On June 19, 2024
State News

Two prescription drug bills aim to lower pharmaceutical prices

Governor Scott signed both into law

By Peter D’Auria/VTDigger

New legislation signed by Gov. Phil Scott May 30 will help patients afford prescription drugs, as rising pharmaceutical prices push up health care costs across the state. 

As legislators scrambled to wrap up the legislative session earlier this month, they passed two bills that aim to reform how prescription drugs are priced and distributed. 

“We’ve known about the impact that skyrocketing prescription drug costs have had for years,” Rep. Mari Cordes, D-Lincoln, the clerk of the House Health Care committee, said in an interview. But “because there’s so much market consolidation and so much vertical and horizontal integration (of health care companies), it’s just been it’s been so hard to get at that and get inside the black box and have any real power to do anything about it.”

Now, lawmakers are seeking ways to open that black box — and slow the growth of drug prices. 

Increasing pharmaceutical prices are driving up costs across Vermont, even for people with no prescriptions. Last week, Blue Cross Blue Shield and MVP asked state officials for permission to hike insurance premiums next year by between roughly 9% to 19%, citing among other factors the cost of prescription drugs. The rise of insurance prices is also driving up education spending, and, in turn, property taxes.  

H.233, targets pharmacy benefit managers — aka PBMs — companies that administer prescription drug benefits for a health insurance company. 

In the convoluted health care industry, PBMs are essentially middlemen. They negotiate prices between drug companies and health insurers and determine which drugs are covered by insurance plans, and to what degree. 

In recent years, PBMs have drawn scrutiny and criticism nationally from lawmakers and officials, who accuse them of driving up drug costs with opaque practices. (PBMs have disputed those claims.)

In Vermont, H.233 comes amid a multi-year push to regulate how the entities can operate in the state. The bill would require PBMs to obtain a license from the Dept. of Financial Regulation in order to operate in Vermont, and strengthen the department’s oversight .

The bill would also ban some PBM practices, such as spread pricing, a tactic in which a PBM charges a health insurer more for a drug than the PBM pays a pharmacy to dispense that drug. Critics say that practice allows PBMs to profit while driving up health care costs and underpaying small independent pharmacies. 

H.233 “will increase transparency, oversight, regulation and enforcement in a system that is hurting our local pharmacies and hurting individual access to professional pharmacy services, as well as driving up drug costs,” Sen. Martine Gulick, D-Chittenden Central, said May 9 on the Senate floor while urging lawmakers to sign the bill. 

Another bill, S.98, also signed by the governor May 30, requires the Green Mountain Care Board to draft a plan for regulating drug costs.

The bill follows efforts in other U.S. states to bring down drug prices by forming panels — called prescription drug affordability boards — that would oversee drug prices. The Green Mountain Care Board is now tasked with submitting a final plan for a drug price regulation program by January 2026. 

Cordes said that neither piece of legislation would lead to immediate, dramatic relief from high drug prices. But they “establish the framework for longer term work,” she said.  “We’ve known about this problem for a long time and have tried various methods to get at it,” she said. “And this is the next step.”

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