The President signed into law a bill that prohibits gag clauses in pharmacists' contracts. But will it really make a difference in medication pricing? 

By Amanda MacMillan
October 11, 2018

President Trump signed into law yesterday a bill that may help lower some drug prices for consumers. The bill, which went into effect immediately, puts an end to “gag clauses” that currently prevent pharmacists from telling customers when it would cost less to purchase a medication outright, rather than through their health insurance.

Most of the time, the full cost of a medication exceeds the co-pay amount dictated by health insurance companies. But that’s not always the case, especially for inexpensive, generic drugs. For example, an influenza drug might cost $125 with insurance and $100 without, the earlier this year, or pharmacy customers could be charged their $20 copay for blood pressure or diabetes drugs that only cost $8 to $15.

According to , 25 states have enacted laws that protect consumers from overpaying in these scenarios. But in the remaining states, it’s been perfectly legal for insurance companies to insert fine print into their contracts with pharmacies—known as "gag clauses"—that prohibit pharmacists from discussing these types of cost differences with patients.

The bill, known as the , was introduced in March by Senators Susan Collins (R-Maine), Claire McCaskill (D-Missouri), and Debbie Stabenow (D-Michigan). Lowering drug prices is a goal of both Democrats and Republicans in Congress—as well as President Trump—and the bill passed overwhelmingly in the Senate last month, 98 to 2.

Afterward, U.S. Representative Earl L. “Buddy” Carter (R-Georgia) thanked the Senate for recognizing the “critical need” for this bill. “As a pharmacist for more than 30 years, gag clauses prohibited me from telling my patients about a better option for them many times,” he said in a statement to the Washington Post’s . “I know how important it is for patients that we end this unfair practice.”

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Under the new bill, insurance companies nationwide are not able to block pharmacists from discussing drug prices with customers. And if pharmacists do share information about price differences, they will be protected from penalties. (Despite what the President , the bill will not give people "knowledge as to prices at different locations," or force pharmacies into "dropping their prices." Prices are set by drug manufacturers and insurance companies—not individual pharmacies—and this bill will not change that.) 

President Trump also signed into law a similar bill, preventing gag clauses in Medicare insurance policies, yesterday as well. That bill will go into effect January 1, 2020.

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Last month, Lauren Blair, a spokesperson for the Campaign for Sustainable Rx Pricing, told The Health 202 that banning gag clauses is an “important but incremental step.” Experts say it’s unclear how much this measure will really lower drug prices for the majority of Americans, and that it certainly won’t solve all of the problems around runaway pharmaceutical costs.

“This is certainly progress but there’s a lot more work to be done, both in the transparency bucket specifically, and broadly in the larger effort to tackle drug prices,” Blair told The Health 202. “And again, transparency is not enough to tackle outrageous drug prices.”

Public Citizen, another consumer advocacy group, agrees that more needs to be done to keep pharmaceutical companies from charging unreasonable amounts for medications. “The approach from the Trump administration and Congress so far has been like repairing a leaky faucet above while gallons of water spill from a pipe bursting below,” the organization wrote in a statement yesterday.