Gag Orders

gag ordersGag orders placed on retail pharmacies by insurance companies and PBMs (Pharmacy Benefit Managers) hopefully will soon become a thing of the past. For years now both the insurers and the PBMs have restricted pharmacists from telling their patients the truth: that it is often times cheaper for the customer or patient to actually buy the prescription medication without going through their insurance company. Written into the contracts that allows a pharmacy to participate in their programs, the insurance companies and pharmacy benefit managers have effectively used these gag orders to block the pharmacist from informing the consumers that it’s less expensive many times to simply pay for their drugs “out of their pockets”. But now it’s clear that the end of this practice may be in sight.

What Is The Know the Lowest Price Act?

Last week the United States Senate passed a new bill known as The Know the Lowest Price Act. The Bill S.2553 would amend title XVIII of the Social Security Act and abolishes the gag orders placed previously on pharmacists for their patients who have Medicare Part-D and patients who have Medicare Advantage (a healthcare plan that is managed by private insurance companies). Basically, the new Senate Act would allow for pricing transparency in a long overdue attempt to help reduce healthcare costs for senior citizens and people with disabilities covered by Medicare. Pharmacists will no longer be forbidden from informing these patients that they can actually spend less money on their prescriptions if they simply don’t go through their health plans.

The bill was passed unanimously last Wednesday by the US Senate, yet it still needs to be approved by Congress’s second chamber – the House of Representatives to become a law. Then it will need to be signed by the President to finally go into effect.

What About Removing Pharmacy Gag Orders For All Patients?

It’s important to note that the new rules of The Know The Lowest Price Act that abolish the pharmacy gag orders only applies to patients with Medicare Part-D and Medicare Advantage Plans. Perhaps soon, however, these pharmacy gag orders will be totally abolished for everyone. Currently another new bill has been proposed that is known as The Patient Right to Know Drug Prices Act (S.2554). This newly proposed legislation is aimed to provide the same protection and pricing transparency to all patients that have any form of private or commercial health insurance coverage. This new bill (The Patient Right to Know Drug Prices Act) is currently gaining momentum and is right now making its way through the Senate.

It’s also notable that several states have already independently taken action to attempt to eliminate these pharmacy pricing gag orders. Both North Dakota and Connecticut have already banned the practice entirely in their states and made the practice illegal. Georgia has just passed new legislation that clearly states that neither the pharmacy itself and the individual pharmacist cannot be penalized for ignoring any insurance provider’s restrictions or PBM’s gag orders. Now North Carolina has also passed a new law saying that pharmacists have the legal right to share such information with their customers.

A Step In The Right Direction?

Most experts agree that the new legislation is simply the first “small” step in attempting to reduce the cost of healthcare in the United States.

In 2017 it was estimated that approximately three-hundred million Americans currently have a PBM in some way managing their pharmacy benefits. There total nearly twenty “major” PBM companies in the United States, but the three “Super PBM’s” account for approximately eighty percent (80%) of all of healthcare patient coverage. Between these three, they have management of the enrollment of approximately 200 million patients who have health insurance coverage and prescription benefits programs.
The three largest or “Super PBM’s” (ranked by the total number of patients that are enrolled in their health insurance programs) are:
1. Express Scripts
2. CVS Health (formerly CVS Caremark)
3. United Health (also referred to as OptumRx & Catamaran)

What has now happened is that the three biggest major healthcare insurance companies now have acquired ownership of these pharmacy benefit managers.   Cigna just recently purchased Express Scripts for an estimated $76 billion dollars. With Express Scripts being the largest independent Pharmacy Benefit Manager (PBM), the following “alliances” are now in place:
– Aetna  now owns CVS Health
– Cigna now owns Express Scripts
– UnitedHealth now owns OptumRx
So this removal of the pharmacy “gag order” poses a problem for all of them. Although two-hundred million Americans may benefit, the profits of these insurance “giants” is likely going to suffer. It will be interesting to see what happens.

Interestingly, the Pharmaceutical Care Management Association (PCMA), an association for PBMs, stated in response to the new legislation “that gag orders were not common and that the organization did not endorse their use”. Yet CNN has reported that the association is spending “large” amounts of money lobbying against the bills.

Questions or Comments on the Gag Order Laws?

At Healthcare Consultants Pharmacy Staffing & Consulting, we welcome your feedback and are available to answer any questions that you may have about this new legislation (or any other topics). HCC has been the nationally renowned pharmacy consulting firm of choice for over 29 years now and can provide you with expert advice in any area of your pharmacy business or practice. With a full-time staff of in-house Pharmacy consultants and specialists, HCC can answer any questions that you have in all pharmacy settings. Contact us online or call us today at 800-642-1652 for a free consultation.


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