Committee narrows H.266 340B bill to manufacturer rules, adds hospital reporting requirement

A legislative committee on Feb. 28 discussed proposed changes to H.266, a bill to create a Title 18 subchapter addressing the 340B drug-pricing program and related conduct by manufacturers, payers and contract pharmacies. Committee members agreed to remove provisions expanding reimbursement restrictions to health insurers and pharmacy benefit managers (PBMs) and to add a hospital reporting requirement from H.202 that would require hospitals participating in 340B to submit annual data to the Green Mountain Care Board.

The discussion centered on two main parts of the draft: new civil- and contract-related prohibitions aimed at manufacturers and a separate set of provisions that would have prohibited insurers, PBMs and other payers from imposing differing reimbursement, fees or administrative burdens on 340B covered entities or contract pharmacies. Jen Carvey of the Office of Legislative Council summarized the draft on the record, saying, “I can put the bill up on the screen, and we can kind of put through it and remind you what's in it and see what you might want to modify.”

Why it matters: The 340B program allows covered entities to obtain prescription drugs at discounted prices; the committee said its work aims to protect patient access to drugs dispensed by 340B entities while avoiding legal conflicts with federal law. Committee members repeatedly flagged the difference between manufacturer conduct (which the draft seeks to restrict) and actions by payers such as insurers and PBMs. Members expressed concern that the broader payer section would expand beyond the committee’s intended focus and create implementation and legal questions.

Key provisions reviewed

- Manufacturer and contract pharmacy protections: The draft would prohibit a manufacturer or its agent from denying, restricting or otherwise interfering with a covered entity’s or contract pharmacy’s acquisition or delivery of 340B drugs, from requiring proprietary claims or purchase data as a condition of supply, and from interfering with dispensing by contract pharmacies. The bill would also require manufacturers to make 340B pricing available to covered entities or contract pharmacies as a discount at time of purchase rather than a later rebate.

- Payer and PBM restrictions (removed by committee direction): The introduced draft included a new section (18 V.S.A. 46 83 in the bill text) that would have barred health insurers, PBMs and third-party payers from reimbursing 340B-covered entities or contract pharmacies at lower rates than non-340B pharmacies, imposing fees, clawbacks or different auditing requirements, requiring billing modifiers to indicate a drug is 340B except where CMS or the Agency of Human Services require it, or excluding 340B participants from networks on that basis. The draft also created a private right of action and contemplated daily or per-package violations for enforcement.

- Medicaid carve-out and enforcement: The draft text explicitly stated that “Medicaid is unaffected,” that is, the subchapter would not apply to Medicaid as a payer. The enforcement provision in the draft would allow injured covered entities, contract pharmacies or others to sue in superior court for injunctive relief, compensatory and punitive damages, costs and reasonable attorney’s fees. The draft described a prohibited act for manufacturers on a per-package basis and for payers on a per-day basis.

Committee decisions and next steps

Committee members agreed to delete from H.266 the new section that would extend reimbursement and anti-discrimination restrictions to health insurers and PBMs, keeping the focus on manufacturer conduct and the contract-pharmacy protections in the bill. The committee also directed staff to incorporate Section 3 of H.202 into H.266; that section would require hospitals participating in 340B to submit an annual report to the Green Mountain Care Board containing a specified set of data about 340B participation and use of savings.

Representative Alan Robert DeMar (committee member) supported adding the reporting requirement, saying Section 3 “seems to have some really worthy information that we might want, that the Green Mountain Care Board might want.” The committee asked staff to bring hospital representatives back after the committee’s recess to clarify what hospitals already report and how much additional burden the new reporting requirement would impose.

What the hospital reporting requirement would require (as discussed)

The reporting language from H.202 under consideration would ask hospitals to provide aggregated, year‑to‑date information including acquisition costs for prescription drugs obtained through 340B, aggregate amounts received for drugs dispensed to patients, aggregate payments the hospital made to contract pharmacies, fees paid to outside vendors that administer 340B programs, other administration expenses (staffing, operations), names of vendors (including split-billing vendors), the total number of claims and claims by payer type (Medicare, private insurance, uninsured), a description of how hospitals use savings from 340B to support community services, and a description of internal oversight to ensure compliance with HRSA rules.

Process and timeline

Committee counsel (Carvey) will prepare markups reflecting the agreed deletions and the insertion of the hospital-reporting language; members agreed to reconvene after the committee’s scheduled recess and to invite hospital witnesses to testify about current reporting practices and anticipated burden. The committee did not take a formal roll-call vote on amendments during the session; members reported general agreement on the direction and asked staff to return with revised text.

Ending: The committee concluded the session by asking counsel to prepare the redline and to return at the next meeting after the break for further testimony and markup.