. Following this hearing, I authored the Patient Right to Know Drug Prices Act with Senators Claire McCaskill (D-MO) and Debbie Stabenow (D-MI) that would prohibit gag clauses. Our bipartisan legislation passed the Committee on July 25 by a unanimous vote.
The Patient Right to Know Drug Prices Act would help save consumers money by preventing the use of pharmacy gag clauses in health insurance plans that are sponsored by employers as well as those that are offered in the individual market, including through the Affordable Care Act exchanges. In addition, our bill broadly defines out-of-pocket costs to prevent companies from using clever contracting to get around the gag clause prohibition. Nearly 40 health care and patient advocacy organizations support our legislation.
Following the introduction of our bill, the Administration joined me and the bill’s bipartisan co-sponsors in condemning gag clauses and is on record supporting our legislation. In fact, the President’s Blueprint identifies gag clauses as a barrier for reducing out-of-pocket costs for consumers. I am also pleased that the Centers for Medicare and Medicaid has put Part D Medicare plan sponsors on notice that such clauses are unacceptable.
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. Who would think that using your debit card to buy your prescription drugs would be less expensive than using your insurance card? It’s counterintuitive. Americans have the right to know which payment method provides the most savings when purchasing their prescription drugs. By prohibiting gag clauses, our legislation takes concrete action to lower the cost of prescription drugs, saving consumers money and improving health care.
