California Makes Moves to Ban PBM Gag Clauses on Pharmacists

California’s legislature is entertaining a bill that would, among other things, prevent pharmacy benefit managers from imposing gag clauses on pharmacists.

AB-315 amends the Health and Safety Code to include certain requirements for pharmacy benefit managers, or PBMs. Among the requirements is a ban on gag clauses in contracts with pharmacists (Sec. 152152(a)(1)). The bill was introduced in February of 2017, and gained momentum throughout the year. The bill is currently in the inactive file, but could be brought out of inactive status at any time.

Pharmacy benefit managers can tell your pharmacist what to say – and it could cost you money.

A doctor's hands in handcuffs.

Currently, some pharmacists are not able to tell patients when they could be paying less for their medications because PBMs put gag clauses in their contracts. PBMs sometimes set the copay price of a drug (what you pay if you used insurance) higher than the list price of the drug (the price you pay without using insurance). When insurance companies do this price setting, it is called a “clawback.” Gag clauses order a pharmacist not to tell you about the clawback, so they cannot say if you could pay less for a drug if you did not use your insurance. This results in higher prices for the patient. This practice is especially detrimental for people with diabetes because they pay about 2.3 times more on healthcare than people without diabetes. Gag clauses are surprisingly widespread; some independent pharmacists estimate that if they were allowed, they could have saved their patients money in about 10% of transactions. DPAC has done a deep dive into gag clauses on our blog.

We need Californians to speak up! Tell the legislature that you don’t want PBMs telling your pharmacist what they can and cannot say!


Click here to send a letter to the California Assembly asking them to support AB-315!

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