Pharmacy Benefit Manager Gag Orders and Clawbacks
We’re excited to present our second blog in a series meant to help you take care when it comes to important arthritis health care and coverage issues. This week we’ll tell you about a practice some pharmacy benefit managers have been using called clawbacks, which affect the price of medications you pay at the pharmacy counter. Read on to learn more and see how the Arthritis Foundation is addressing the issue.
What are clawbacks?
A person who fills his or her prescription at the pharmacy may pay more for a prescription drug with insurance than if he or she had filled it without insurance. This can occur due to a “clawback,” a term used to describe the difference between the cash cost of a drug (purchasing a drug without insurance) and the copayment required by your health plan. That difference, the clawback, is often passed by the pharmacy back to the pharmacy benefit manager (PBM) as a profit. Unfortunately, this often occurs without the patient ever knowing they could avoid the higher copay by paying without insurance. A provision in the contract between the pharmacist and the PBM, known as a “gag order,” prohibits the pharmacist from disclosing cost information related to payment options.
What does this mean for patients?
Patients may be paying higher out-of-pocket costs for their medications unnecessarily. The Journal of the American Medical Association recently found that out of almost 10 million claims, 23 percent of prescriptions involved an overpayment like a clawback. And due to the contractual gag orders mentioned above, your pharmacist may not be legally allowed to tell you that this is the case.
What is the Arthritis Foundation doing to address this issue?
- The Arthritis Foundation is engaged in state and federal legislation that would prohibit gag orders and allow pharmacists to disclose all possible payment options to patients so they pay the lowest possible price for their medications. We also support legislation that goes one step further, requiring by law that a patient be charged the lowest amount (copayment or cash price) at the pharmacy counter.
- State legislation addressing clawbacks and associated gag orders has successfully passed in Arizona, Connecticut, Florida, Georgia, Kentucky, Louisiana, Maine, Maryland, New York, North Dakota, South Dakota, Utah, Virginia and West Virginia.
- Congress has introduced several bipartisan bills to ensure that health insurers and PBMs do not prohibit pharmacies from informing individuals about the prices for certain drugs. These federal bills include the Patient Right to Know Drug Prices Act of 2018 (S. 2554), led by Sen. Susan Collins (R-ME); the Know the Lowest Price Act of 2018 (S. 2553), led by Sen. Debbie Stabenow (D-MI); and the Prescription Transparency Act of 2018 (H.R. 5343), led by Rep. Buddy Carter (R-GA).
You can help by sharing your experience or opinion on this practice through our legislative action center!