Vermont Board sets new drug pricing caps effective 2025 and 2026

The Senate Health and Welfare Committee convened on May 29, 2025, to discuss significant changes to prescription drug pricing regulations in Vermont. The meeting focused on the implementation of a new pricing structure that aims to cap hospital charges for outpatient prescription drugs.

The proposed regulations stipulate that, starting April 1, 2025, hospitals will be capped at a 20% average sales price (ASP) for any drug they charge at that rate or lower. This cap will remain in effect unless the Green Mountain Care Board determines that it negatively impacts healthcare quality or rural healthcare sustainability, in which case hospitals may propose adjustments to commercial rates for other services.

The committee also discussed the frequency of updates to average sales prices, which will be revised biannually, aligning with quarterly updates from the Centers for Medicare and Medicaid Services. Notably, independent critical access hospitals not affiliated with larger networks will be exempt from these pricing caps.

Further discussions revealed that from July to December 2025, a different cap of 30% ASP will apply to drugs charged above 20%. This adjustment is due to contractual provisions that require insurers to reimburse 90% of charges. The committee clarified that these pricing structures are not permanent; they will be subject to change based on future decisions by the Green Mountain Care Board.

Questions from committee members addressed the compatibility of new regulations with existing practices, particularly regarding "white bagging," a method of drug distribution that has been replaced. The committee confirmed that while the new regulations do not directly conflict with previous practices, they may not be practical to implement simultaneously.

Overall, the meeting underscored the Vermont government's commitment to regulating prescription drug costs while ensuring that healthcare providers can maintain quality and sustainability in their services. The next steps involve monitoring the impact of these changes and potential adjustments by the Green Mountain Care Board as needed.