Part D plan sponsors face compliance action on drug gag orders, CMS warns

Medicare Part D plan sponsors that fail to ensure beneficiaries are paying the cheapest price for their drugs could face compliance action, the Centers for Medicare and Medicaid Services has said in a letter sent out Friday.

CMS Administrator Seema Verma sent the letter to all Medicare Part D plan sponsors in reference to the practice of gag clauses in contracts that prevent pharmacists from telling patients the most inexpensive way to pay for drugs.

Pharmacy benefit managers put gag clauses into contracts with pharmacies to prevent the pharmacists from telling patients when they could pay less for a drug by paying cash instead of through their insurance, and paying the required copay or deductible.

PBM's get a share of the transaction when patients use their insurance, but the practice costs consumers and CMS money.

CMS doesn't specifically tell Part D plan sponsors to break their contracts. Verma said the agency's existing policy requires plan sponsors to ensure enrollees pay the lesser of the Part D negotiated price or copay, or be subject to CMS compliance actions.  

"We want to make it clear that CMS finds any form of 'gag clauses' unacceptable and contrary to our efforts to promote drug price transparency and lower drug prices," Verma said in the letter.

The agency also reminded Part D plan sponsors that they must require their network pharmacies to disclose any differential between the price of a Part D drug and the price of the lowest cost generic version of the drug.

Verma and Health and Human Services Director Alex Azar have been promoting price transparency since President Donald Trump unveiled a blueprint to lower the cost of prescription drugs on May 11.

"President Trump and Secretary Azar are committed to lowering drug prices, and CMS today took another important step to help patients who are feeling the pain," Verma said. "Many patients don't know that some drugs are actually more expensive when they use their insurance. Today we are taking a significant step towards bringing full transparency to all the back-end deals that are being made at the expense of patients."

Prescription drug spending has been rising and is a top concern for legislators, providers, insurers and consumers.

Last year, the Blue Cross Blue Shield Association said its prescription drug spend had increased at a rate of 10 percent per year.  The per capita spending for pharmaceuticals in the U.S. was $1,443 in the U.S. in 2016, compared with a range of $466 to $939 in other nations.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com