MODEL BILLS

No Gag Rule on Pharmacists Act

Summary: The No Gag Rule on Pharmacists Act prohibits health insurance companies and pharmacy benefits managers from using contracts to prevent pharmacists from telling their customers about cheaper ways to buy prescription drugs.

Based on Connecticut SB 445. See also laws in Arkansas, Louisiana, North Dakota and Nevada.

SECTION 1. SHORT TITLE

This Act shall be called the “No Gag Rule on Pharmacists Act.”

SECTION 2. FINDINGS AND PURPOSE

(A) FINDINGS—The legislature finds that:

(1) Pharmacy benefits managers (PBMs) are companies that contract with pharmacists to administer the prescription drug benefit component of health insurance plans, setting the co-pay amounts for each drug.

(2) PBMs, on behalf of health insurance companies, often use contract provisions to prohibit pharmacists from informing their customers about less expensive ways to pay for their prescriptions.

(3) In some cases, customers who have not reached their deductible could pay less by purchasing a drug out of pocket instead of going through their insurance, but PBM-required contract provisions prohibit pharmacists from sharing this option.

(4) These contract provisions are unfair to both pharmacists who are effectively prohibited from using their professional expertise.

(5) Customers themselves are also unfairly disadvantaged by this system, as they are both financially impacted and unable to make fully informed decisions on their healthcare choices because they are denied information on potential prescription drug options.

(B) PURPOSE—This law is enacted to protect the health and welfare of residents who need to take prescription drugs.

SECTION 3. NO GAG RULE ON PHARMACISTS

After section XXX, the following new section XXX shall be inserted:

(A) DEFINITIONS—In this section:

(1) “Allowable claim amount” means the amount the health insurance carrier or pharmacy benefits manager has agreed to pay the pharmacy for the prescription medication.

(2) “Health insurance carrier” means [cite definition in existing law].

(3) “Pharmacy benefits manager” means [cite definition in existing law].

(B) PROHIBITIONS

(1) A health insurance carrier or pharmacy benefits manager shall not offer or agree to a contract provision which penalizes a pharmacy or pharmacist for disclosing information to a customer regarding:

(a) the cost of a prescription medication to the customer; or

(b) the availability of any therapeutically equivalent alternative medications or alternative methods of purchasing the prescription medication, including, but not limited to, paying a cash price, that are less expensive to the customer than the cost of the prescription medication.

(2) A contract provision penalizes a pharmacy or pharmacist if it prohibits such disclosure or disadvantages a pharmacy or pharmacist that makes such a disclosure, including through increased utilization review, reduced payments or other financial disincentives.

(3) No health insurance carrier or pharmacy benefits manager shall require an individual to make a payment at the point of sale for a covered prescription medication in an amount greater than the lesser of:

(a) the applicable copayment for such prescription medication;

(b) the allowable claim amount for the prescription medication; or

(c) the amount an individual would pay for the prescription medication if the individual purchased the prescription medication without using a health benefit plan [cite definition in existing law] or any other source of prescription medication benefits or discounts.

(C) ENFORCEMENT

(1) Any provision of a contract that violates the provisions of this section shall be void and unenforceable, and shall constitute an unfair trade practice pursuant to [cite existing law]. The invalidity or unenforceability of any contract provision under this subsection shall not affect any other provision of the contract.

(2) The [Insurance Commissioner] shall enforce the provisions of this section and, upon request, audit a contract for pharmacy services for compliance with the provisions of this section.

SECTION 4. EFFECTIVE DATE

This law shall become effective on July 1, 20XX.