November 5, 2018

A Nationwide End to Gag Clauses (article)

As part of the current Administration’s efforts to control prescription drug costs, President Trump signed two new laws on October 10, 2018.  These laws, known as the “Patient Right to Know Drug Prices Act” (S. 2554, P.L. 115-263) applicable to individual and group health plans in the private market, and the “Know the Lowest Price Act of 2018(S. 2553, P.L. 115-262), applicable to Medicare Prescription Drug Plan sponsors and Medicare Advantage organizations, are intended to end the so-called “gag clauses” in insurance contracts. 

The intent of these laws is to prevent pharmacists from advising individuals about differences between the price, copayment, or coinsurance of a drug under a health plan, and a lower price of the drug without health insurance coverage.  Historically, some state insurance laws have governed gag clauses in insurance contracts; these new laws will provide federal protection for consumers.

The law impacting individual and group health insurers took effect on the date of signage; the law impacting Medicare prescription drug plans becomes effective for plan years beginning on or after January 1, 2020.

The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

Accelerated Recovery Resources

Access articles and tools to help your business generate cash, improve leverage, and align & transform as you recover from the pandemic.

COVID-19 Resources

Access all COVID-19 related articles to help your business respond to the pandemic.

Insights in Your Inbox