We Give People the Help They Need to Live in the Place They Love

     Prescription Insurance for Seniors: Prescription Prices and Gag Clauses       

By Danika McClure

Contact us at 203 776-2273




For many Americans, the price of prescription medications is a major concern. New evidence suggests that “gag clauses” may be costing Americans more at the pharmaceutical counter.

Increasing Prescription Prices

For years now, headlines from major news outlets around the country have highlighted the astronomical and ever rising cost of lifesaving prescription medications.

Perhaps the most newsworthy instance of this kind of price gouging was by the biopharmaceutical company Retrophin, who under the leadership of former CEO Martin Shrekli, hiked the price of a lifesaving drug from $13.50 to $750 a pill. But as many medical experts have argued, Shrekli is a symptom of a larger problem.

“Shkreli is a blimp in the bigger picture,” John Rother, executive director of the Campaign for Sustainable Rx Pricing, told Healthline earlier this year. “Not that many people were affected. But some other drug companies are raising prices and affecting millions of people.”

As Katherine McBeth of Fiscal Tiger notes, it’s price gouges like these that ensure that “the healthcare sector will continue to profit off of overpriced services that are essential to maintain personal health,” and are a symptom of a system that the University of Illinois, Chicago, Health Informatics program argues is “aimed at making profits, [and] pushing pills.”

But while the rise of prescription drug prices has been covered widely in media outlets, far less covered are the ways that health insurance companies and pharmacies themselves may be gouging the price of your prescriptions.

There Are Ways to Find Cheap Prescriptions

In fact, according to many reports, some consumers who use health insurance copays to purchase their prescriptions may be better off paying with cash and avoiding costly copays altogether, especially if their prescriptions are generic.

The reason?

According to Brenda Breslauer of NBC News, “a middleman called a pharmacy benefit manager handles the prescription drug part of your health insurance plan on behalf of your insurer.” In some instances, that middleman may charge a copay that exceeds the drug’s cash price. It’s a process that causes a lot of confusion for patients and for pharmacists. Pharmacists in the industry refer to this as a clawback.

“If there’s any cost in health care that should be easy to understand, it’s the cost of prescription medications,” writes David Belk, MD. “Pharmacies buy prescription drugs in bulk from pharmaceutical corporations and suppliers the same way they buy aspirin, and then sell them for a profit. But somehow this simple transaction is wrapped in so many layers of confusion that almost no one understands what’s really happening.”

What’s worse is that your pharmacist may not be legally permitted to tell you about the issue, given that there are a number of gag clauses in their contracts with these pharmacy benefit managers that prevent them from offering low-cost alternatives—a process which troubles many pharmacists.

“Part of the contracts we sign with the pharmacy benefit managers prohibit us from being able to share information that possibly a medication would be less expensive [if the customer paid] cash,” explained Steve Hoffart, a pharmacist in the small town of Magnolia, Texas. “As a pharmacist, I’m here to take care of patients,” said Hoffart. “It’s extremely hard to see the patients paying more than what they really should be.”

It’s a practice that many pharmacists believe is a blight to the profession and a challenge for customers who have high deductibles.

As Hoffart shares with NBC, these price gouges can range from a few dollars to hundreds of dollars and typically occur the most with generic medications—meaning that individuals who use medications to treat symptoms of diabetes, high cholesterol, depression, and anxiety are the most likely to see these price increases.

“Recent investigations show that OptumRx, UnitedHealthcare, Cigna, and Catamaran make their customers overpay for many commonly-used medicines,” note the legal experts at Keller Rohrback. “For example, if a drug costs $3.00 retail, your insurance might require you to pay $30.00–ten times more–just because $30.00 is the stated copay.”

It’s a practice that has gotten several insurance providers in potential legal hot water. OptumRX, UnitedHealthcare, Cigna, and Catamaran are currently in the middle of class action lawsuits because of this practice, but it’s unclear what the outcome of these proceedings will be.

Stay Informed About Your Prescription Plans

There are ways that patients can circumvent this issue. As reported by the LA Times, 59% of independent pharmacists are subjected to gag clauses that prohibit them from volunteering information about insurance clawbacks, meaning that the patient would have to affirmatively ask about pricing.

Some states have taken on the issue through legislation. Anti-clawback laws have been enacted in Louisiana, Georgia, North Dakota, Maine, and Connecticut.

For those who wish to become more informed about the cost of their prescriptions, or whether they can save money moving forward, there are a few options. One is to call the pharmacy and ask for the retail price of your medication. As an alternative, you can enter the name of your medication and zip code at LowestMed.com. You can also look up your medication on the National Average Drug Acquisition Cost on Medicaid.gov.