Senate panel approves bill banning ‘gag clauses’ in pharmacy contracts

The Senate Health Committee on Wednesday approved a bill banning “gag clauses” that prevent pharmacists from telling customers when they can save money on prescriptions by paying with cash instead of insurance.

Such clauses are sometimes inserted into contracts pharmacies have with insurers or pharmacy benefit managers — the middlemen that manage pharmacy benefits for insurance companies and employers.

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The clauses prevent a pharmacist from telling a customer if, for example, their $20 co-pay is higher than the pharmacy’s cash price for a drug. The bill, sponsored by Sen. Susan Collins (R-Maine), would ban these clauses. 

“Many Americans struggle to afford their prescriptions,” Health Committee Chairman Lamar Alexander (R-Tenn.) said.

“Senator Collins’ bill ends ‘gag rules’ that prevent a pharmacist from telling a patient that a prescription is cheaper if the patient pays cash instead of using his or her insurance.”

Collins framed the bill as a “concrete action to lower the cost of prescription drugs.” 

“Insurance is intended to save consumers money. Gag clauses in contracts that prohibit pharmacists from telling patients about the best prescription drug prices do the opposite,” Collins said in a statement. 

“Who would think that using your debit card to buy your prescription drugs would be less expensive than using your insurance card?  It’s counterintuitive. Americans have the right to know which payment method provides the most savings when purchasing their prescription drugs.”