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May 13 2018

Pharmacists see the end to Pricing “Gag Rule,” at least for Medicare Patients

One of the more frustrating restrictions on the pharmacist-consumer relationship has long been the pharmacist’s inability to tell a customer about lower-cost drug purchasing options.  Which is why pharmacists largely cheered when the Trump Administration announced in mid-May that it was eliminating the aptly named “gag rule” for Medicare Part D patients.

Contracts negotiated between pharmacies and pharmaceutical benefit managers (PBMs) often include a clause preventing pharmacists from alerting consumers if out-of-pocket costs for a drug would be cheaper if the consumer paid cash for the drug, rather than running the prescription through the consumer’s insurance company.  In many instances, due to negotiated reimbursement rates, the insurance company-mandated co-pay is actually higher.  But, due to the presence of the “gag rule,” pharmacists have been prohibited from sharing that information with their customers.

One study published in the Journal of the American Medical Association examined 9.5 million insurance claims, and found “23 percent of prescriptions filled through insurance ended up costing more for customers than if they had paid out of pocket.”  The overpayments averaged almost $11 per prescription.

One pharmacy owner, Steven F. Moore, who with his family owns Plattsburgh, NY’s Condo Pharmacy, told The New York Times that the prohibition was “incredibly frustrating.”  Moore offered an example of the current pricing structure:  “A consumer filling a prescription for a drug to treat diabetes or high blood pressure may owe $20 if he uses insurance coverage.  By contrast, a consumer paying cash might have to pay $8 to $15.”

But, because of the way pharmacy/PBM contracts are negotiated, the pharmacist may be prevented from sharing this information with the patient.

Removal of the prohibition has become a front burner issue in recent years.  So far, at least 21 states have enacted laws prohibiting “gag clauses,” according to the Prescription Drug Resource Center of the National Conference of State Legislators.

Legislation has also been introduced in the U.S. Congress to ban the gag rule nationwide from private and individual market plans.  “Insurance is intended to save consumers money,” U.S. Senator Susan Collins (R-ME), said in announcing the legislation, which has bi-partisan support.  “But gag clauses in contracts that prohibit pharmacists from telling patients about the best prescription drug prices do the opposite.”

But for the more than 35 million senior citizens on Medicare Part D, the issue seems to have been put to rest, with the May 2018 announcement of the Trump Administration’s “American Patients First” initiative.  The initiative, which outlines a plan to reduce drug prices and lower patient out-of-pocket costs, prohibits Part D contracts that include the gag rule.

“Our plan bans the pharmacist gag rule, which punished pharmacists for telling patients how to save money,” President Donald Trump said in announcing the initiative.

With prescription drug spending accounting for 10 percent of overall U.S. health care spending, and Medicare patients among the nation’s most vulnerable, pharmacists are no longer prohibited from sharing valuable pricing information.

Whether or not Congress extends the “pharmacist gag rule prohibition” nationwide remains to be seen.  But with the practice currently banned in 21 states, and now from all Medicare Part B contracts, pharmacists are slowly but surely seeing this unfair restriction fall by the wayside.