Trump signs bills banning so-called “gag clauses”

Earlier in October, President Trump signed into law two bills banning the use of pharmacy “gag clauses” in both Medicare and private health plans. The clauses, sometimes included in contracts between insurers, pharmacies and pharmacy benefit managers, prohibit pharmacies from notifying customers that a prescription drug would cost less if they paid for it out-of-pocket instead of through their insurance, which can result in patients overpaying for their prescription drugs.

  • The first of the bills, the Know the Lowest Price Act, bans pharmacy gag clauses in Medicare Part D and Medicare Advantage plans
  • The second bill, the Patient Right to Know Drug Prices Act, prohibits the use of pharmacy gag clauses in commercial health plans, including those within the Affordable Care Act’s (ACA) exchanges
  • Neither bill requires pharmacists to inform patients when their prescription drug would cost less without using their insurance, but they do allow pharmacists to share this information when asked

While some experts believe these bills will have little impact on consumers or the industry as a whole, researchers at the University of Southern California (USC) Schaeffer Center estimated that patient overpayments totaled about $135 million in 2013.


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