Ohio banned drug distributors and middlemen from preventing pharmacies from informing customers when it would be cheaper to buy a drug out-of-pocket rather than through their insurance.
It became the latest state to ban such “gag clauses” as lawmakers are seeking federal legislation to end the practice.
The state’s insurance regulator made the move through a bulletin Wednesday that ordered pharmacy benefit managers, which oversee drug plans for employer and union insurance plans, to end the practice.
“Consumers have a right to better understand the cost of their prescription drugs and whether or not they can get those prescriptions filled at a lower cost,” said Jillian Froment, the state’s insurance director. “We require insurers and pharmacy benefit managers to act in good faith and to follow Ohio law, but these explicit prohibitions will make expectations clear and will protect Ohio consumers.”
The move also prohibits insurers and PBMs from charging consumers more for their prescription drugs than what it would cost without insurance coverage, the department said Wednesday.
“For example, if a consumer has a $20 co-pay for a prescription that only costs $10 if purchased without insurance, the consumer must be charged the lesser amount,” the release said.
Lawmakers pursuing federal legislation to end the gag clauses praised Ohio’s move.
“Multiple reports have exposed how this egregious practice has harmed consumers, such as one customer who used his insurance to pay $129 for a drug when he could have paid $18 out of pocket,” said Sen. Susan Collins, R-Maine, a sponsor of one of the bills. “Americans have the right to know which payment method, whether insurance or cash, would provide the most savings when purchasing prescription drugs.”
At least 13 states have enacted laws to end the gag clause practice as of late March, according to data from the National Conference of State Legislatures. Another 35 state legislatures are considering prohibiting such clauses.
