Photo: Simon Dawson/Bloomberg

Some consumers in New York may be paying a higher co-payment for a prescription drug than the actual price of that medication, which prompted a state agency in New York to issue guidance this week aiming to prevent the practice.

The state Department of Financial Services said that so-called gag clauses, which prevent pharmacists from providing pricing information to insured consumers, have compounded the problem.

Those clauses, according to acting DFS Superintendent Linda Lacewell, violate New York's insurance laws.

“DFS expects insurers to take immediate steps to make sure that consumers are being treated fairly and that they are not being ripped off when they buy prescription medication,” Lacewell said. “Consumers should not be penalized when buying medications with a retail price that is lower than the amount of the co-pay and should only be paying the lower retail price.”

The guidance was issued after the agency was contacted by pharmacists who said co-payments were being charged to consumers, in some cases, that were higher than the retail price of the drug. Some pharmacists have said they weren't able to tell consumers about the discrepancy because of gag clauses in contracts between pharmacy benefit managers and insurers.

Insurers are prohibited under New York's insurance and public health laws from requiring consumers to pay a co-payment that exceeds the price of a drug, according to DFS. The agency has also received reports that pharmacy benefit managers have threatened to take retaliatory actions against pharmacists who tell consumers that their co-pay is higher than the price of the drug.

“Insurers are responsible for complying with New York State laws regardless of whether they contract with third parties, such as pharmacy benefit managers, to administer policy benefits,” Lacewell said. “Consumers have every right to ask about and receive information about prescription drug pricing and to be charged fairly.”

DFS wrote in a letter to insurers this week that if they continued to receive reports of unlawful conduct by insurers, pharmacy benefit managers or any other agents, the agency will take action.

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