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H8582A
2026 -- H 8582 SUBSTITUTE A
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LC006502/SUB A
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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 INSURANCE -- PHARMACY FREEDOM OF CHOICE--FAIR
COMPETITION AND PRACTICES
Introduced By:
Representatives Caldwell, and Solomon
Date Introduced:
May 26, 2026
Referred To:
House Health & Human Services
It is enacted by the General Assembly as follows:
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SECTION 1. Sections 27-29.1-1, 27-29.1-2, 27-29.1-7, 27-29.1-10 and 27-29.1-11 of the
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General Laws in Chapter 27-29.1 entitled "Pharmacy Freedom of Choice — Fair Competition and
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Practices" are hereby amended to read as follows:
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27-29.1-1. Definitions.
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For purposes of this chapter
, the following terms shall mean
:
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(1)
“Director” shall mean the director of the department of business regulation.
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(2)
“Eligible bidder” shall mean a retail pharmacy, community pharmacy, or pharmacy
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department registered pursuant to chapter 19.1 of title 5, irrespective of corporate structure or
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number of locations at which it conducts business, located within the geographical service area of
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a carrier and willing to bid for participation in a restricted pharmacy network contract.
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(3)
(2)
“Insured”
or "covered individual"
shall mean any person who is entitled to have
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pharmacy services paid by an insurer pursuant to a policy, certificate, contract, or agreement of
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insurance or coverage.
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(4)
(3)
“Insurer” shall mean an insurance carrier as defined in chapters 18, 19, 20, and 41
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of this title.
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(5)
(4)
“Nonrestricted pharmacy network” shall mean a network that permits any pharmacy
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to participate on substantially uniform terms and conditions established by an insurer or
pharmacy
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benefits manager
pharmacy benefit manager
.
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(5) "Health insurance commissioner" or "commissioner" shall mean the office of health
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insurance commissioner.
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(6)
“Pharmacy benefits manager”
"Pharmacy benefit manager" or "PBM"
shall
mean any
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person or entity who or that is not licensed in Rhode Island as an insurer and that develops or
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manages pharmacy benefits, pharmacy network contracts, or the pharmacy benefit bid process
have
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the meaning provided in § 27-19-26.2
.
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(7) “Pharmacy benefit management services” shall mean the management or
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administration of prescription drug benefits for an insurer, directly or through another entity, and
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regardless of whether the pharmacy benefit manager and the insurer are related, or associated by
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ownership, common ownership, organization or otherwise. Such management or administration
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includes, but is not limited to:
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(i) The administration or management of prescription drug benefits;
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(ii) Claims processing, retail network management, or payment of claims to pharmacies for
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dispensing prescription drugs;
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(iii) Clinical or other formulary or preferred drug list development or management;
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(iv) Negotiation or administration of rebates, discounts, payment differentials, or other
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incentives, for the inclusion of particular prescription drugs in a particular category or to promote
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the placement of particular prescription drugs on a formulary or preferred drug list;
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(v) Patient compliance, therapeutic intervention, or generic substitution programs;
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(vi) Disease management;
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(vii) Drug utilization review or prior authorization;
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(viii) Adjudication of appeals or grievances related to prescription drug coverage;
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(ix) Contracting with network pharmacies; and
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(x) Controlling the cost of covered prescription drugs.
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(7)
(8)
“Restricted pharmacy network” shall mean an arrangement for the provision of
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pharmaceutical drug services to insureds that under the terms of an insurer’s policy, certificate,
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contract, or agreement of insurance or coverage requires an insured or creates a financial incentive
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for an insured to obtain prescription drug services from one or more participating pharmacies that
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have entered into a specific contractual relationship with the carrier.
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(9) "Spread pricing" shall mean any amount charged or claimed by a pharmacy benefit
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manager for a prescription drug that exceeds the amount paid by the pharmacy benefit manager to
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a pharmacy or pharmacist for the dispensing of the prescription drug.
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27-29.1-2. Requirement for availability and accessibility of pharmacy services.
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In accordance with § 23-17.13-3 [repealed], an
An
insurer must demonstrate to the
director
LC006502/SUB A - Page 2 of 8
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health insurance commissioner
of health
the willingness and potential ability to ensure that
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pharmacy services will be provided in a manner to ensure both availability and accessibility of
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adequate personnel and facilities and in a manner enhancing availability, accessibility, and
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continuity of service.
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27-29.1-7. Regulation of pharmacy benefit managers.
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(a)
Pharmacy benefits managers
Pharmacy benefit manager
shall
be included within the
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definition of third-party administrator under chapter 20.7 of this title and shall
be regulated
in
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accordance with chapter 84 of this title
as such
.
The annual report filed by third-party administrators
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with the department of business regulation shall include: contractual language that provides a
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complete description of the financial arrangements between the third-party administrator and each
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of the insurers covering benefit contracts delivered in Rhode Island; and if the third-party
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administrator is owned by or affiliated with another entity or entities, it shall include an
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organization chart and brief description that shows the relationships among all affiliates within a
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holding company or otherwise affiliated. The reporting shall be in a format required by the director
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and filed with the department as a public record as defined and regulated under chapter 2 of title
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38.
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(b) A pharmacy benefit manager shall not substitute or cause the substitution of one
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prescription drug for another in dispensing a prescription including, but not limited to, a generic or
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therapeutically equivalent drug, or alter or cause the altering of the terms of a prescription, without
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the approval of the prescriber or as explicitly required or permitted by law, including regulations
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of the health insurance commissioner or board of pharmacy and department of health.
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(c) No pharmacy benefit manager shall, with respect to contracts between such pharmacy
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benefit manager and a pharmacy or, alternatively, such pharmacy benefit manager and a pharmacy's
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contracting agent including, but not limited to, a pharmacy services administrative organization:
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(1) Prohibit or penalize a pharmacist or pharmacy from disclosing to an individual
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purchasing a prescription medication or service information regarding:
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(i) The cost of the prescription medication or service to the individual, or the cost of the
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prescription medication or service to the pharmacy and the pharmacy's reimbursement for that
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prescription medication or service; or
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(ii) The availability of any therapeutically equivalent alternative medications or alternative
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methods of purchasing the prescription medication including, but not limited to, paying a cash
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price; or
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(2) Charge or collect from an individual a copayment that exceeds the total submitted
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charges by the pharmacy for which the pharmacy is paid. If an individual pays a copayment, the
LC006502/SUB A - Page 3 of 8
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pharmacy shall retain the adjudicated costs and the pharmacy benefit manager shall not redact or
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recoup the adjudicated cost.
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(d) A pharmacy benefit manager, with respect to contracts between a pharmacy benefit
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manager and a pharmacy or, alternatively, a pharmacy benefit manager and a pharmacy's
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contracting agent including, but not limited to a pharmacy services administrative organization,
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shall include a reasonable process to appeal, investigate and resolve disputes regarding multi-source
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generic drug pricing. The appeals process shall include the following provisions:
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(1) The right to appeal by the pharmacy and/or the pharmacy's contracting agent shall be
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limited to fifteen (15) days following the initial claim submitted for payment;
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(2) A telephone number through which a network pharmacy may contact the pharmacy
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benefit manager for the purpose of filing an appeal and an electronic mail address of the individual
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who is responsible for processing appeals;
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(3) The pharmacy benefit manager shall send an electronic mail message acknowledging
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receipt of the appeal. The pharmacy benefit manager shall respond in an electronic message to the
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pharmacy and/or the pharmacy's contracting agent filing the appeal within fifteen (15) days
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indicating its determination. If the appeal is determined to be valid, the maximum allowable cost
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for the drug shall be adjusted for the appealing pharmacy effective as of the date of the original
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claim for payment. The pharmacy benefit manager shall require the appealing pharmacy to reverse
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and rebill the claim in question in order to obtain the corrected reimbursement;
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(4) If an update to the maximum allowable cost is warranted, the pharmacy benefit manager
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or insurer shall adjust the maximum allowable cost of the drug effective for all similarly situated
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pharmacies in its network in the state effective no later than one day after the date the appeal was
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determined to be valid; and
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(5) If an appeal is denied, the pharmacy benefit manager shall provide the reason for the
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denial and identify the national drug code of a therapeutically equivalent drug, as determined by
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the federal Food and Drug Administration, that is available and in adequate supply for purchase by
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pharmacies in this state from wholesalers at a price which is equal to or less than the maximum
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allowable cost for that drug as determined by the pharmacy benefit manager.
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27-29.1-10. Costs of enforcement.
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The total cost of the enforcement
under this chapter
of §§ 27-29.1-3 and 27-29.1-8
shall be
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borne by the
pharmacy benefits manager(s)
pharmacy benefit manager(s)
and/or the insurer(s)
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against whom the
complaint
investigation, examination or enforcement action
is made on an equal
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basis and shall include
, without limitation,
the following expenses:
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(1) One hundred fifty percent (150%) of the total salaries and benefits paid to the personnel
LC006502/SUB A - Page 4 of 8
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of the
department of business regulation
office of health insurance commissioner
engaged in the
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enforcement less any salary reimbursement;
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(2) All reasonable technology costs related to the enforcement process. Technology costs
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shall include the actual cost of software and hardware utilized in the enforcement process and the
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cost of training personnel in the proper use of the software or hardware;
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(3) All necessary and reasonable education and training costs incurred by the state to
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maintain the proficiency and competence of the enforcing personnel. All these costs shall be
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incurred in accordance with the appropriate state of Rhode Island regulations, guidelines, and
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procedures
.
; and
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(4) Any reasonable expenses of any experts, consultants, and contractors retained by the
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health insurance commissioner.
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27-29.1-11. Evaluation report.
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The health insurance commissioner
, pursuant to § 42-14.5-1,
shall evaluate the impact of
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nonrestricted pharmacy networks
pharmacy benefit manager practices and operations
on health
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insurance costs in Rhode Island and shall submit a report of findings
to the joint legislative
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committee on health care oversight on or before May 1, 2005
and recommendations to the general
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assembly on or before March 31, 2027
.
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SECTION 2. Chapter 27-29.1 of the General Laws entitled "Pharmacy Freedom of Choice
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— Fair Competition and Practices" is hereby amended by adding thereto the following section:
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27-29.1-12. Duty, accountability, and transparency of pharmacy benefit managers.
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(a)(1) The pharmacy benefit manager shall have a duty and obligation to perform pharmacy
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benefit management services with care, skill, prudence, diligence, and professionalism.
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(2) A pharmacy benefit manager interacting with a covered individual shall have the same
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duty to a covered individual as the insurer for whom it is performing pharmacy benefit management
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services.
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(3) A pharmacy benefit manager shall have a duty of good faith and fair dealing with all
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parties including, but not limited to, covered individuals and pharmacies, with whom it interacts in
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the performance of pharmacy benefits management services.
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(b) All funds received by the pharmacy benefit manager in relation to providing pharmacy
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benefit management services shall be received by the pharmacy benefit manager in trust and shall
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be used or distributed only pursuant to the pharmacy benefit manager's contract with the insurer or
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applicable law; including any administrative fee or payment to the pharmacy benefit manager
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expressly provided for in the contract to compensate the pharmacy benefit manager for its services.
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Any funds received by the pharmacy benefit manager through spread pricing shall be subject to
LC006502/SUB A - Page 5 of 8
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this section.
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(c) Beginning August 1, 2027, a pharmacy benefit manager shall provide to an insurer for
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whom it is providing pharmacy benefit services:
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(1) Any pricing discounts, rebates of any kind, inflationary payments, credits, clawbacks,
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fees, grants, chargebacks, reimbursements, or other benefits received by the pharmacy benefit
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manager. The insurer shall have access to all financial and utilization information of the pharmacy
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benefit manager in relation to pharmacy benefit management services provided to the insurer;
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(2) The terms and conditions of any contract or arrangement between the pharmacy benefit
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manager and any party relating to pharmacy benefit management services provided to the insurer
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including, but not limited to, dispensing fees paid to the pharmacies; and
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(3) Any activity, policy, practice, contract or arrangement of the pharmacy benefit manager
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that directly or indirectly presents any conflict of interest with the pharmacy benefit manager's
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relationship with or obligation to the insurer.
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(d) Beginning August 1, 2028, reports required to be provided under the Consolidated
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Appropriation Act of 2026, and subsequent regulations, shall be deemed sufficient to comply with
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the requirements of this subsection.
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(e) Any information required to be disclosed by a pharmacy benefit manager to an insurer
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under this section that is reasonably designated by the pharmacy benefit manager as proprietary or
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trade secret information shall be kept confidential by the insurer, except as required or permitted
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by law, including disclosure necessary to prosecute or defend any legitimate legal claim or cause
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of action. Designation of information as proprietary or trade secret information under this
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subsection shall have no effect on the obligations of any pharmacy benefit manager or insurer to
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provide that information to the office of health insurance commissioner, provided any such
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information provided to the office of health insurance commissioner shall be confidential and
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exempt from disclosure under § 38-2-2.
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27-29.1-13. Rules and regulations.
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The health insurance commissioner shall promulgate rules and regulations necessary to
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effectuate the purpose of this chapter, including, defining, limiting, and relating to the duties,
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obligations, requirements and other provisions relating to pharmacy benefit managers.
LC006502/SUB A - Page 6 of 8
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SECTION 3. This act shall take effect on January 1, 2027.
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LC006502/SUB A
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LC006502/SUB A - Page 7 of 8
EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO INSURANCE -- PHARMACY FREEDOM OF CHOICE--FAIR
COMPETITION AND PRACTICES
***
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This act would impose certain duties, transparency, and accountability from pharmacy
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benefit managers and pharmacy benefit management services.
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This act would take effect on January 1, 2027.
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LC006502/SUB A
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