Blue Cross Vermont endorses bill to reduce drug costs by 4% for residents

The Senate Health and Welfare Committee convened on May 29, 2025, to discuss critical issues surrounding drug pricing and healthcare policies in Vermont. The meeting focused on the implications of drug delivery methods, specifically contrasting "white bagging" and "buy and bill" practices, as well as the potential impact of proposed legislation on healthcare costs.

The discussion began with a presentation on the differences between white bagging, where pharmacy benefit managers (PBMs) purchase drugs and deliver them to hospitals, and the buy and bill model, where hospitals purchase drugs at wholesale prices and charge insurers. The speaker emphasized that under the buy and bill model, hospitals retain the profit margin, which is seen as preferable for Vermont's healthcare system, although concerns were raised about the size of these margins.

A significant point of discussion was the safety and complexity of drug delivery methods. The speaker argued that white bagging may not safely deliver most medications to hospitals, although exceptions exist. The committee was informed that if a percent cap on the average sales price (ASP) is implemented, it would not alter how drugs are delivered to hospitals.

The conversation also highlighted the financial implications for patients. Currently, drugs filled by hospitals are processed under medical claims, which have different out-of-pocket caps compared to retail pharmacy claims. This distinction could significantly affect patient costs depending on the delivery method chosen.

The committee reviewed data indicating that the current system allows hospitals to access drugs at a discount through the 340B program, which has led to reduced rebates for health insurers. The speaker noted that this trend has been increasing, impacting overall healthcare costs.

In terms of legislative support, the committee discussed a bill that aims to reduce qualified health plan (QHP) rates by an estimated 4%. The speaker assured that this reduction would be built into the base rates, although future increases in drug prices could offset some of these savings.

The meeting concluded with a cautionary note regarding potential hospital responses to the legislation, as there are concerns that hospitals might seek alternative revenue strategies to compensate for any losses incurred from the proposed changes. The committee remains focused on ensuring that the legislation effectively addresses these challenges while promoting equitable healthcare access for Vermonters.