Senate Health and Welfare delays vote on S.266 after debate over 340B reporting and 'white bagging'

The Senate Health and Welfare Committee postponed action on S.266, a bill that would expand hospital reporting on participation in the federal 340B drug pricing program and repeal a prohibition on insurers or pharmacy benefit managers requiring pharmacies to dispense medications directly to health care settings, a practice known as "white bagging." The committee agreed to revisit the bill at its next meeting on Tuesday.

Jen Harvey, legislative counsel for the Office of Legislative Counsel, presented two instances of amendment to S.266. She said the first amendment (subsection a) would require hospitals to submit to the Green Mountain Care Board, in a form and manner prescribed by the board, a report detailing a hospital's participation in the 340B program during the previous fiscal year. Harvey described the required data as aggregated acquisition cost and aggregated payment amount for 340B drugs dispensed or administered during the previous calendar year, reported separately for four distribution channels: 1) drugs dispensed from an in-house pharmacy; 2) drugs dispensed from a contract pharmacy; 3) drugs administered with separate payment; and 4) drugs administered with payment bundled with other services. For drugs with bundled payment, Harvey said hospitals would estimate payment amounts by comparing actual acquisition cost to the wholesale acquisition cost for the drug.

Harvey said another amendment would require hospitals to provide the Green Mountain Care Board with a list of the names of all vendors that managed, administered, or facilitated any aspect of the hospital's 340B program during the previous calendar year, together with brief descriptions of each vendor's work. That vendor information would be exempt from public inspection and copying under the Public Records Act but would be provided to the Office of the Health Care Advocate and "shall not further disclose this confidential information," Harvey said.

A separate amendment (labeled section 4 in the presentation) would repeal language added a few years ago in Title 8 that prohibited a health insurer or pharmacy benefit manager from including in contract, written policy, or written procedure a requirement that a pharmacy designated by the insurer or PBM dispense medication directly to a health care setting for a clinician to administer (white bagging). Harvey and others clarified that the bill would not change the existing prohibition on "brown bagging," in which a patient brings medication to a provider for administration.

Mike Fisher, health care advocate, cautioned that discussions about "savings" can be confusing. "If the hospitals are providing the medications and the white bag ... the commercial payer still pays the commercial price," Fisher said, arguing that while hospitals may see revenue shifts, the commercial insurance system ultimately funds the purchase through premiums and cost-sharing.

Committee members and witnesses debated the potential for cost savings and how any reductions would be realized or passed on to consumers. One committee member noted that allowing insurers an alternative source for drugs could create negotiating leverage over hospital prices; another noted hospitals had requested the prior prohibition because of concerns about medication quality, temperature control, and convenience when patients or outside vendors supplied drugs.

Committee discussion included whether the white-bagging change would affect telemedicine (commenters said it would not) and whether removing the prohibition would guarantee lower prices (witnesses said the bill's language alone does not ensure guaranteed price reductions). A figure of "$50,000,000" was mentioned during the discussion but not tied definitively to a specific calculation in the record.

The committee took no vote. The chair proposed returning to the bill at the committee's next meeting on Tuesday and considering the white-bagging language for a possible vote then.

The committee's deliberations left several implementation and oversight details unresolved, including (1) how the Green Mountain Care Board will prescribe the report form and manner; (2) how hospitals should estimate bundled-payment amounts; (3) how confidential vendor data provided to the Office of the Health Care Advocate will be used without further disclosure; and (4) whether any insurer cost savings would be reflected in rate reviews or passed to consumers.