Pharmacy “Gag Clauses” Eliminated, Allowing Full Disclosure of Prescription Prices at Pharmacies

By Sarah Martinez, CAFP Policy and Advocacy Intern

Last April, Colorado passed HB18-1284 Disclosure of Prescription Costs at Pharmacies, enacting the “Patient Drug Costs Savings Act”. Before this legislation, insurance carriers and their Prescription Benefit Managers in Colorado could maintain contracts with pharmacies that included “Gag Clauses”. These were legal agreements that threatened to punish pharmacies and pharmacists for disclosing alternative drug price information to patients when those prices might be cheaper than the negotiated price under their health plan. More simply, if the cheapest option for a drug was to pay out-of-pocket rather than go through insurance, the pharmacist’s hands were tied, and he or she could not inform the patient of their alternative options. Now, the Patient Drug Cost Savings Act allows pharmacies and pharmacists to freely disclose to patients if a more affordable option to purchase their prescription is available. The Act prohibits punitive measures and Gag Clauses from being included in insurers’ contracts with pharmacists.

NBC News wrote an article in October 2017 reporting the stark differences in copay prices versus out-of-pocket prices, and how pharmacists were unable to properly inform the patients who came to the pharmacy. A pharmacist quoted in the article gave an example that one insurance carrier charged the patient $129 for a prescription, but the pharmacist knew the patient could pay just $18 out-of-pocket, a potential savings of $111. Under the Gag Clause system, this extra money went straight to the Prescription Benefit Manager’s pocket.

Colorado’s Patient Drug Costs Savings Act enables pharmacists to make patients aware of the most affordable option and allow patients to make informed medical and financial decisions that best benefit their health. Patients can trust their health is being put first, and that they are getting the pricing information they deserve.

A wave of state laws eliminating Gag Clauses is rectifying this issue and putting the power back in the hands of the consumer. And in October 2018, the President signed the Know the Lowest Price Act and the Patient Right to Know Act into law that prohibits Gag Clauses on the federal level, ensuring patients will have the same protections across the country. To watch the two-minute NBC news segment about the federal bill, click here.

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