WAAY 31’s I-Team investigation exposes a practice that results in some of you paying too much for your prescriptions when you use your insurance. Many pharmacists in Alabama insist they want to be able to tell you when paying cash is cheaper than your insurance co-pay. They blame third-party administrators who insurance companies hire to negotiate with pharmacies. You may not even realize you have a Pharmacy Benefit Manager, also known as a PBM, but they're widespread and powerful.
WAAY 31 reveals the costly reason why PBM contracts can keep pharmacists from telling you the whole story and how State Senator Arthur Orr is working to outlaw Pharmacist Gag Clauses.
Tommy and Martha Sharp depend on their prescription drugs. We talked with Martha who had gathered several prescription bottles to show us. The drugs are a critical part of the Sharps' everyday lives. "It's kept me on track as far as health issues,” Martha told WAAY 31. “My husband as well. He's just suffered a stroke. And they’re very important for him."
Martha trusts the folks at her pharmacy with her life. "There is a lot of trust,” she explained, “almost like family sometimes." This trusting patient was astonished to hear what's happening in Alabama. Pharmacists can be required to keep secrets from patients like the Sharps. Those secrets could be valuable information that could save patients money.
Martha told us she was surprised when we told her about the Pharmacist Gag Clauses. "I am,” she said. “I always thought I was getting the best deal."
Senator Arthur Orr is determined to stop the practice. "The pharmacy shouldn't have their hands tied to tell the customer what's best for the customer when it comes to the price of their drugs," he told WAAY 31. Senator Orr says he wants you to get the best possible price on your prescriptions.
That might be at odds with Pharmacy Benefit Managers. Insurance companies hire PBMs to dictate terms including co-pays. Trouble is, the co-pay may be more than you have to pay. The senator wants to stop PBMs from forcing pharmacists to keep quiet when paying cash is cheaper than your co-pay.
"They want to be able to tell their customer that there is a lower price alternative if they don't use their insurance card and that it could cost them much less if they just paid the over-the-counter price for that particular drug," Orr told us.
Senator Orr’s effort is getting support from pharmacists in the state.
"We could, in effect, sell it to you at a lower price,” Bob Giles told WAAY 31. “We are restricted and can’t really tell the patient that.” Giles is the government affairs director for the Alabama Pharmacy Association. He explained pharmacists worry about the growing power of PBMs.
They're not the only ones worried.
The Cato Institue calculates PBMs now control prescription benefits of at least 266 million Americans.
Giles says he’s seen PBMs control up to 98 percent of a pharmacy’s prescription business.
PBMs can basically tell pharmacists to take or leave it. Giles said his colleagues have little choice but to agree to “the contracts that we're required to sign as pharmacists," he said. "And pharmacies do this every day in order to accept your insurance."
The contracts -- complete with Pharmacist Gag Clauses -- could cost you big money. For example, your co-pay may require you to pay $50 for a prescription. But, the cash price for the drug may be just $10. That means you paid an extra $40 -- profit for a Pharmacy Benefit Manager.
"It's not good for anyone,” Giles insists. “The only thing that the gag clauses are in there for are to prevent transparency in the PBM marketplace. They're the ones that are profiting the most right now. And they don't want you to know how much money they're making."
Giles told WAAY 31 that regulating PBMs and being transparent with patients is now the top priority of the Alabama Pharmacy Association. "I can tell a cash-paying customer almost anything,” he explained. “If you have insurance, you're dictated by the PBM contract what we can and cannot disclose to you."
"I've got a bill ready,” Senator Orr told WAAY 31. “And I'll be ready the first day of the legislative session in March." Senator Orr says he typically prefers a free market solution. But, for the problem of Pharmacy Gag Clauses, lawmakers may have the only cure. "I think that's the way we're going to have to go to get the customer the true market price for those drugs that they need and rely on."
Martha Sharp says Senator Orr's law can't come soon enough. "That would be great,” she told us. “That would be great especially as you can see we use a lot of prescription drugs to benefit our health. And it would definitely save us money to know that we're getting the best price.”
Senator Orr says he's getting bi-partisan support for a bill to outlaw the Pharmacist Gag Clauses in Alabama.
Aside from the support from the Alabama Pharmacy Association, the National Community Pharmacists Association is also working to end gag clauses. It supports federal legislation in addition to state laws.