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Federal, State Efforts to Improve Prescription Drug Transparency Move Forward

September 28, 2018

At the federal level, the U.S. House cleared a pair of Senate bills aimed at making it easier for patients to get the lowest price on prescription drugs at the pharmacy counter, sending the legislation to President Donald Trump. At the state level, the Senate Insurance Committee unanimously approved a bill that would do the same, sending the bill to the Senate for consideration.

The federal Patient Right to Know Drug Prices Act and Know the Lowest Price Act of 2018 along with Pennsylvania’s House Bill 2211 (Ward, R-Blair), prohibit "gag clauses" that prevent pharmacists from telling customers whether they could save money by buying prescription drugs out-of-pocket rather than using their health insurance.

The federal bills are on the path to becoming the first drug pricing legislation enacted since the Trump administration unveiled its “American Patients First” blueprint for lowering drug costs in May. Outlawing gag clauses had been an element of that plan. The Administration has identified transparency in addressing health care costs as a fundamental policy pursuit.

But the true effect of gag clauses on patient costs is unclear. The three major pharmacy benefit managers have denied using the provisions in their contracts. A JAMA research letter found that gag clauses drove patient overpayments roughly 23 percent of the time during a six-month period in 2013.

According to the National Conference of State Legislatures, many state policymakers have been alerted to problems with “gag clauses.” Between 2016 and March 2018, at least seven states enacted laws prohibit “gag clauses” in contracts that restrict pharmacists. Mississippi and Virginia laws were signed during March 2018.

For more information on HAP’s work to promote greater transparency, please contact Jolene Calla, Esquire, HAP’s vice president, health care finance & insurance. Questions pertaining to federal advocacy may be directed to Laura Stevens Kent, HAPs vice president, federal advocacy. Questions pertaining to state advocacy may be addressed to Stephanie Watkins, HAP’s vice president, state legislative advocacy.

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