Senate panel reviews H.266 changes to cap hospital charges for outpatient drugs; hospitals warn of access risks

The Senate Health and Welfare Committee on May 29 considered House amendments to H.266, a bill that would limit hospital charges for prescription drugs administered in outpatient and office settings by tying allowable charges to a percentage of the Centers for Medicare & Medicaid Services average sales price (ASP).

Jen Carvey of the Office of Legislative Council told the committee that H.266 “is an act relating to the 3 40 b prescription drug pricing program” and summarized the House’s proposed changes, including a new section that would cap hospital outpatient drug claims at either 20% of ASP (as of a specified test date) or the percentage the hospital was charging on 04/01/2025, with annual ASP updates on Jan. 1 and July 1. Carvey also described separate, time-limited language that would apply a 30% cap for part of 2025 before the 20% standard took full effect.

Why it matters: Sponsors and supporters say the cap will lower premiums and blunt outlier hospital markups on drugs that can drive up costs for insurers, employers and patients. Opponents—hospital leaders and clinicians—warn that the change could make some infusion services financially unsustainable, reduce local access to complex therapies and push patients to higher‑cost or more distant providers.

Insurer and regulator testimony

Sarah Teachab, director of media relations for Blue Cross Blue Shield of Vermont, told the committee the insurer strongly supports the amended bill and said its analysis projects a roughly 4% reduction in Qualified Health Plan (QHP) premiums and about a 3% reduction for school employee coverage if the bill passes as described: “We strongly support this bill. I did send a memo that we believe this would reduce QHP rates by 4%.” Teachab also described how average sales price (ASP) data are published quarterly by CMS and are already used as benchmarks for Medicare Part B and Medicaid.

Owen Foster, chair of the Green Mountain Care Board, urged action and said delay has worsened the financing problem: “Delay. Period. We have not reckoned with the realities of our health care system for a very long time.” Foster described the bill’s provision allowing the Care Board to consider targeted rate increases if a hospital demonstrates that the cap harms access, quality or rural sustainability, and he framed the measure as a way to reallocate funds toward underfunded services.

Hospital and provider testimony

A hospital executive who identified herself in testimony as Lucinda and who said she leads Northwestern Medical Center cautioned that the bill “as it is written today, is a flawed and unsustainable policy that will negatively impact the health and the safety of the mothers.” She provided examples from her hospital’s infusion center comparing CMS ASPs with the hospital’s acquisition costs for several high‑volume drugs (as presented to the committee): for one biosimilar the ASP was $92.50 per unit while the hospital’s purchase basis was about $450; for Remicade the ASP cited was $305.23 while the hospital’s price basis was $875 per 100 mg vial; other examples included ASPs and the hospital’s higher internal costs for Rituxan, G‑CSF and a biosimilar to Rituxan. Lucinda said her infusion unit “barely makes it to break even status” and warned, “Were this law to go into effect as written, we would have no other option but to close our infusion center.” She also said Northwestern’s cash on hand has declined by about one‑third in five years and that an additional 20–30% drop tied to the bill would be untenable.

Steve Leffert of UVM Medical Center testified that he shared concern about targeting infusion therapies without time to plan: “I’m very concerned about targeting any 1 type of therapy to have a sudden huge price change because we don’t understand the impact that will have on access to care for Vermonters.” Leffert said some hospitals could not absorb displaced volume if smaller centers cut services and that the system needs time to assess capacity outside Vermont. He told the committee he worried the bill would reduce roughly $61 million in revenue at his health system (as described in his testimony) and that hospitals are already working on risk‑sharing options but need more time and tools to implement them.

Consumer and public interest testimony

Mike Fisher, a Vermont health care advocate, pressed for immediate legislative action, saying the financing problem is already harming employers, taxpayers and residents: “We’ve already broken something, and that something is our entire Vermont economy.” Fisher said an enforceable, measurable change that lowers premiums is preferable to longer, uncertain transformations.

Discussion points and next steps

Committee members and witnesses debated timing and implementation. The House amendment sets phased effective dates: portions of the cap would apply to claims between July 1 and Dec. 31, 2025 (a 30% cap for that interval for certain charges) and a broader 20% cap becoming effective Jan. 1, 2026, with earlier sections of the bill taking effect on passage and hospital 340B reporting due on or before Jan. 31, 2026 (testimony summarized as presented by counsel). Witnesses requested more lead time (some suggested implementing changes on Jan. 1 rather than July 1) and asked the committee to preserve the Care Board’s authority to consider budget impacts and to allow hospitals to request rate adjustments where access or quality would be harmed.

No formal votes or committee actions were recorded during the hearing. Committee members said they would continue to take testimony and review written submissions before moving forward.

Ending note

Committee counsel and the Care Board flagged technical details and cross‑program impacts—such as whether federal programs or research contracts that reimburse at different rates would be affected—and several witnesses urged careful accounting of how a change to hospital charges would interact with Medicare, Medicaid and 340B program mechanics. The committee recessed to continue deliberations and scheduled follow‑up work and additional testimony.