President Signs Legislation Prohibiting Pharmacy “Gag Clauses” for Employer Health Plans

October 12, 2018

President Trump signed the Patient Right to Know Drug Prices Act (S.2554), which prohibits an insurer or pharmacy benefit manager from restricting a pharmacy’s ability to tell consumers when their insurance copay is higher than the cash price for a drug.

The new law applies to employer health plans as well as individual plans sold on and off the ACA exchanges.  A companion bill (S.2553) that was also signed by the President bars gag clauses in Medicare Advantage and Part D plans.

A recent Journal of the American Medical Association study found 23 percent of prescriptions cost more to patients if they were filed through their insurance instead of paid out-of-pocket.

Takeaway:  Employers should work with their pharmacy benefit manager, third-party providers, and carriers to ensure there are no gag clauses in their contracts.