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The Health 202: 'Gag clauses' mean you might be paying more for prescription drugs than you need to

A prescription is filled at a pharmacy in Sacramento. (AP Photo/Rich Pedroncelli)


Using your insurance plan isn’t always the cheapest way to buy prescription drugs. But your pharmacist might be banned from telling you that.

Lawmakers on both sides of the aisle are seeking ways to stop a practice that can keep customers from saving money at the drugstore counter. “Gag clauses” buried in the fine print of pharmacy contracts — and imposed by pharmacy benefit managers (PBMs) — prevent many pharmacists from telling customers when the cash price for a medicine may be less expensive than their insurance co-pay unless the customers directly ask. 

Ending “gag clauses” is just one option as Republicans and Democrats attempt to find ways to lower the skyrocketing cost of prescription drugs — both a problem for the health-care system and a political headache for both parties. President Trump singled out the clauses when he said he wanted to ban them in his May speech on drug prices, a goal also outlined in the administration’s blueprint to lower costs for pharmaceuticals. And congressional legislation has been drafted to tackle the problem.

Health and Human Services Secretary Alex Azar decried gag clauses as "unacceptable" in a hearing last week before the Senate Finance Committee. Last month, he vowed to work with Sen. Susan Collins (R-Maine) — who is sponsoring one of the anti-gag clause bills along with bipartisan colleagues — to pass such measures.

During a Senate Health, Education, Labor and Pensions Committee hearing June 12, Collins described standing behind a couple at the pharmacy who said they couldn’t afford a $111 co-pay for a medication. The pharmacist told Collins that happens “every single day.”

“That really troubles me. It was pharmacists who brought to my attention the fact that these gag clauses exist,” Collins said.

“We will look forward to working with you and other senators on legislation that would across the spectrum deal with the issue of these gag clauses and getting it to stop,” Azar responded. “Because we think patients have the right to know what their out-of-pockets are and what their lower-cost alternatives are.”

PBMs are the middleman acting as a negotiator between drug companies and insurance companies to determine what prescriptions are covered by a given health plan. And experts explained to The Health 202 that it's the PBM that determines what individuals from an insurance network pay for a drug, and which pocket any difference between costs to pharmacies and patients.

For their part, top PBMs insist they do not include “gag clauses” in their contracts — which tend to contain broad confidentiality rules rather than a single, specific prohibition on sharing the true cost of a drug at the pharmacy counter.

“We do not engage in this anti-consumer practice and are working constructively with state and federal policymakers to ban the practice,” Phil J. Blando, a spokesman for Express Scripts, told The Health 202 in a statement.  Blando said the company uses a “lesser-of” strategy so that members “always pay the lowest cost automatically, whether it’s the cash price or their copay.” He said Express Scripts believes “gag clauses” are “not in patients’ best interest.”

CVS Health also praised congressional efforts addressing gag clauses in a March statement on its website, and similarly said the company’s practice is to charge patients the lowest price.

“CVS Health's own pharmacy benefit manager, CVS Caremark, does not engage in the practice of preventing pharmacists from informing patients of the cash price of a prescription drug, known as ‘gag clauses,’” the statement says.

President Trump on May 11 announced his plan to lower prescription drug prices. (Video: Reuters, Photo: Jabin Botsford/Reuters)

But the practice still seems to be occurring in many pharmacies. Anthony Reznik, director of government affairs for the Independent Pharmacy Alliance, said that when a patient picks up a prescription, the pharmacist electronically pulls up information that includes the cost under insurance predetermined by PBMs.

“[If] I see on my screen that if you pay the cash price it would actually be cheaper for you than if you were to pay with your insurance, I can’t tell you unless you ask me specifically about it,” he said.

The difference between the cash and insurance price for a drug varies widely, and Reznik said “there’s no rhyme or reason to it.” Pharmacists’ information might reveal the insurance co-pay for a patient is $50, even if the drug itself costs the pharmacy only $10. If the patient doesn’t ask about other options, the pharmacist cannot voluntarily inform a patient when an out-of-pocket price would cost them less.

Congress is trying to fix the problem.

Collins — along with Sens. Claire McCaskill (D-Mo.) and Debbie Stabenow (D-Mich.) — introduced two bills to tackle gag clauses. “The Patient Right to Know Drug Prices” would block insurers or PBMs from prohibiting pharmacies from informing customers of the difference between the insurance co-pay and the actual cost of a drug."The Know the Lower Price Act” would do the same for people covered under Medicare Advantage and Medicare “Part D” plans.

Meanwhile, in the House, Rep. Earl L. “Buddy” Carter (R-Ga.) has introduced the bipartisan “Prescription Transparency Act” that would also prohibit gag provisions. Neither Carter’s bill or the Senate bills have come up for a committee vote.

“Being the only pharmacist currently serving in Congress and having years of experiences with this, I’ve witnessed firsthand some of the issues that we’re talking about in this bill,” Carter told The Health 202.

He specifically criticized the “shell game” being played by PBMs, which he said disclose little to no information about the drug-pricing process. And while ending the practice won't directly lower the cost of drugs, Carter said it's an important step toward increasing drug pricing transparency for consumers and demystifying the role of the PBM.

“This shows you they are hiding things,” he said. “They put a clause in a contract with a pharmacy telling them they have to be quiet about this? That shows you they don’t want transparency.”

“Now, I’m not opposed to anybody making money, but show me what the value is that the PBMs are bringing into the system. They bring no value whatsoever,” Carter continued. “They will tell you their mission is to keep prescription drug prices low. Well, how is that working out for you? Because if they were fulfilling their mission, why are we talking about high prescription drug prices? Why is it one of the president’s primary agenda items?”

The National Community Pharmacists Association said it supports national legislation to bar “gag clauses,” a term it says can be misleading because it refers to the broad contract language.

“You would rarely find an overt prohibition that ‘Though shalt not tell the patient the true negotiated price,’” spokesman Scott Brunner said. “Instead, there is broad and nebulous confidentiality verbiage.”

Kala Shankle, NCPA’s director of policy and regulatory affairs, said legislation would be beneficial if it contains specific language allowing pharmacists to bypass such provisions.

“The relationship between independent pharmacists and PBMs at this point is so broken that it’s created an atmosphere … where we need something to point to, to tell the PBM to knock off their opaque practices,” Shankle said. “That’s what we want out of this legislation. All three of the bills would provide that type of remedy for independent pharmacists.”

A survey of 640 pharmacists by NCPA in 2016 found that 59 percent had encountered certain “gag” restrictions at least 10 times in a month.

Reznik panned what he called the “near monopoly” enjoyed by the three PBMs — Express Scripts, CVS Caremark, and OptumRx — that control almost 80 percent of the market, arguing it contributes to pharmacists’ fears about violating gag rules. “If you’re outed by just one network out of these three, you could lose your entire business, and those patients lose access to a pharmacy they may have frequented for decades.”


AHH: Wanna know who is more prone to meet the CDC's exercise guidelines? People with higher household income, who are not religious and who drink heavily, per numbers crunched by our colleague Christopher Ingraham. Using state-level data from a variety of sources, Chris reports on the factors correlated with more exercise versus less. Just 23 percent of American adults age 18 to 64 meet federal guidelines for weekly physical activity, but the share of adults meeting federal guidelines ranges from a low of 13.5 percent in Mississippi to a high of 32.5 percent in Colorado.

"We found that, overall, median household income does the best job of predicting physical fitness out of the variables we looked at: The more money you have, the more exercise you get," Christopher reports. "You need disposable income to buy a gym membership or running shoes, after all."

But the factors might not line up exactly as you'd expect. Religiosity and voting for President Trump were associated with less exercise. Weirdly, rates of heavy drinking were associated with more exercise. And the physical environment -- how hot an area is, for example -- seemed to play less of a role in exercise than one might think, Chris writes.

Correction: An initial version of this newsletter incorrectly said states with a lack of religiosity had lower rates of exercise. States with higher religiosity have lower rates of exercise.

OOF: Drugmakers seem to be hiking prescription prices despite a vow from the president in May that some manufacturers would make “massive” cuts. There were 48 price jumps in May and 104 in June and the first two days of July, a Wells Fargo report found, according to Politico’s Sarah Karlin Smith. The increases were an average of 31.5 percent and median of 9.4 percent.

“Bayer raised the price of two cancer drugs by hundreds of dollars in May and Novartis followed by boosting four pricey treatments in June. Pfizer, one of the largest U.S. pharmaceutical companies, announced increases on more than 41 products this week," Sarah writes. And the overall trends “cast doubt on whether Trump and Health and Human Services Secretary Alex Azar can pressure manufacturers to voluntarily drop prices without the threat of specific consequences," she adds.

Why does the administration’s plan seem not to be working, at least so far? Experts suggest a lack of incentive may be at fault. “The industry isn’t taking the administration seriously on drug pricing because there doesn’t appear to be a credible threat if they don’t comply with these requests,” Stacie Dusetzina, a drug pricing expert at Vanderbilt University School of Medicine, told Sarah. “While there are some items in the recently released Drug Pricing Blueprint that explore ways to incentivize companies to not increase prices or to increase accountability for price hikes, these are a long way from being implemented.”

OUCH: A state legislator in Ohio wants more government regulation of fertility centers, after a hospital in suburban Cleveland lost thousands of families' stored eggs and embryos (which in some cases was their only chance of having a baby), The Post's Ariana Eunjung Cha reports. The Ohio Department of Health found that the tragedy at University Hospitals Fertility Clinic in March could have been prevented, as the facility had issues with record keeping of temperatures and liquid nitrogen levels in their cryotanks and had only one designated point of contact for problems related to the tanks.

Fertility treatments are not heavily regulated in the United States, and most lawmakers fear any attempt at oversight will devolve into a larger debate around reproductive rights. But Ohio state Sen. Joe Schiavoni (D) told The Post his bill would solely be focused on how eggs and embryos are stored, requiring 24-hour monitoring by a person on site at all times and mandating that clinics store multiple samples from one person in different tanks and that all employees have training in handling liquid nitrogen.


— HHS is warning members of Congress their trips to visit migrant children at immigration facilities are taking up needed resources. Matt Bassett, HHS assistant secretary for legislation who is responsible for the facilities, wrote a letter on Tuesday to the chairmen of the Senate and House Judiciary committees about the visits.

“Nearly 500 work hours have been spent facilitating congressional visits to facilities for more than 70 Members of Congress,” Bassett wrote in the letter. He noted “many of these hours” could have been used to reunify families, The Post’s Felicia Sonmez, John Wagner and Elise Viebeck report. The department wants lawmakers to start requesting visits to facilities two weeks in advance, per the Associated Press.

— Some of the groups working to house migrant children in their facilities have strong ties to the Trump administration and have otherwise donated millions to both Democrats and Republicans, the New York Times reports.

“The president’s education secretary provided funding to one of the groups. His defense secretary sat on the board of another,” Ben Protess, Manny Fernandez and Kitty Bennett write. “Mr. Trump’s own inauguration fund collected $500,000 from two private prison companies housing detained migrant families. And some of the contractors employ prominent Republican lobbyists with ties to Mr. Trump and his administration, including someone who once lobbied for his family business.”

But it’s not clear whether such political favors led to the nonprofits, corporations and religious groups acquiring contracts, and some already had contracts for such migrant facilities before the start of the Trump administration, Ben, Manny and Kitty add.


— No. 2 House Democrat Steny Hoyer has been hospitalized with pneumonia, an aide said yesterday. The House minority whip, who is 79, was admitted to George Washington University Hospital on Tuesday and “is being treated with antibiotics and resting,” Katie Grant, his spokeswoman, said in a statement. The congressman “is expected to make a full recovery quickly,” she said.

— Liberal political strategists hope to block Trump’s next Supreme Court nominee by replaying a strategy they used to help defeat the Republican effort to repeal the Affordable Care Act last year, The Post's Michael Scherer reports. Their multimillion-dollar plans will especially target two Republican defenders of the ACA -- Sens. Lisa Murkowski of Alaska and Susan Collins of Maine -- to buck the president again by opposing the pick he plans to reveal on Monday.

"One group, Demand Justice, plans to launch a $5 million campaign Thursday with ads in both senators’ states focused on the possibility that the next justice will provide the majority vote to allow states to ban abortion, overturning the 1973 decision in Roe v. Wade," Michael writes. "NARAL Pro-Choice America announced plans Tuesday to take out full-page ads in four Maine newspapers highlighting the issue."

“We had a particular success with Murkowski and Collins, obviously, in the ACA fight,” said Brad Woodhouse, the executive director of Protect our Care, a liberal umbrella group that organized opposition last year to the GOP's repeal-and-replace effort. “So we kind of understand how to do the work in those states.”


— Last year, only 60.2 women out of every 1,000 women of childbearing age gave birth, a record low number of Americans having babies. It’s the second consecutive year the rate has reached such a low, the New York Times’s Claire Cain Miller reports.

Some of the main reasons young Americans gave for having fewer kids includes not being able to afford child care, not having a partner and wanting more leisure time, Claire reports, citing a new survey from the New York Times and Morning Consult. In the survey, more than half of the 1,858 women who responded said they were expecting to have fewer children compared with their parents. Some respondents said they wanted to have more time for the children they already had and some cited financial considerations, including not being able to afford more children or waiting because of current financial instability.

“The survey, one of the most comprehensive explorations of the reasons that adults are having fewer children, tells a story that is partly about greater gender equality,” Claire writes. “Women have more agency over their lives, and many feel that motherhood has become more of a choice. But it’s also a story of economic insecurity. Young people have record student debt, many graduated in a recession and many can’t afford homes — all as parenthood has become more expensive. Women in particular pay an earnings penalty for having children.”

— A few more good reads from the Post and beyond:

HPV test is better than Pap smear at detecting precancerous cervical changes, study says (Laurie McGinley)

The Online Gene Test Finds a Dangerous Mutation. It May Well Be Wrong. (New York Times)


Obamacare Is Proving Hard to Kill (New York Times)


Minnesota sues OxyContin maker Purdue Pharma (Star Tribune)


Two more victims of Soviet-era nerve agent poisoned in British town where Russian ex-spy was attacked (William Booth and Karla Adam)


Coming Up

  • The American Enterprise Institute holds an event on “The Affordable Care Act’s twisted path through implementation, litigation, and reinterpretation” on July 9.
  • The House Energy and Commerce Subcommittee on Health holds a hearing on “Opportunities to Improve the 340B Drug Pricing Program” on July 11.
  • The Brookings Institution holds an event on “(De)stabilizing the ACA’s individual market” on July 13.

The White House lowered its flag to half-staff to honor the five victims of the Capital Gazette shooting:

The White House lowered its flag to half-staff July 3 to honor the five victims of the Capital Gazette shooting in Annapolis, Md., on June 28. (Video: Reuters)

President Trump says he's met with four candidates to join the Supreme Court, and wants to move quickly to nominate a replacement for Justice Anthony Kennedy:

President Trump said on July 2 that he met with four Supreme Court candidates, and wants to move quickly to nominate a replacement for Justice Anthony Kennedy. (Video: Reuters)