White House Signs Bills Banning Gag Clauses, Schaeffer Center Research Pivotal in Discussion

Earlier this month, President Trump signed two bills which ban the use of gag clauses by pharmacy benefit managers (PBMS) and pharmacies. The legislation, which was introduced by Senators Susan Collins and Debbie Stabenow, was applauded by lawmakers of both parties. In addition, California Governor Jerry Brown signed a bill codifying existing regulation on copayment limits and prescription pricing standards.

Gag clauses, which are clauses in the agreement between PBMs and pharmacies, prohibited pharmacists from telling customers when they could save money by paying cash instead of their insurance copayment. The issue gained national attention in recent months in part because of research conducted by the Schaeffer Center’s Karen Van Nuys, Geoffrey Joyce, Rocio Ribero, and Dana Goldman.

Van Nuys and her colleagues analyzed a data set of private claims and found that copayments paid by patients exceeded the cost of the drug to the insurer in almost one in every 4 claims analyzed. Among these overpayments, the average overpayment was $7.69. However, almost 20 percent of the overpayments analyzed exceeded $10.

Prior to this report, a summary of which was published in JAMA, many assumed it to be an uncommon occurrence.

In the months following publication of the study, the findings were referenced in over 80 online media stories including pieces by PBS, Kaiser Health News, and NPR. Van Nuys also discussed the report findings with policymakers, who frequently cited the report in their discussion of the bills. “A recent study found that 1 in 4 consumers needlessly and unfairly overpaid for their prescriptions, but Claire’s bill to fix that JUST passed the Senate. Today’s a good day for anyone who pays for prescriptions…” wrote Senator McCaskill’s office in a tweet.

President Trump indicated his support for the bills prior to signing, tweeting, “American’s deserve to know the lowest drug price at their pharmacy, but “gag clauses” prevent your pharmacist from telling you! I support legislation that will remove gag clauses and urge the Senate to act.” The President signed the bills on October 10, 2018.


In addition, a report by the National Conference of State Legislatures cited the report in a case study on drug pricing and multiple states have introduced legislation.

The interactive graphic below shows how frequently the co-payment exceeds the price of commonly prescribed drugs, and provides the average overpayment per drug.

The white paper can be downloaded here.