Pharmacy Benefit Manager (PBM) Gag Clauses Tie Pharmacists’ Hands

Your pharmacist’s hands may be tied when it comes to telling you drug prices.

Gag clauses in contracts with pharmacy benefit managers (PBMs) prevent pharmacists from telling the truth about the price of some medications.

Currently, patients cannot rely on their pharmacist to give them all available information because PBMs are able to issue gag clauses within their contracts with pharmacies. The result of these gag clauses is higher costs for the unknowing patient. This problem is particularly egregious for people with diabetes, who pay about 2.3 times more on healthcare than people without diabetes. Contractually mandated gag clauses for pharmacists must be banned so that pharmacists are able to do their jobs and patients are able to trust their providers.

Three men wearing suits with their arms crossed.

The problem arises when PBMs engage in clawbacks.

Clawbacks occur when PBMs, standing in for insurance companies, set the copay price of a prescription drug higher than the cash price of that drug. When the patient goes to the pharmacy to purchase their prescription medicine, they pay their copay price, believing that they are getting a good deal through their insurance. In actuality, they may be better off skipping their insurance and paying the list price. The pharmacist knows the two prices, but is prevented from telling the patient that they are being ripped off because of gag clauses in PBM contracts.

Many pharmacists are bound by these gag rules, and there are many lost opportunities to inform patients of their pricing options.

According to a survey by the National Community Pharmacists Assn., 59% of independent pharmacists said they were subject to gag clauses prohibiting them from volunteering pricing information. The survey also revealed that 83% of pharmacists said there were at least 10 times during the past month when patients could have saved money if the pharmacists were allowed to tell them about the price difference. Some pharmacists estimate clawbacks happen in 10% of their transactions.

A doctor holding a heart and a businessman holding money.

Gag clauses are not always explicit, but always restrict pharmacists from telling their patients the whole truth.

Some contracts between PBMs and pharmacists explicitly bar the pharmacist from publicly criticizing benefit managers or suggesting customers obtain the medication cheaper by paying out of pocket. But even if the contract does not explicitly say that the pharmacist may not discuss lower priced options with their patients, it may include language that has the same effect. In one OptumRX provider manual, there is language that requires the pharmacist to charge their customers using their insurance the required copay “and only this amount.” Waiving the copay is “strictly prohibited.” And pharmacists who contracted with OptumRX in 2017 could lose their contract for many reasons, including engaging in “actions detrimental to the provider network,” doing anything that “disparages” it, or trying to “steer” customers to other coverage or discounted plans. Why would a pharmacist agree to such terms? Pharmacists are often forced into contracts with gag clauses because they need to serve people with insurance in order to stay competitive and retain customers. PBMs rarely negotiate with pharmacists, and the contracts PBMs offer are usually take-it-or-leave-it contracts. If a pharmacists refuses to sign the contract because it includes a gag order, the PBM will simply take its business to the next pharmacy in town.

State and federal governments are taking action to protect patient-constituents from deceitful gag clauses imposed on pharmacists.

Many states have outlawed clawbacks all together or have prohibited gag clauses for pharmacists. The Federal government is taking notice as well, with bills presented in the Senate and the House. In the Senate, the Patient Right to Know Drug Prices Act, or S. 2554, would ban the practice of pharmacy gag clauses. 

In a press release, bill sponsor Senator Collins said:

“Multiple reports have exposed how this egregious practice has harmed consumers, such as one customer who used his insurance to pay $129 for a drug when he could have paid $18 out of pocket… Americans have the right to know which payment method — insurance or cash — would provide the most savings when purchasing prescription drugs. By prohibiting gag clauses, our legislation would take concrete action to lower the cost of prescription drugs, saving consumers money.”

Thouse House bill, introduced by Representative Earl “Buddy” Carter, is called the Prescription Transparency Act or H.R. 5343. Rep. Carter is a pharmacist by trade, and said this about his proposed legislation:

“As a pharmacist for more than 30 years, there were many times when I was prevented from telling my patients that there was a cheaper option because of a gag clause. There is no reason pharmacists should not be able to talk to patients about what is best for them.”

The total cost of diabetes in 2012 was $245 billion, and 18% of that cost ($44.1 billion) was attributed to prescription medications. People with diabetes should not have to pay more for their medications simply because they did not ask the right questions.

Send a letter to your representatives asking them to co-sponsor legislation to prohibit gag clauses so you can trust that your pharmacist can tell you the whole truth!

Send a letter to your Senators

Send a letter to your Representative

A doctor's hands holding a stethoscope and handcuffed.


Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest

Leave a comment