New Transparency Laws Could Help Patients Reduce Out-of-Pocket Drug Spending

October 18, 2018

President Trump recently signed two bills into law aimed at reducing patients’ out-of-pocket spending on prescription medications. The “Patient’s Right to Know Drug Prices Act” and the “Know the Lowest Price Act” address a practice known as “gag clauses.”

What are gag clauses?

Gag clauses are practices used by health plans or pharmacy benefit managers (who manage most of the country’s prescription drug programs and negotiate on behalf of insurance companies). These clauses prevent pharmacists from alerting patients at the pharmacy counter when they could be saving money on prescriptions if they choose not to use their health insurance and simply pay out-of-pocket directly. Research has shown that patients are overcharged an estimated one out of every five times a prescription is filled.

What do these laws do?

While a handful of states (California, Connecticut, Georgia, Indiana, North Dakota, and Ohio) already had laws to prevent gag clauses, the federal laws will eliminate the practice nationwide.

These laws now ban the use of gag clauses and apply to patients with either private insurance or Medicare Part D plans.

What does this mean for patients?

Pharmacists are now allowed to alert consumers when they would save money by not utilizing their insurance coverage.

Think about a similar scenario with car insurance. If you get into a minor accident, it might make more sense to pay out of pocket vs. filing a claim with your insurance company. Similarly, now patients can choose to pay out of pocket for their medications when it would be more expensive to use their insurance coverage.

It is still important for patients to ask questions because these laws simply allow pharmacists to disclose the information and do not require it. Patients can ask if they are paying the lowest price and question what alternatives are available to ensure that their health care and financial needs are being met.

The Cancer Support Community applauds these efforts and encouraged the Trump Administration to ban gag clauses in our response to their drug pricing initiative. We support opportunities for patients to make informed choices and save money. This transparency will allow pharmacists to have conversations with patients that will allow them to make the best choices for themselves and their families.

For more information about gag clauses and other issues impacting cancer patients, survivors, and their loved ones, sign up to be a Cancer Support Community grassroots advocate.