Committee debates H.266 language to cap hospital outpatient drug charges at 120% of ASP and preserve white-bagging ban

The House Committee on Health Care on Thursday, May 15, discussed an amendment to H.266 that would limit what hospitals may bill insurers for outpatient prescription drugs administered in outpatient or office settings by capping reimbursement at 120% of the Centers for Medicare & Medicaid Services’ (CMS) average sales price (ASP) for each drug, with critical access hospitals exempted.

The amendment language under consideration would (1) cap charges for drugs that hospitals charged at more than 120% of ASP as of April 1, 2025, to a maximum of 120% of the most recent quarterly CMS ASP going forward; (2) prevent hospitals from increasing the percentage of ASP charged for drugs that were at or below 120% as of April 1; and (3) bar hospitals from balance-billing patients or increasing other hospital charges to offset reductions in drug revenue. The bill would not apply to hospitals designated as critical access hospitals.

The proposal was introduced alongside data from Blue Cross Blue Shield of Vermont. Sarah (Analyst, Blue Cross Blue Shield of Vermont) presented claims-based estimates showing wide variation in hospital markups for several expensive outpatient drugs and an estimated $46 million in annual savings to Blue Cross members if hospitals were capped at 120% of ASP. She cautioned that the data cover Blue Cross claims only, are based on a limited set of rare, high-cost drugs and that small sample sizes in some hospitals can skew averages: "these are rare drugs that are not administered at every hospital in our system regularly," she said.

Sarah presented hospital-level examples for a single drug (Inflectra) from the claims window she analyzed: Southwestern charged roughly 1,600% of ASP for Inflectra in the sample period; University of Vermont Medical Center charged about 2,312% of ASP for that drug in the same window; Central Vermont Medical Center charged about 1,358% of ASP; Mount Ascutney was about 2,481%; Northwestern about 561%; and North Country about 697%. She also said approximately 70% of the $46 million estimated savings would come from the University of Vermont Medical Center, with smaller shares attributed to Rutland Regional and Central Vermont. "So that's if I take that $46,000,000 and divide it by the hospitals ... almost 70% of that $46,000,000 would be from the University of Vermont Medical Center," she said.

Committee members and witnesses discussed the bill alongside a related Senate amendment on "white bagging" and the 340B program (referred to in the hearing as "3 40 b"). White bagging is a practice where a pharmacy or pharmacy benefit manager supplies a dispensed drug directly to a provider for administration rather than the provider obtaining it through the hospital’s usual supply chain; the Senate amendment included temporary changes the House committee had previously restricted. Committee members described three procedural paths: let the bill die, concur with the Senate amendment (including white-bagging language), or amend the bill and send it back to the Senate.

Several committee members favored preserving the House’s white-bagging ban and instead incorporating the ASP cap amendment as a more precise, immediate tool to reduce insurer costs without reintroducing patient-safety risks tied to white bagging. "It's a much more precise way of dealing with the issue," said Mari (committee member) in support of the ASP approach and of keeping the white-bagging ban intact.

Supporters of the ASP cap framed it as a targeted emergency tool to reduce drug-driven outpatient costs and preserve insurer and system solvency. "I feel like it's really irresponsible not to do it, not to really rein in those drug [price] drivers because the system has to find many millions of dollars in order to stay solvent," said Wesley (committee member).

Some members asked for technical clarifications: how the cap would be implemented across payers, effective dates to ensure a reduction in premiums in 2026, and whether hospitals might offset drug-revenue losses by raising other charges (the draft language expressly prohibits such offsets).

The amendment language that staff drafted and posted to the committee record placed the cap in Title 18 (general health care administration), referenced CMS quarterly ASP updates as the price basis, and specified that the provision would remain in effect unless the Green Mountain Care Board established a different reference-based price under the board authority cited as section 93 76 in committee discussion.

The bill as discussed would exempt critical access hospitals from the cap; committee staff said that exemption was intentional to avoid imposing further burdens on small, rural hospitals known to be financially vulnerable.

Committee members said the bill would move quickly if the Senate returns its version to the House calendar. They signaled support for pursuing an amendment that replaces the Senate white-bagging language with the ASP cap language, while noting staff would invite additional witnesses and data to refine implementation details before any final floor action.

No formal committee vote on final language was recorded at this hearing; members agreed the committee should continue outreach to stakeholders and refine effective dates, enforcement mechanisms and premium-translation provisions to ensure the intended insurer and premium savings flow to consumers.