A House panel advanced a bill on Friday to ban the use of “gag clauses” in health insurance contracts that prevent consumers from paying lower prices for prescription drugs.
The House Energy and Commerce’s health subcommittee unanimously advanced the reform as part of a series of six healthcare bills during a markup hearing on Friday.
One of the pieces of legislation is a draft bill that bans private insurers and drug middlemen called pharmacy benefit managers from inserting “gag clauses” into contracts with pharmacists. The clause prohibits the pharmacist from telling a consumer it is cheaper to pay for a drug out of pocket rather than through insurance.
The Senate passed a bill on Wednesday that would prohibit such “gag clauses” for seniors on Medicare. Another bill aimed at private plans is still under consideration.
President Trump’s drug pricing blueprint also sought to end “gag clauses” for plans on Medicare Part D, the program’s prescription drug plan. But it would need Congress to end the practice in private plans.
Bipartisan support for the legislation has grown as Congress and the Trump administration are increasing scrutiny of the rebate deals that pharmacy benefit managers, also known as PBMs, and insurers cut with drug-makers.
PBMs, which represent employer and union-based plans, and insurers get a cut of any rebate they get from a drug-makers.
Health and Human Services Secretary Alex Azar, a former pharma CEO, has argued that this system has created a “perverse incentive” to keep list prices for drugs high. The thinking goes that PBMs and insurers only want to cover drugs with a higher the list price because they will get a bigger cut of the rebate.
The House subcommittee also passed a draft bill that would give the Medicare Payment Advisory Commission, which advises Congress on Medicare issues, with access to certain rebate information. The goal is to provide greater information about the drug prices that Medicare pays.
The legislation, along with several other healthcare bills, now goes to the full committee.
