The bill amends current law to establish limitations on hospital charges for outpatient prescription drugs, specifically addressing reimbursement claims submitted to health insurers. Under the new provisions, hospitals are prohibited from charging more than 120 percent of the average sales price (ASP) for prescription drugs administered in outpatient settings, effective January 1, 2026.
Background:
The 340B Drug Pricing Program is a U.S. federal program established under Section 340B of the Public Health Service Act (1992) that allows certain healthcare providers, known as "covered entities," to purchase outpatient prescription drugs at significantly reduced prices from manufacturers. Administered by the Health Resources and Services Administration (HRSA), the program aims to help safety-net providers stretch limited resources to serve low-income and uninsured patients.
How It Works:
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- Manufacturers sell 340B drugs to covered entities at or below a ceiling price set by HRSA, based on the average manufacturer price minus a discount.
- Covered entities use these drugs for eligible patients (those receiving care from the entity) in outpatient settings.
- Revenue from dispensing 340B drugs (often at market rates to insured patients) can be reinvested into patient care services.
The Details:
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Prohibition on Discrimination
Prohibits manufacturers from denying, restricting, or interfering with the acquisition or delivery of 340B drugs to contract pharmacies unless restricted by federal law. Manufacturers cannot require data submission as a condition for 340B drug access unless federally mandated. -
Discount Requirement
Mandates that 340B drug pricing be offered as a discount at purchase, not as a rebate. -
Medicaid Exemption
Clarifies that the subchapter does not apply to Vermont's Medicaid program. -
Violations and Enforcement
Allows 340B entities or injured parties to seek injunctive relief, damages, and legal fees in Superior Court for violations, with each discriminatory act per drug package considered a separate violation. -
Hospital Reporting
Requires hospitals participating in the 340B program to submit annual reports to the Green Mountain Care Board by January 31, detailing acquisition costs, payment amounts, vendor contracts, community benefits, and compliance oversight. Vendor details are confidential but shared with the Health Care Advocate. This section is repealed on January 1, 2031. -
Hospital Charge Limitations
Caps hospital charges for outpatient prescription drugs at 120% of the Average Sales Price (ASP) as of April 1, 2025, with biannual ASP updates. Hospitals cannot offset reduced revenue by increasing other charges unless approved by the Green Mountain Care Board to protect care access. This does not apply to independent critical access hospitals and remains in effect until a new reference-based price is set (see S.126). -
Effective Dates (Sec. 6): The hospital charge cap takes effect on January 1, 2026; other provisions are effective upon passage, with the first hospital report due by January 31, 2026.
The Good:
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The Bad:
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Analysis:
The bill has the potential to reduce consumer healthcare costs, particularly for outpatient prescription drugs and patients served by 340B entities, due to the price cap and enhanced access to discounted drugs. However, the extent of the reduction is uncertain and may be limited by the lack of a direct patient discount requirement, potential revenue offset strategies (by providers), and exclusions. Real-world impact will depend on how hospitals, pharmacies, and insurers implement and respond to the new regulations.
Current Status:
The bill was signed by the Governor on June 11, 2025 and went into law.
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Last updated: 6/23/2025
DISCLAIMER: Generative AI used to assist in the production of this report.