Senators Collins, McCaskill, Stabenow Lead Bipartisan Group of Senators in Introducing Legislation to Prohibit “Gag Clauses” That Cause Consumers to Pay Higher Prices for Prescription Drugs

In 2016, Americans spent nearly $330 billion on retail prescription drugs, including $45 billion out of pocket.

Washington, D.C. — Today, U.S. Senators Susan Collins (R-ME), Claire McCaskill (D-MO), and Debbie Stabenow (D-MI) led a bipartisan group of Senators in introducing two bills to remove barriers that prevent patients from paying the lowest possible price for prescription drugs.  The Patient Right to Know Drug Prices Act and the Know the Lowest Price Act would prohibit health insurers and pharmacy benefit managers from using “pharmacy gag clauses” – an egregious practice that some companies use to conceal prices from patients at the pharmacy. This causes many consumers to needlessly overpay for their prescription.

 

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.

 

“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.  “Multiple reports have exposed how this egregious practice has harmed consumers, such as one customer who used his insurance to pay $129 for a drug when he could have paid $18 out of pocket.  Americans have the right to know which payment method – insurance or cash – would provide the most savings when purchasing prescription drugs.  By prohibiting gag clauses, our legislation would take concrete action to lower the cost of prescription drugs, saving consumers money.”

 

"Your pharmacist should be able to tell you if there's a cheaper way to get the prescription drugs you need. It's outrageous that current practice prevents that, and our bipartisan bill would change it,” said Senator McCaskill.  “With prescription drug costs rising, Missourians should have access to transparent pricing information so they can make an informed decision that's best for their families."

 

“It’s outrageous that companies can stop pharmacists from telling customers how to pay less for their prescriptions,” said Senator Stabenow.  “Customers have the right to know the lowest price available to them at the pharmacy. There is still a lot of work to be done to lower the cost of prescription drugs but our legislation is an important step forward.” 

 

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 through exchanges and by private employers. 

 

The Know the Lowest Price Act would provide this same protection for individuals who are covered by Medicare Advantage and Medicare Part D plans.

 

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 only bipartisan investigation into the causes, impacts, and potential solutions to egregious price spikes for certain generic, 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 nearly $330 billion on retail prescription drugs, including $45 billion out of pocket and another $139 billion paid by the government through Medicare, Medicaid, and other programs.  Spending on retail prescription drugs amounted to nearly 10 percent of all health expenditures. 

 

Senators Collins, McCaskill, and Stabenow introduced the Patient Right to Know Drug Prices Act with Senators John Barrasso (R-WY) and Bill Cassidy (R-LA).  The Know the Lowest Price Act was introduced by Senators Stabenow, Collins, McCaskill, Barrasso, Cassidy, and Ron Wyden (D-OR).