CMS Acts on Pharmacy "Gag" Clauses

May 10th, 2018

Sometimes CMS headlines surprise me.  Take for example this one from May 17:

CMS Sends Clear Message to Plans: Stop Hiding Information from Patients

Not only was the headline an attention getter, the article informed me of a practice that seems unethical even if not illegal in the past.

Prior to this letter, Part D insurance carriers could (and some did) enter into contractual agreements with pharmacies that included gag clauses.  These clauses contractually prohibited pharmacists from telling patients that they would pay less for filling a prescription if they paid cash instead of using their insurance. 

How could that be?  Many Part D plans have mandatory copays and deductibles that would be more than the cost of the drug. 

Per the news release, on May 17,  the "Centers for Medicare & Medicaid Services (CMS) sent a letter to companies that provide Medicare prescription drug coverage in Part D explaining that so-called 'gag clauses' are unacceptable, as part of the Administration-wide “American Patients First” initiative to lower prescription drug costs...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.” 

A copy of the letter that was sent to all Part D Plan Sponsors can be accessed at:

To learn more about the President’s blueprint to lower prescription drug costs, please visit:

Tags: Part D, Prescription Drugs


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