Gag clauses are now illegal: 5 things to know

Alia Paavola - Print  | 

In an effort to increase drug price transparency, President Donald Trump signed two bills into law that ban insurers from writing gag clauses into their contracts with pharmacists, according to CBS News.

Here are five things to know:

1. Gag clauses have been blamed for complicating price transparency efforts at the pharmacy counter. These clauses, which insurers and pharmacy benefit managers often write into their contracts with pharmacies, prevent pharmacists from telling a consumer that it would be cheaper to buy a drug out of pocket than through their insurance.

2. President Trump signed two bills targeting these gag orders: the Know the Lowest Price Act and the Patients' Right to Know Drug Prices Act.

3. The Know the Lowest Price Act applies applies explicitly to Medicare Part D, which pays for prescription drugs and to Medicare Advantage, a health plan managed by private insurers. The Patients' Right to Know Drug Prices Act targets commercial and private health insurance.

4. Both bills were passed by Congress last month in nearly unanimous votes, according to NBC News.

5. "President Trump took bold action today to lower the amount that Americans must pay for prescription drugs by signing bipartisan legislation to make gag clauses illegal. I applaud Congress for taking swift action, and specifically Sen. Susan Collins, R-Maine, for her work on this legislation," said CMS Administrator Seema Verma in a press release.

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