Pennsylvania Budget

Shown is the Pennsylvania Capitol building Tuesday, Dec. 8, 2015, at the state Capitol in Harrisburg, Pa. (AP Photo/Matt Rourke)

HARRISBURG — Legislation awaiting action in the state Senate would bar pharmaceutical suppliers from including gag clauses in contracts to stop pharmacists from disclosing when customers can save money by paying for their prescriptions instead of using insurance.

The measure, House Bill 943, passed the state House unanimously in November as part of a series of bills intended to reform the role played by pharmacy benefit managers.

The federal government banned gag clauses for prescription drugs in 2018, but the federal ban doesn’t cover private insurance if the companies involved only do business in Pennsylvania, said Dr. Lawrence John, president of the Pennsylvania Medical Society.

Before the federal ban was passed, gag clauses “were standard operating procedure,” he said.

Prescription drug prices are a serious problem, John said.

The medical society supports the legislation because it’s intended to help patients afford the medication they need, he said.

At least 33 states have bans on gag clauses for prescription drug prices, according to the National Conference of State Legislatures. That includes Maryland and West Virginia, which both banned these types of gag clauses in 2018

“For many less expensive, generic medicines, co-pays can often be more expensive than if the patient simply pays out-of-pocket and bypasses insurance,” said state Rep. Valerie Gaydos, R-Allegheny County, the author of HB 943.

The gag clauses bar pharmacists from volunteering that customers can save money by not using insurance, state Auditor General Eugene DePasquale said. But typically, if the customer thinks to ask if they have an option to save money, the pharmacists can respond, despite the gag clause, he said.

Pharmacy benefit managers are companies that operate between pharmaceutical manufacturers and pharmacies, purportedly to negotiate better prices.

But their role has increasingly come under scrutiny, particularly from independent pharmacy owners who say the benefit managers operate with too little transparency and too much power.

The legislation is now in the Senate Health and Human Services Committee. A spokeswoman for state Sen. Michele Brooks, R-Crawford County, the chair of that committee, said there are no immediate plans to hold a committee vote on the measure and send it to the full Senate.

Lawmakers and staff have had “many conversations and meetings on this bill,” said Diane McNaughton, a spokeswoman for Brooks, There’s been no timeline set for moving the legislation.

McNaughton said that the gag clause language in HB 943 isn't controversial.

"We realize that many Pennsylvanians are struggling to pay for their prescriptions and believe that no one should be paying more for medication than they have to," she said.

But in addition to the gag clause ban, HB 493 includes a provision that would bar pharmacy benefit managers from blocking pharmacists who want to disclose contract information to government officials. "The issue that has been raised with this legislation involves the disclosure of contract information and potentially proprietary information," McNaughton said.

DePasquale called on the state Senate to act on HB 943 and the related bills. One of those, House Bill 944, would allow the auditor general to audit pharmacy benefit managers. That legislation also passed the House and is now awaiting action in the Senate Health and Human Services committee.

DePasquale said Pennsylvania taxpayers paid $2.86 billion to PBMs for services provided to Medicaid enrollees in 2017.

Charles Kray, who owns Hershey Pharmacy and is president of the Pennsylvania Pharmacists Association, joined DePasquale at a January press conference on the issue. Kray said that he’d recently filled a prescription for a customer in which the brand-name version of the drug cost $350 and the generic cost $40. The customer’s insurance demanded that the patient use the brand-name version of the drug with a $100 co-pay, he said. Because of a gag clause, Kray said he couldn’t tell the customer he could save money by not using his insurance.

“There’s too little transparency around the billions of dollars that state taxpayers pay PBMs for services provided to Medicaid enrollees,” DePasquale said. “It’s time for the Senate to act on a package of bills approved by the House last fall and send them to the governor for his signature.”

The effort to get the changes passed has prompted the state’s independent pharmacists to launch a Your PA Community Pharmacies campaign.

The bills “are designed to hold Pennsylvania’s pharmacy benefit managers accountable to countless Pennsylvanians who deserve to pay the lowest possible cost for their prescription drugs,” said Patricia Epple, CEO of the Pennsylvania Pharmacists Association and a coalition member.

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