Senate Passes Bill Addressing Gag Clauses and Biosimilar Settlements

Yesterday, the United States Senate passed the Patient Right to Know Drug Prices Act by a vote of 98 to 2. The bill will now move to the House of Representatives for consideration.

The bill, introduced in March 2018 by Senator Susan Collins, R-Maine—together with Senators Claire McCaskill, D-Missouri, and Debbie Stabenow, D-Michigan—eliminates so-called “gag clauses” that prevent pharmacies from telling consumers whether they could spend less on their medication by paying out-of-pocket.

Under the bill, health plans and their pharmacy benefit managers (PBMs) will no longer be permitted to restrict pharmacies from informing any individual about how much they would pay for their prescription drugs without using their health insurance coverage. Plans and PBMs will also be barred from penalizing pharmacies for informing their customers about how to pay a lower price. The Senate has already passed a similar bill, the “Know the Lowest Price Act of 2018,” that addresses gag clauses for Medicare plans.

“Nearly [1] in [4] Americans pay more for their prescriptions than they need to—and at a time when drug prices are skyrocketing and Missourians are struggling to pay for their prescriptions, that’s just unacceptable,” McCaskill said in a statement. “I’m proud to have worked across the aisle to get this commonsense fix done…and I hope this bill moves quickly to the President’s desk.”

Senators Mike Lee, R-Utah, and Rand Paul, R-Kentucky, voted against the bill. Lee withdrew support for the legislation after his fellow senators voted down his amendment that would have limited the applicability of the gag clause provision to self-insured group health plans.

The bill also addresses so-called pay-for-delay agreements for biosimilars by requiring reference product sponsors and biosimilar developers to notify the Federal Trade Commission (FTC) when they settle patent disputes so that the agency can scrutinize whether the agreements inappropriately inhibit competition.

Other legislation to address pay-for-delay arrangements is already under consideration by the House; in July 2018, Congressman John Sarbanes, D-Maryland, introduced the Biosimilars Competition Act of 2018, which would require biologic and biosimilar drug manufacturers to report any agreements they enter into that may keep lower-cost drugs from reaching consumers.

Lawmakers have been increasingly vocal about pay-for-delay settlements in 2018; in July, Senators Chuck Grassley, R-Iowa, and Amy Klobuchar, D-Minnesota, sent a letter to the FTC in which they urged the agency to “examine whether makers of biologic medicines are using strategies like ‘pay-for-delay’ to hinder or delay biosimilars from entering the market,” and raised specific concerns about Humira maker AbbVie’s settlements with biosimilar developers that will only allow biosimilar adalimumab to enter the US market in 2023.

FDA Commissioner, Scott Gottlieb, MD, has also voiced his concern about pay-for-delay tactics in the biosimilars marketplace; however, in March 2018 remarks at the America’s Health Insurance Plans National Health Policy Conference, Gottlieb explained that pay-for-delay tactics run deeper than settlements alone. “The crux of these pay-for-delay schemes are also taking root in the biologics market,” explained Gottlieb, adding that, “Except this time, in these biosimilar pacts, the tactics are dressed in the guise of rebates and contracting provisions between manufacturers and PBMs that discourage biosimilar market entry.”