Hi, Cardinal readers. Welcome to the first edition of The Pulse, a weekly roundup of health-focused news. Each week, we’ll bring you updates on health policy, community surveys, new clinical studies, programs and services in Southwest and Southside Virginia.
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Bills aimed at lowering prescription drug costs and creating more pricing transparency are advancing through the General Assembly this session.
Lawmakers have debated these issues for several years. Some proposals stem from state-commissioned studies, while others build on past legislation or return for a second or third attempt after stalling in prior sessions.
Transparency for pharmacy benefit managers
Last year, lawmakers passed a package of bills to create a single pharmacy benefit manager, or PBM, for Virginia’s Medicaid managed care organizations. A single PBM would reduce duplicative administrative costs and allow transparency in drug costs and dispensing fees. A 2019 General Assembly-directed study showed that the state would save about $32 million with a direct PBM.
The Department of Medical Assistance Services contracts with managed care organizations to manage the benefits for the state’s Medicaid enrollees. Those organizations then contract with PBMs, which are essentially the middleman between manufacturers, health plans and the pharmacists. PBMs negotiate prices and retain rebates and discounts, a practice that has drawn scrutiny for its lack of transparency.
The single PBM system is scheduled to take effect July 1.
This year, Del. Keith Hodges, R- Middlesex County, introduced HB 1109, requiring greater transparency from the PBM that will serve all Medicaid managed care organizations.
The bill would require standardized methods for collecting and reporting data to DMAS and the Centers for Medicare and Medicaid Services. Required data would include detailed breakdowns of expenditures, rebates and the sources of all cost components.
During an interview, Hodges pointed to a 2025 study on drug pricing in Virginia conducted by Strategic Directions Rx, a firm led by Jeremy Counts, a Blacksburg-based pharmacist. The study found that Virginia’s Medicaid spending on prescription drugs exceeded the national average between 2017 and 2023.
According to the study, Virginia Medicaid plans overspent by $10.8 billion on medication during that period, largely due to overpayment for generic medications.
Hodges estimates that increased transparency could save $1 billion in Medicaid spending in the first year and $1.8 billion in the second year.
“We need to have a transparent system to see what those drug costs are,” Hodges said.
The bill is still in committee, assigned to the House subcommittee on Social Services for review.
Sen. Mark Peake, R-Lynchburg, also introduced legislation aimed at regulating PBM payment rules for Medicaid plans. His bill, SB 410, would prohibit PBMs from reimbursing pharmacies below the national average drug acquisition cost plus a dispensing fee. It would also bar PBMs from imposing retroactive or point-of-sale fees; tying pharmacy reimbursement to patient outcomes, scores or performance metrics; or deriving revenue directly from pharmacies or patients.
In addition, the bill would require PBMs to calculate patients’ out-of-pocket costs based on the net price of a prescription drug and increase PBM reporting requirements. PBMs would be required to submit quarterly reports to the governor and the General Assembly detailing drug costs, rebates and other pricing components.
SB 410 is currently in Commerce and Labor, where it will need a committee report before it can move to the Senate floor for a vote.
Prescription Drug Affordability Board
Sen. Creigh Deeds, D-Charlottesville, has introduced legislation to establish a Prescription Drug Affordability Board, or PDAB, in Virginia.
This marks the fourth attempt to create such a board. Gov. Glenn Youngkin vetoed similar legislation in 2024 and 2025.
PDABs are state-run entities that review the pricing of high-cost prescription drugs and, in some cases, set upper payment limits. Under Deeds’ proposal, SB 271, the board would meet at least four times a year to review selected drugs sold in Virginia and submit annual reports to the General Assembly beginning Dec. 31.
The bill applies to health plans and programs run or regulated by the state. It would require those plans to cap what they pay for certain prescription drugs at a maximum price set by the board after it reviews whether the drugs are affordable. Medicare Part D plans would not have to follow those price limits, according to the bill.
At least nine states have established PDABs, although Colorado remains the only state to successfully implement an upper payment limit. Four years after creating the board, Colorado capped the price of Enbrel, a medication for arthritis and other autoimmune diseases. Pharmaceutical company Amgen sued the state, arguing that the cap would cause financial harm, according to reporting by the Colorado Sun.
Maryland became the first state to enact PDAB legislation in 2019. In November, Maryland’s board moved toward approving upper payment limits for two drugs used to treat Type 2 diabetes, though the caps still require final approval.
Critics, including Virginia Bio, a nonprofit trade association representing the life sciences industry in Virginia, argue that PDABs have failed to produce meaningful results. Dr. Harry Gewanter, a pediatric rheumatologist in Richmond and former president of the Medical Society of Virginia, testified against the proposal, saying lawmakers should instead focus on regulating pharmacy benefit managers.
Virginia AARP has consistently supported PDAB legislation. In June, the organization reiterated its support and said it would continue backing legislation in 2026.
“This would save all Virginians money in the form of lower premiums as well as lower out-of-pocket costs at the pharmacy counter,” according to the Virginia AARP website.
The estimated cost for VDH to implement the provisions of this legislation is estimated to be up to $1.1 million in 2027.
The bill passed the Senate in a 31-8 vote on Friday.
Community pharmacies
Another pharmacy-related bill that would have created a grant program to support independent pharmacies in underserved areas died in a 7-0 vote Friday in the Health and Human Resources subcommittee. However, a budget amendment for the program is still in play.
Del. Bontia Anthony, D-Norfolk, sponsored HB 335 and the budget amendment to create the Independent Pharmacy Access and Resilience Pilot Program. The program would provide grants to 12 pharmacies operating in pharmacy deserts located in medically underserved areas with high Medicaid patient volumes, with priority given to independent pharmacies.
Virginia mirrors national trends in pharmacy closures. Large chains, including Walgreens and Rite Aid, have shuttered locations across the state, while independent, community-based pharmacies are also disappearing.
The Joint Commission on Health Care has studied pharmacy closures in Virginia and their impact on local communities. Its findings show that 51 communities across 28 localities meet the definition of a pharmacy desert, places where residents must travel more than 1 mile to access a pharmacy in urban areas, 5 miles in suburban areas and 10 miles in rural areas. More than 20% of residents in these communities live below the federal poverty level.
In rural areas, smaller populations and high Medicaid enrollment mean low sales volumes paired with low reimbursement rates, creating significant financial strain. Independent pharmacies typically operate a single storefront and cannot offset losses with revenue from other locations. These factors also discourage new pharmacies from opening in rural communities, according to the commission.
The commission offered several legislative recommendations to help address these challenges, particularly in rural areas.
Under Anthony’s bill, leadership with the pilot program would consult with state agencies, schools of pharmacy and community health partners to assess closure risks and develop strategies to prevent pharmacies from shutting down.
Grant funding could be used to expand pharmacy services, improve workflow, provide revenue cycle support or help pharmacies access alternative funding streams. The bill also would allow funding to support partnerships with health systems, community clinics, local health departments or academic institutions.
The pilot program would expire in July 2030.
The program would need $65,000 allocated from the general fund for startup costs, followed by $300,000 annually beginning in 2028.