Lawmakers Have Sights on Middlemen Blamed for Rising Drug Costs

THE HILL, BY JESSIE HELLMANN - 06/08/18 06:03 AM EDT

With public outrage growing over the rising costs of prescription drugs, Congress is targeting the middlemen they say are to blame. 

Specifically, lawmakers are moving to ban “gag clauses” that prohibit pharmacies from telling customers they can save money on a drug if they pay with cash instead of using their health insurance. 

These clauses are sometimes included in contracts between pharmacies and pharmacy benefit managers — the middlemen who act as negotiators between drug companies and insurers.

The clauses prevent a pharmacist from telling a customer if their $20 co-pay is higher than the pharmacy’s cash price for a drug. 

“Pharmacists want to be able to give their consumers information about what’s the best way to buy the medication they need, but the gag rule prohibits the pharmacists from doing that,” said Rep. Peter Welch (D-Vt.), co-sponsor of a House bill that would ban gag clauses. 

The practice of charging a co-pay that is higher than the cash price of a drug is called a “clawback.”

The National Community Pharmacists Association (NCPA), one of the groups pushing for a federal “gag clause” ban, notes that it’s the pharmacy benefit managers or “PBMs” that keep this extra money, not the pharmacies. 

“Obviously that’s intended to fatten the profits of the PBMs at the expense of the consumers, and it’s interfering with the trusting relationship pharmacists have with their clients,” Welch said. 

Bipartisan bills in the House and Senate, sponsored by Sen. Susan Collins(R-Maine) and Rep. Buddy Carter (R-Ga.), wouldn’t ban clawbacks, but would ban gag clauses so pharmacists can tell their customers whether they’d save money on their prescription if they pay with cash instead of their insurance. 

The Collins bill is expected to come up for a committee vote on June 20. 

A spokesperson for Carter said the congressman is still continuing to push for a hearing and building member support. 

It’s difficult to know how often customers are charged more for their co-pay than what they’d pay for buying a drug with cash.

The Pharmaceutical Care Management Association, the industry group for PBMs, says it doesn't endorse gag clauses and that they are rare. 

But in a survey conducted by the NCPA in 2016, 39 percent of pharmacists said gag clauses prevented them from telling customers about cheaper alternatives between 10 and fifty times in the past month. 

“Prohibiting PBM 'gag clauses' will empower pharmacists to inform patients of lower prescription price options and help improve price transparency. Our members always want to assist their patients in receiving the affordable medications they need,” the American Pharmacists Association said in a statement. 

A recent study in the Journal of the American Medical Association reviewed 9.5 million insurance claims and found that 23 percent of prescriptions filled through insurance ended up costing more for customers than if they would have paid cash.