Bipartisan Legislation Authored by Senators Collins, McCaskill to Prohibit Pharmacy “Gag Clauses” Signed into Law

The Patient Right to Know Drug Prices Act is a solution to an egregious practice that concealed lower prices from Americans at the pharmacy counter, causing them to needlessly overpay

Washington, D.C. – Today, bipartisan legislation authored by U.S. Senators Susan Collins (R-ME) and Claire McCaskill (D-MO) to ban the use of pharmacy “gag clauses” was signed into law.  The Patient Right to Know Drug Prices Act prohibits an egregious practice that concealed lower prescription drug prices from patients at the pharmacy and caused consumers to needlessly overpay.  This legislation is a continuation of Senators Collins and McCaskill’s bipartisan efforts to reduce the cost of prescription drugs.


“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,” said Senator Collins.  “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.  Improving the affordability and accessibility of medication is a priority that Claire and I share, and I was delighted to work with her once again to help reduce the cost of prescription drugs.  I am pleased that our bipartisan legislation has been signed into law.”


“Earlier this year, I heard from a woman who was shocked when she found out she could get her mother’s prescription for less if she paid out of pocket than through insurance—and was even more upset her pharmacist was prohibited from telling her that was possible,” Senator McCaskill said. “After months of hard, bipartisan work including support from the President, I’m proud to report back to her and so many other Missourians struggling to pay for their prescriptions, that pharmacy gag clauses are finally a thing of the past.”


Pharmacy gag clauses prevented pharmacists from proactively telling consumers that their prescription could cost less if they paid for it out-of-pocket rather than using their insurance plan.  Before passage of this legislation, pharmacists who disobeyed these clauses faced significant penalties.


The Patient Right to Know Drug Prices Act, sponsored by Senators Collins and McCaskill, prohibits insurers and pharmacy benefit managers 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 law applies to group plans sponsored by employers and plans offered in the individual market.” This legislation passed the Senate in September 98-2 and was cosponsored by Senators Barrasso, Stabenow, Cassidy, 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).


The Know the Lowest Price Act was also signed into law today.  This legislation provides this same protection for individuals who are covered by Medicare Advantage and Medicare Part D plans.  The bill was sponsored by Senators Debbie Stabenow (D-MI), Collins, McCaskill, John Barrasso (R-WY), Bill Cassidy (R-LA), and Ron Wyden (D-OR).


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 nearly one out of four 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 supported 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, America’s Health Insurance Plans, and patient groups.


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.