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Students urge PBM and 340B transparency, propose 20% cap on hospital drug markups
Summary
Middlebury College students told the House Health Care Committee May 14 that Vermont should increase transparency of pharmacy benefit managers and 340B revenues and consider capping hospital-administered drug reimbursements to curb high prescription costs.
Middlebury College students told the Vermont House Health Care Committee May 14 at the State House that pharmacy benefit managers (PBMs) and the 340B drug-pricing program are contributing to high prescription costs and recommended state-level reporting and price limits.
The students said greater transparency and reporting from PBMs and hospitals would show where discounts and markups flow and help regulators spot “spread pricing” that diverts savings away from patients. They recommended requiring PBMs to submit an annual reimbursement report and hospitals to report 340B revenue and usage, then consider a 20% cap on commercial reimbursement for hospital‑administered drugs.
Student presenter Ellie Kennedy said PBMs “act as middlemen between manufacturers and pharmacies” and that their markups are often treated as trade secrets, making oversight difficult. She and her team highlighted state-level examples: Minnesota’s 2023 statute requiring 340B reporting and a Minnesota report that accounted for $630,000,000 in 340B revenue across covered entities. Kennedy said Minnesota’s experience shows both the value and the data‑collection challenges of such laws.
The students reported that Vermont hospitals’ administered drug prices are unusually high in national comparisons: a 2024 RAND chart the group cited places Vermont hospital‑administered prices at over 500% of the average sales price (ASP) benchmark used elsewhere. The group gave a concrete example: they said Blue Cross Blue Shield of Vermont must reimburse Rutland Regional Medical Center more than 1,400% of ASP for the drug Remicade under commercial contracts cited in their research.
To detect and limit abusive pricing, the students proposed: (1) specific 340B reporting language that includes drugs “dispensed and administered to patients,” to avoid the undercounting Minnesota experienced; (2) mandatory, standardized PBM reimbursement reports to the Department of Financial Regulation as a condition of licensure, including median reimbursement rates and any differential treatment of 340B claims; and (3) a 20% cap on hospital‑administered drug markups for commercial insurers, noting Medicare’s 6% benchmark and estimating that a 20% cap would still allow hospitals room to cover handling and administrative costs.
Presenters acknowledged tradeoffs. They said hospitals rely on some 340B revenue to fund services for low-income patients and that the state would need careful data collection and complementary health-care reforms. The students also noted that Blue Cross Blue Shield of Vermont projects most commercial savings from a cap would come from three hospitals: UVM Medical Center, Central Vermont Medical Center and Rutland Regional Medical Center.
Committee members and staff at the hearing asked technical questions about Minnesota’s methodology and how a Vermont reporting law would define reportable drugs and revenue. The students referenced ongoing state bills as models and said H.266 (a Vermont bill discussed elsewhere in the hearing) aims to address some 340B transparency issues.
No formal action was taken at the hearing; the committee will consider student testimony as it reviews pending legislation on 340B reporting and related PBM regulations.
