Vermont recently became the first state to require drug manufacturers to provide justification for price increases. Under the new law, data on the cost of the drug will come from the state Medicaid program. The Department of Vermont Health Access (DVHA) and the Green Mountain Care Board (GMCB) will work together to create a yearly list of 15 drugs whose prices have increased by 50 percent or more over the past five years or by 15 percent or more over the past 12 months for the state’s Medicaid program. The DVHA is responsible for the management of Vermont’s publicly-funded health insurance programs, while the GMCB is an independent group created by the Vermont Legislature tasked with ensuring that changes in the health system improve quality while stabilizing costs.

For each prescription drug on the GMCB and DVHA list, the manufacturer will be required to submit all relevant information and supporting documentation necessary to justify the manufacturer’s wholesale acquisition cost increase in a format the state’s attorney general determines to be understandable and appropriate. Such relevant information may include:

  • All factors that have contributed to the wholesale acquisition cost increase;
  • The percentage of the total wholesale acquisition cost increase attributable to each factor; and
  • An explanation of the role of each factor in contributing to the wholesale acquisition cost increase.

The state attorney general may bring an action against non-compliant manufacturers, and may impose a civil penalty of no more than $10,000 per violation.

In addition to the reporting obligations mentioned above, the new law also requires that the DVHA use the same dispensing fee in its reimbursement formula for 340B prescription drugs as it uses to pay for non-340B prescription drugs under the Medicaid program. Additionally, the DVHA is authorized to modify the dispensing fee or reimbursement formula provided to federally qualified health centers and Title X family planning clinics for dispensing 340B prescription drugs to Medicaid beneficiaries.