Collins, McCaskill, Stabenow, Barrasso, Cassidy Bill to Prohibit “Gag Clauses” That Cause Consumers to Overpay for Prescriptions Clears Key Senate Hurdle

The Patient Right to Know Drug Prices Act is a bipartisan solution to an egregious practice that conceals lower prices from Americans at the pharmacy counter

Washington, D.C. – Today, the Senate Health Committee unanimously passed legislation authored by U.S. Senators Susan Collins (R-ME), Claire McCaskill (D-MO), Debbie Stabenow (D-MI), John Barrasso (R-WY), and Bill Cassidy (R-LA) to remove barriers that prevent patients from paying the lowest possible prices for their prescription drugs.  The Patient Right to Know Drug Prices Act would prohibit the use of “gag clauses” by health insurers and pharmacy benefit managers, an egregious practice that conceals lower prescription drug prices from patients at the pharmacy, causing consumers to needlessly overpay.


“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.  By prohibiting gag clauses, our legislation would take concrete action to lower the cost of prescription drugs, saving consumers money.”


“It’s outrageous that these contract clauses would forbid pharmacists from helping Missourians pay less for the medicines they need,” Senator McCaskill said. “This bipartisan effort will help to end that practice, and we’ve got to continue taking every possible to step to make prescription drugs in this country more affordable.”


“It’s just wrong for people to overpay for their medication simply because their pharmacist is not allowed to tell them they could pay a lower price with cash instead of insurance,” said Senator Stabenow. “Our bills take an important step towards banning this outrageous practice that hurts Michigan families and seniors.”


Pharmacy gag clauses forbid pharmacists from proactively telling consumers if their prescription would cost less if they paid for it out-of-pocket rather than using their insurance plan.  Pharmacists who disobey these clauses face significant penalties.  The Patient Right to Know Drug Prices Act would prohibit an insurer or pharmacy benefit manager 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 bill would apply to plans offered in the individual market, including through exchanges, and plans sponsored by private employers.  A separate bill Senators Stabenow, Collins, and McCaskill Barrasso, Cassidy, and Ron Wyden (D-OR) introduced, the Know the Lowest Price Act, would provide this same protection for individuals who are covered by Medicare Advantage and Medicare Part D plans.  Their legislation is currently under consideration by the Senate Finance Committee.


A 2016 industry survey found that nearly 20 percent of pharmacists were limited by gag clauses more than 50 times per month.  Estimated overpayments due to “gag clauses” were $135 million in 2013.


Senator Collins, the Chairman of the Senate Aging Committee and a member of the Senate Health Committee, has championed bipartisan efforts in Congress to increase the affordability and accessibility of prescription drugs.  During a Senate Health hearing last year, Senator Collins referenced a report that was broadcast by NBC “Nightly News” in October, which highlighted the issue of “pharmacy gag clauses.”  Additionally, 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.


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.