HB 240 Eliminates the Use of “Gag Orders” on Local Pharmacists by Health Care Companies and Prescription Drug Manufactures

Juneau – Today, the Alaska Legislature unanimously passed legislation to empower local pharmacies and help lower prescription drug prices in Alaska. House Bill 240 will protect Alaska consumers by eliminating the use of “gag orders” by health care companies and prescription drug manufacturers. These orders are used to prevent local pharmacists from informing customers that they can save money by paying for some prescription drugs with cash rather than using health insurance. HB 240 also clarifies how pharmacies in Alaska can be audited by pharmacy benefit managers.

“The effort to pass this bill has been eye-opening because it showed how drug prices could be manipulated to benefit insurance companies, pharmacy benefit managers, and drug manufacturers. By eliminating the use of gag orders local pharmacists are now free to look out for the bottom-line of Alaskans,” said HB 240 sponsor Rep. David Guttenberg (D-Fairbanks). “In working with health care stakeholders to develop and pass this bill, we uncovered examples of unfair audit practices by several pharmacy benefit managers, which essentially work as the middle-men between the pharmacies and the insurance companies and drug manufacturers. Too often these middle-men have been tipping the scale in favor of one side over the other. This bill clearly outlines how audits are to be conducted, so they are fair and not arbitrary.”    

HB 240 requires pharmacy benefit managers (PBMs) to register with the state and sets procedures they must follow when conducting audits. The bill also restricts PBMs from inserting “gag clauses” into pharmacists’ contracts, which are often confidential documents.   

“Competition is a good thing, but the health care system has been steadily moving in favor of big business and big money for decades. This has hurt local providers and allowed prices to go up unchallenged. Passing this bill has been a long and difficult process, but it’s worth it because we can now empower our local pharmacies to compete better, which I believe will save Alaskans money,” said Rep. Guttenberg. “There are a lot of people to thank for getting this bill passed. Senator Giessel put in a lot of hard work to get unanimous support for HB 240 in the Senate and Representative Gara identified the need to eliminate the use of gag orders in Alaska.”

HB 240 has garnered significant support from health care stakeholders including numerous independent pharmacies, the Alaska Board of Pharmacy, and the National Community Pharmacists Association.

“We are glad to see Alaska legislators taking action on problems created by opaque pharmacy benefit manager business practices. HB 240 will allow community pharmacists to better serve their patients without PBMs imposing unfair and burdensome requirements. This is a major step forward for patients and community pharmacies in Alaska,” said John Norton, Director of Public Relations with the National Community Pharmacists Association.

House Bill 240 passed the Alaska State Senate today by a unanimous vote of 19-0. The bill unanimously passed the Alaska House of Representatives last month and will now be sent to Alaska Governor Bill Walker for his signature.

For more information, please contact Seth Whitten in Rep. Guttenberg’s office at (907) 465-4708.

Mike Mason
Press Secretary, Alaska House Majority Coalition
Phone: (907) 444-0889

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