AN ACT RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND HEALTH CARE REFORM ACT OF 2004 -- HEALTH INSURANCE OVERSIGHT (Regulates price increases for prescription drugs.)

H7950

2026 -- H 7950
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LC005741
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND HEALTH
CARE REFORM ACT OF 2004 -- HEALTH INSURANCE OVERSIGHT

Introduced By:
Representatives Potter, Kislak, Ajello, Donovan, Giraldo, Morales,
Cotter, McEntee, Read, and McGaw

Date Introduced:
February 27, 2026

Referred To:
House Health & Human Services
It is enacted by the General Assembly as follows:
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SECTION 1. Section 42-14.5-2.1 of the General Laws in Chapter 42-14.5 entitled "The
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Rhode Island Health Care Reform Act of 2004 — Health Insurance Oversight" is hereby amended
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to read as follows:
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42-14.5-2.1. Definitions.
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As used in this chapter:
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(1) “Accountability standards” means measures including service processes, client and
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population outcomes, practice standard compliance, and fiscal integrity of social and human service
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providers on the individual contractual level and service type for all state contracts of the state or
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any subdivision or agency to include, but not limited to, the department of children, youth and
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families (DCYF), the department of behavioral healthcare, developmental disabilities and hospitals
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(BHDDH), the department of human services (DHS), the department of health (DOH), and
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Medicaid. This may include mandatory reporting, consolidated, standardized reporting, audits
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regardless of organizational tax status, and accountability dashboards of aforementioned state
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departments or subdivisions that are regularly shared with the public.
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(2) "Consumer Price Index" means the Consumer Price Index, Annual Average, for all
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Urban Consumers, CPI-U: US City Average, All Items, reported by the United States Department
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of Labor, Bureau of Labor Statistics, or its successor or, if the index is discontinued, an equivalent
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index reported by a federal authority or, if no such index is reported, "Consumer Price Index" means

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a comparable index chosen by the Bureau of Labor Statistics.
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(2)
(3)
“Executive Office of Health and Human Services (EOHHS)” means the department
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that serves as “principal agency of the executive branch of state government” (§ 42-7.2-2)
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responsible for managing the departments and offices of: health (RIDOH), human services (DHS),
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healthy aging (OHA), veterans services (VETS), children, youth and families (DCYF), and
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behavioral healthcare, developmental disabilities and hospitals (BHDDH). EOHHS is also
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designated as the single state agency with authority to administer the Medicaid program in Rhode
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Island.
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(4) "Identified drug" means any prescription drug that has at any time been identified as
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having an unsupported price increase.
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(5) "Prescription drug" has the same meaning as prescription as defined in § 23-25.3-3.
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(3)
(6)
“Primary care services” means, for the purposes of reporting required under § 42-
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14.5-3(t), professional services rendered by primary care providers at a primary care site of care,
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including care management services performed in the context of team-based primary care.
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(4)
(7)
“Rate review” means the process of reviewing and reporting of specific trending
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factors that influence the cost of service that informs rate setting.
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(5)
(8)
“Rate setting” means the process of establishing rates for social and human service
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programs that are based on a thorough rate review process.
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(6)
(9)
“Social and human service program” means a social, mental health, developmental
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disability, child welfare, juvenile justice, prevention services, habilitative, rehabilitative, substance
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use disorder treatment, residential care, adult or adolescent day services, vocational, employment
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and training, or aging service program or accommodations purchased by the state.
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(7)
(10)
“Social and human service provider” means a provider of social and human service
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programs pursuant to a contract with the state or any subdivision or agency to include, but not be
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limited to, the department of children, youth and families (DCYF), the department of behavioral
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healthcare, developmental disabilities and hospitals (BHDDH), the department of human services
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(DHS), the department of health (DOH), and Medicaid.
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(8)
(11)
“State government and the provider network” refers to the contractual relationship
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between a state agency or subdivision of a state agency and private companies the state contracts
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with to provide the network of mandated and discretionary social and human services.
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(12) "Unsupported price increase" means an increase in price for a prescription drug for
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which there was no, or inadequate, new clinical evidence to support the price increase. In order to
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determine whether a price increase for a prescription drug is unsupported by new clinical evidence,
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the state shall utilize and rely upon the analyses of prescription drugs prepared annually by the

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Institute for Clinical and Economic Review (ICER) and published in its annual unsupported price
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increase report.
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(13) "Wholesale acquisition cost" has the meaning set forth in 42 U.S.C. § 1395w-
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3a(c)(6)(B).
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SECTION 2. Chapter 42-14.5 of the General Laws entitled "The Rhode Island Health Care
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Reform Act of 2004 — Health Insurance Oversight" is hereby amended by adding thereto the
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following section:
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42-14.5-6. Penalty imposed and collection power.

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(a) A penalty shall be assessed on the sales within the state of identified drugs and payable
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by the manufacturers of the identified drugs. The penalty shall be calculated as described in
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subsection (a)(1) of this section.
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(1) The penalty in any calendar year shall equal eighty percent (80%) of the difference
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between the revenue generated by sales within the state of the identified drugs and the revenue that
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would have been generated if the manufacturer had maintained the wholesale acquisition cost from
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the previous calendar year, adjusted for inflation utilizing the Consumer Price Index.
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(2) In order to be subject to the penalty a manufacturer shall have at least two hundred fifty
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thousand dollars ($250,000) in total annual sales within the state in the calendar year for which the
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penalty is assessed.
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(3) Within sixty (60) days of the annual publication by ICER of the unsupported price
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increase report, the commissioner shall identify the manufacturers of identified drugs. The
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commissioner shall notify each manufacturer that sales within the state of identified drugs shall be
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subject to the penalty assessed in this section for a period of two (2) calendar years following the
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identified drug’s appearance in the annual publication by ICER.
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(4) Such penalty shall be collected annually. Any manufacturer notified by the
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commissioner pursuant to subsection (a)(3) of this section, shall submit to the commissioner a
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return on a form prescribed and furnished by the commissioner and pay the penalty by April 15 for
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the previous calendar year.
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(5) The form described in subsection (a)(4) of this section shall contain information
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including, but not limited to:
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(i) The total amount of sales of the identified drug within the state;
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(ii) The total number of units sold of the identified drug within the state;
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(iii) The wholesale acquisition cost of the identified drug during the tax period and any
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changes in the wholesale acquisition cost during the calendar year;
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(iv) The wholesale acquisition cost during the previous calendar year;

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(v) A calculation of the penalty owed; and
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(vi) Any other information that the commissioner determines is necessary to calculate the
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correct amount of the penalty owed.
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(6) The commissioner may request any agency to assist in calculation of the penalty and
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collection, including the tax administrator, who may collect the contribution with interest in the
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same manner and with the same powers as are prescribed for collection of taxes in title 44.
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(b) Use of revenue.
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(1) The payments required by this section may be made by electronic transfer of monies to
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the general treasurer.
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(2) The general treasurer shall take all steps necessary to facilitate the transfer of monies
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to a restricted receipt account and made available to the office of the health insurance commissioner
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to offset costs to assess and collect the penalty, audit manufacturers that are required to submit
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returns pursuant to this section, and defend appeals from manufacturers. The balance shall be
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deposited in the general fund.
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(c) Prohibition on withdrawal of prescription drugs for sale.
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(1) It shall be a prohibition of this chapter for any manufacturer or distributor of an
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identified drug to withdraw that drug from sale or distribution within this state for the purpose of
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avoiding the penalty set forth in this section.
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(2) Any manufacturer who intends to withdraw an identified drug from sale or distribution
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from within the state in order to avoid a penalty as described in this section shall provide a notice
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of withdrawal in writing to the board of pharmacy and to the attorney general at a minimum of one
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hundred eighty (180) days prior to such withdrawal.
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(3) The attorney general shall assess a penalty of five hundred thousand dollars ($500,000)
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on any entity, including any manufacturer or distributor of an identified drug, that it determines has
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withdrawn an identified drug from distribution or sale in the state in violation of this section.
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(d) Hearing by commission on application and appeals.
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(1) Any manufacturer aggrieved by the action of the commissioner in determining the
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amount of any penalty imposed under the provisions of this section may apply to the commissioner,
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within thirty (30) days after the notice of the action is mailed to it, for a hearing relative to the
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penalty. The commissioner shall fix a time and place for the hearing and shall so notify the
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manufacturer. Upon the hearing the commissioner shall correct manifest errors, if any, disclosed at
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the hearing and thereupon assess and collect the amount lawfully due together with any penalty or
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interest thereon.
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(2) Appeals from administrative orders or decisions made pursuant to any provisions of

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this section shall be pursued pursuant to chapter 35 of title 42 ("administrative procedures"). The
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right to appeal under this section shall be expressly made conditional upon prepayment of all
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contributions, interest, and penalties unless the manufacturer demonstrates to the satisfaction of the
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court that the manufacturer has a reasonable probability of success on the merits and is unable to
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prepay all contributions, interest, and penalties, considering not only the manufacturer’s own
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financial resources, but also the ability of the manufacturer to borrow the required funds. If the
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court, after appeal, holds that the manufacturer is entitled to a refund, the manufacturer shall also
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be paid interest on the amount at the rate provided in § 44-1-7.1, as amended.
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SECTION 3. This act shall take effect upon passage.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND HEALTH
CARE REFORM ACT OF 2004 -- HEALTH INSURANCE OVERSIGHT
***
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This act would regulate price increases for prescription drugs. Any unsupported price
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increase of a prescription drug would be subject to a penalty equal to eight percent (80%) of the
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difference between the revenue generated by the sales of the prescription drug and the revenue that
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would have been generated if the manufacturer had maintained the wholesale acquisition cost from
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the previous calendar year, adjusted appropriately for inflation. Manufacturers would be prohibited
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from withdrawing a prescription drug from sale or distribution for the sole purpose of avoiding the
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penalty of a price increase.
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This act would take effect upon passage.
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