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2018 New Law Update on Gag Clauses and Clawback
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The passage of the New York State Budget resulted in the addition of several laws affecting pharmacy practice as it pertains to PBM contracts.  This was the result of a concentrated effort by PSSNY and our members.

A change to the NY Public Health Law means that gag clauses and clawbacks are now prohibited.  Here are the highlights, followed by some illustrations for those items marked with an asterisk (*).


  • Pharmacists can now discuss price options with patients
  • Less expensive therapeutic equivalents can be discussed
  • Alternatives to copays can be offered (including discount cards)

U&C = Usual and Customary

  • U&C is transmitted on every claim processed.
  • Copay adjudicated CANNOT be higher than U&C.  This eliminates clawbacks*.
  • U&C transmitted is the MAXIMUM that the patient will pay at the register.
  • It is IMPERATIVE that your software reflects the true U&C on every single prescription**.
  •  U&C cannot be arbitrary.
  • Keep all pricing current!
  • Price returned by PBM is the price you charge at the register.
  • DO NOT change the U&C after claim submission without reversing and resubmitting but….
  • NOTE: PBMs will be scrutinizing every transaction, so avoid reversals by verifying your price is accurate before transmitting!


  • Major savings can be realized by changing to 90 day supply on inexpensive generics (see illustration below),
  • We can now explain how 90 day cash price might be less than 30 day copay X 3***.
  • BEWARE!! You MUST get a new prescription to change the quantity dispensed on an Rx.  Section 6816 of article 137 of NY State Education Law prohibits filling the prescription for “a greater or lesser quantity of any ingredient specified in any such prescription.”


  • Prescriptions not processed through the PBM will NOT apply to patient deductible or Out-of-Pocket (OOP).
  • Some contracts require ALL prescriptions be adjudicated, even when PBM pays zero.
  • Get a signed statement of understanding that prescription is not being processed through PBM at patient’s request and will not count towards deductible and OOP.
  • PBMs will be excruciatingly vigilant about price monitoring.
  • Reversals raise flags and cost your store a fee.  Transmit accurate pricing the first time!


  •  *Clawbacks occurred before the law change.  A clawback occurs when the patient’s copay is more than the contracted reimbursement amount to the pharmacy. The difference goes to the PBM.
  • For example, the patient pays a generic copay of $10. The contracted reimbursement amount is $8.99.  The health plan paid $0 to the pharmacy. PBM clawed back $1.01
  • **NOW Generic Copay is $10. Claim adjudicates at U&C $8.99. Plan pays $0. Patient pays $8.99
  • *** Same drug – Insurance limit is 30 days.  Patient pays $8.99 U&C for 30 days. U&C for 90 day might be $12. Thanks to the elimination of gag clauses, we can discuss a 90 day cash option with the patient. This change would require a new prescription from the prescriber. 

PSSNY, 210 Washington Avenue Extension, Albany, NY 12203 * 800-632-8822 *