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S3060Baa
2026 -- S 3060 SUBSTITUTE B AS AMENDED
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LC005062/SUB B
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
____________
A N A C T
RELATING TO INSURANCE -- PHARMACY BENEFIT MANAGERS ACT
Introduced By:
Senators Appollonio, Murray, Lawson, Ciccone, Tikoian, and
Date Introduced:
March 12, 2026
Referred To:
Senate Health & Human Services
It is enacted by the General Assembly as follows:
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SECTION 1. Title 27 of the General Laws entitled "INSURANCE" is hereby amended by
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adding thereto the following chapter:
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CHAPTER 84
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PHARMACY BENEFIT MANAGERS ACT
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27-84-1. Short title.
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This chapter shall be known and may be cited as the "Pharmacy Benefit Managers Act."
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27-84-2. Definitions.
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For the purpose of this chapter:
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(1) "Controlling person" means any person or entity that directly or indirectly has the power
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to direct or cause to be directed the management, control or activities of a pharmacy benefit
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manager.
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(2) "Health insurance commissioner" or "commissioner" means the office of health
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insurance commissioner.
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(3) "Insured" or "covered individual" means any person who is entitled to have pharmacy
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services paid by an insurer pursuant to a policy, certificate, contract, or agreement of insurance or
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coverage.
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(4) "Insurer" means a health insurance carrier as defined in chapters 18, 19, 20, and 41 of
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this title.
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(5) "Pharmacy benefit management services" means the management or administration of
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prescription drug benefit for an insurer, directly or indirectly through another entity, and regardless
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of whether the pharmacy benefit manager and the insurer are related, or associated by ownership,
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common ownership, organization or otherwise. Such management or administration of prescription
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drug benefit 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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(6) "Pharmacy benefit manager" or "PBM" shall have the meaning provided in § 27-19-
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26.2.
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(7) "Rebate" means all price concessions paid by a manufacturer to a pharmacy benefit
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manager or insurer, including rebates, discounts, and other price concessions that are based on the
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actual or estimated utilization of a prescription drug. Rebates also include price concessions based
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on the effectiveness of a drug as in a value-based or performance-based contract.
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(8) "Restricted pharmacy network" shall have the meaning provided in § 27-29.1-1.
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(9) "Spread pricing" means any amount charged or claimed by a pharmacy benefit manager
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for a prescription drug that exceeds the amount paid by the pharmacy benefit manager to a
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pharmacy or pharmacist for the dispensing of the prescription drug.
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27-84-3. Certificate of authority required.
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(a) No person, firm, association, corporation or other entity may act, offer to act as, or hold
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itself out to be a pharmacy benefit manager, without having a valid certificate of authority as a
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pharmacy benefit manager issued by the health insurance commissioner. Notwithstanding the
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requirements of this section, for a period of up to two (2) years after the date on which the health
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insurance commissioner issues a guidance document outlining the application process for entities
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to obtain a valid certificate of authority as a pharmacy benefits manager, a person, firm, association,
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corporation or other entity may act, offer to act as, or hold itself out to be a pharmacy benefit
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manager if it has obtained a provisional pharmacy benefit manager certificate of authority (a
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provisional certificate of authority) issued by the health insurance commissioner. The health
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insurance commissioner may establish minimum registration standards required for a provisional
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certificate of authority. Any person, firm, association or corporation who applies for a provisional
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certificate of authority shall make an application to the commissioner in such form(s) and
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supplements as required by the commissioner. The commissioner may issue a provisional
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certificate of authority to applicants that have complied with the commissioner's minimum
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provisional certificate of authority standards. The commissioner may reject an application for a
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provisional certificate of authority that fails to comply with the minimum standards. Upon at least
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sixty (60) days' notice, the commissioner may advise a holder of a provisional certificate of
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authority that the provisional certificate of authority will expire as of a certain date. The
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commissioner may revoke a provisional certificate of authority upon at least sixty (60) days' notice
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for any reason. For each business entity, the officer(s) and director(s) named in the provisional
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certificate of authority and the successors thereof shall be responsible for the business entity's
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compliance with the applicable laws, rules and regulations of this state.
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(b) Any person, firm, association, corporation or other entity that violates this section shall,
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in addition to any other penalty provided by law, be liable for restitution and compensatory
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damages to any insurer, pharmacy or covered individual, or other person harmed by the violation
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and shall also be subject to either a penalty not exceeding the greater of ten thousand dollars
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($10,000) for the first violation and fifteen thousand dollars ($15,000) for each subsequent
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violation; or the aggregate gross receipts attributable to all violations.
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27-84-4. Requirements for pharmacy benefit managers.
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(a) Any person, firm, association or corporation who applies to be certified as a pharmacy
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benefit manager shall make an application to the commissioner in such form(s) and supplements
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required by the commissioner. The commissioner may issue a certificate of authority to applicants
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that have complied with the requirements of this chapter. The commissioner may reject an
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application filed by a pharmacy benefit manager that fails to comply with the requirements of this
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chapter.
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(b) For each business entity, the officer(s) and director(s) named in the application and the
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successors thereof shall be responsible for the business entity's compliance with the applicable
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laws, rules and regulations of this state.
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(c) Applicants to be a pharmacy benefit manager shall make an application to the health
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insurance commissioner upon a form to be furnished by the commissioner. The application shall
LC005062/SUB B - Page 3 of 12
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include or be accompanied by the following information and documents:
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(1) All basic organizational documents of the pharmacy benefit manager including, but not
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limited to, any articles of incorporation, articles of association, partnership agreement, trade name
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certificate, trust agreement, shareholder agreement, and other applicable documents and all
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amendments to those documents;
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(2) The bylaws, rules, regulations, or similar documents regulating the internal affairs of
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the pharmacy benefit manager;
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(3) The names, addresses, official positions, and professional qualifications of the
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individuals who are responsible for the conduct of affairs of the pharmacy benefit manager;
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including, all members of the board of directors, board of trustees, executive committee, or other
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governing board or committee; the principal officers in the case of a corporation or the partners or
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members in the case of a partnership or association; shareholders holding directly or indirectly ten
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percent (10%) or more of the voting securities of the pharmacy benefit manager; and any other
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person who exercises control or influence over the affairs of the pharmacy benefit manager;
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(4) Annual financial statements or reports for the two (2) most recent years which prove
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that the applicant is solvent and any information that the health insurance commissioner may
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require in order to review the current financial condition of the applicant;
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(5) A statement describing the business plan of the pharmacy benefit manager including,
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but not limited to, information pertaining to staffing levels and activities proposed in this state and
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nationwide. The plan shall provide details setting forth the pharmacy benefit manager's capability
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for providing a sufficient number of experienced and qualified personnel in the areas of claims
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processing, recordkeeping and underwriting;
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(6) Standards and practices utilized by the pharmacy benefit manager for:
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(i) The creation of pharmacy networks and contracting with network pharmacies and other
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providers in compliance with chapter 29.1 of title 27, including promotion and use of independent
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and community pharmacies and patient access;
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(ii) Development of pricing models used by pharmacy benefit manager both for their
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services to an insurer and for the payment of services to a pharmacy benefit manager by a third-
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party administrator; and
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(iii) Protection of consumers; and
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(7) Any other pertinent information that may be required by the commissioner on any of
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the following related to a pharmacy benefit manager's operations in any state including, but not
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limited to:
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(i) Conflicts of interest between pharmacy benefit managers and insurers;
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(ii) Deceptive practices in connection with the performance of pharmacy benefit
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management services;
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(iii) Anti-competitive practices in connection with the performance of pharmacy benefit
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management services; and
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(iv) Unfair claims practices in connection with the performance of pharmacy benefit
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management services.
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(d) The applicant shall make available, for inspection by the office of the health insurance
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commissioner, copies of all contracts with insurers, third-party benefit administrators, and other
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persons or entities utilizing the services of the pharmacy benefit manager in this state.
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(e) A pharmacy benefit manager shall immediately notify the office of the health insurance
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commissioner of any material change in its ownership, control, or other fact or circumstance
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affecting its qualification for a certificate of authority in this state. Any pharmacy benefit manager
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holding a certificate issued under this chapter shall inform the office of the health insurance
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commissioner by a means acceptable to the commissioner of a change of address within thirty (30)
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days of the change.
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27-84-5. Certificate of authority term, renewal, and fees.
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(a) Any person, firm, association or corporation who applies to be certified as a pharmacy
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benefit manager shall provide with the submission of an application to the office of the health
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insurance commissioner a fee of ten thousand dollars ($10,000) for each year or fraction of a year
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in which a certificate shall be valid. Any person, firm, association or corporation who applies for a
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provisional certificate of authority as a pharmacy benefit manager shall provide with the submission
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of an application to the office of the health insurance commissioner a fee of ten thousand dollars
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($10,000).
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(b) Every pharmacy benefit manager's certificate of authority shall expire twenty-four (24)
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months after the date of issue. Every certificate of authority issued pursuant to this chapter may be
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renewed for the ensuing period of twenty-four (24) months upon the filing of an application and
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renewal fee of ten thousand dollars ($10,000) in conformity with this chapter.
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(c) If an application for a renewal certificate of authority shall have been filed with the
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office of the health insurance commissioner at least two (2) months before its expiration, then the
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certificate sought to be renewed shall continue in full force and effect either until the issuance by
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the health insurance commissioner of the renewal certificate applied for or until five (5) days after
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the commissioner shall have refused to issue such renewal certificate and given notice of such
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refusal to the applicant.
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(d) The health insurance commissioner may refuse to issue a pharmacy benefit manager's
LC005062/SUB B - Page 5 of 12
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certificate of authority if, in the commissioner's judgment, the applicant or any member, principal,
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officer or director of the applicant, is not trustworthy and competent to act as or in connection with
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a pharmacy benefit manager, or that any of the foregoing has given cause for revocation or
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suspension of such license, or has failed to comply with any prerequisite for the issuance of such
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license.
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(e) Pharmacy benefit manager applicants and certificate holders shall be subject to
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examination by the office of the health insurance commissioner as often as the commissioner may
8
deem it expedient. The commissioner may promulgate any necessary regulations establishing
9
methods and procedures for facilitating and verifying compliance with the requirements of this
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chapter.
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(f) The commissioner may issue a replacement for a currently in-force certificate that has
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been lost or destroyed. Before the replacement certificate shall be issued, there shall be on file with
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the office of the health insurance commissioner a written application for the replacement certificate,
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affirming under penalty of perjury that the original certificate has been lost or destroyed, together
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with a fee of two thousand dollars ($2,000).
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27-84-6. Reporting requirements for pharmacy benefit managers.
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(a) On or before July first of each year, every pharmacy benefit manager shall report to the
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office of the health insurance commissioner, in a statement subscribed and affirmed as true under
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penalties of perjury, the information requested by the commissioner including, but not limited to:
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(1) Any pricing discounts, rebates of any kind, inflationary payments, credits, clawbacks,
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fees, grants, chargebacks, reimbursements, other financial or other reimbursements, incentives,
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inducements, refunds or other benefit received by the pharmacy benefit manager;
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(2) The terms and conditions of any contract or arrangement, including other financial or
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other reimbursements incentives, inducements or refunds between the pharmacy benefit manager
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and any other party relating to pharmacy benefit management services provided to an insurer
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including, but not limited to, dispensing fees paid to pharmacies;
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(3) The following information attributable to patient utilization of prescription drugs
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covered by insurers in the state including, but not limited to:
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(i) The aggregated dollar amount of rebates and fees collected from pharmaceutical
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manufacturers;
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(ii) The aggregated dollar amount of rebates and fees collected from pharmaceutical
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manufacturers that were passed to insurers;
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(iii) The aggregated dollar amount of rebates and fees collected from pharmaceutical
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manufacturers passed to covered individuals at the point of sale of a prescription drug; and
LC005062/SUB B - Page 6 of 12
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(iv) The aggregated dollar amount of rebates and fees collected from pharmaceutical
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manufacturers that were retained by the pharmacy benefit manager.
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(4) A response to a set of standard questions developed by the commissioner regarding
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business practices including, but not limited to, spread pricing, pharmacy network development,
5
and utilization management;
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(5) The rebate percentage and dollar amount retained by the pharmacy benefit manager for
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every rebate, discount, price concession or other consideration under each rebate contract; and
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(6) The dollar amount of any other compensation paid by a drug manufacturer to a
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pharmacy benefit manager for services, including distribution management services, data or data
10
services, marketing or promotional services, research programs, or other ancillary services, under
11
each rebate contract.
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(b) The office of the health insurance commissioner may require the filing of quarterly or
13
other statements, which shall be in such form and shall contain such matters as the commissioner
14
shall prescribe.
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(c) The commissioner may address to any pharmacy benefit manager or its officers any
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inquiry in relation to its provision of pharmacy benefit management services or any matter
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connected therewith. Every pharmacy benefit manager or person so addressed shall reply in writing
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to such inquiry promptly and truthfully, and such reply shall be, if required by the office of the
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health insurance commissioner, subscribed by such individual, or by such officer or officers of the
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pharmacy benefit manager, as the commissioner shall designate, and affirmed by them as true under
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the penalties of perjury.
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(d) In the event any pharmacy benefit manager or person does not submit the report
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required by subsection (a) of this section, the commissioner is authorized to levy a civil penalty
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against such pharmacy benefit manager or person not to exceed ten thousand dollars ($10,000) per
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day for each day beyond the date the report is due or the date specified by the commissioner for
26
response to the inquiry.
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(e) Not later than October 1 of each year, the commissioner shall publish the aggregated
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data from all reports for that year required by this section in an appropriate location on the office
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of health insurance commissioner's Internet website. The combined aggregated data from the
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reports must be published in a manner that does not disclose or tend to disclose proprietary or
31
confidential information of any pharmacy benefit manager or insurer.
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(f) All information, documents and material disclosed by a pharmacy benefit manager
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under this section and in the possession or under the control of the office of the health insurance
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commissioner shall be deemed confidential and not subject to disclosure except to the extent such
LC005062/SUB B - Page 7 of 12
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information is included on an aggregated basis across all pharmacy benefit managers in the
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published report required by subsection (e) of this section. This subsection shall not apply to
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information, documents and materials where they are in the possession and under the control of a
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person or entity other than the commissioner.
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27-84-7. Additional obligations.
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(a) No pharmacy benefit manager shall violate any provisions of the state law applicable
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to pharmacy benefit managers.
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(b) No pharmacy benefit manager shall permit any subcontractor, affiliate, subsidiary, or
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other individual or entity performing pharmacy benefit management services for a pharmacy
10
benefit manager to take any action which would violate any provision of law if taken by the
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pharmacy benefit manager. A pharmacy benefit manager shall be responsible for the actions of any
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subcontractor, affiliate, subsidiary, or other individual or entity who violates any provision of this
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article in performance of any pharmacy benefit management services for such pharmacy benefit
14
manager whether or not the pharmacy benefit manager was aware of, or sanctioned, the conduct.
15
27-84-8. Grounds for suspension or revocation of certificate of authority.
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(a) The commissioner may revoke or suspend the certificate of authority of any pharmacy
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benefit manager if, after notice and hearing, the director determines that the pharmacy benefit
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manager or any member, principal, officer, commissioner, or controlling person of the pharmacy
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benefit manager, has:
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(1) Violated any applicable laws, regulations, or orders of the commissioner or another
21
state's authority who oversees pharmacy benefit managers, or has violated any law in the course of
22
his or her dealings in such capacity after such certificate of authority has been issued or renewed
23
pursuant to this chapter;
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(2) Provided materially incorrect, materially misleading, materially incomplete or
25
materially untrue information in the application for a certificate of authority;
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(3) Obtained or attempted to obtain a certificate of authority through misrepresentation or
27
fraud;
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(4) Used fraudulent, coercive or dishonest practices;
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(5) Demonstrated incompetence;
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(6) Demonstrated untrustworthiness; or
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(7) Demonstrated financial irresponsibility in the conduct of business in this state or
32
elsewhere;
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(8) Improperly withheld, misappropriated or converted any monies or properties received
34
in the course of business in this state or elsewhere;
LC005062/SUB B - Page 8 of 12
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(9) Intentionally misrepresented the terms of an actual or proposed contract;
2
(10) Admitted to or been found to have committed any insurance unfair trade practice or
3
fraud;
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(11) Had a pharmacy benefit manager certificate, registration, or license, or its equivalent,
5
denied, suspended or revoked in any other state, province, district or territory;
6
(12) Failed to pay state income tax or comply with any administrative or court order
7
directing payment of state income tax; or
8
(13) Ceased to meet the requirements for a certificate of authority under this chapter.
9
(b) Before revoking or suspending the certificate of authority of any pharmacy benefit
10
manager pursuant to the provisions of this chapter, the commissioner shall give notice to the holder
11
of the certificate of authority and shall hold, or cause to be held, an adjudicatory proceeding in
12
conformity with chapter 35 of title 42.
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(c) If a pharmacy benefit manager's certificate of authority in accordance with this section
14
is revoked or suspended by the commissioner, then the commissioner shall forthwith give notice to
15
the pharmacy benefit manager. For good cause shown, the commissioner may delay the effective
16
date of a revocation or suspension to permit the pharmacy benefit manager to satisfy some or all of
17
its contractual obligations to perform pharmacy benefit management services in the state.
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(d) No individual, corporation, firm or association whose certificate of authority as a
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pharmacy benefit manager has been revoked pursuant to subsection (a) of this section, and no firm
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or association of which such individual is a member, and no corporation of which such individual
21
is an officer or director, and no controlling person of the holder of the certificate of authority shall
22
be entitled to obtain any certificate of authority under the provisions of this chapter for a minimum
23
period of one year after such revocation, or, if such revocation be judicially reviewed, for a
24
minimum period of one year after the final determination thereof affirming the action of the
25
commissioner in revoking such certificate.
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(e) If any such certificate of authority held by a firm, association or corporation be revoked,
27
no member of such firm or association and no officer or director of such corporation or any
28
controlling person of the pharmacy benefit manager shall be entitled to obtain any certificate of
29
authority under this chapter for the same period of time, unless the commissioner determines that
30
such member, officer or director was not personally at fault in the matter on account of which such
31
certificate of authority was revoked.
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(f) The commissioner shall retain the authority to enforce the provisions of and impose any
33
penalty or remedy authorized by this chapter against any person or entity who is under investigation
34
for or charged with a violation of this chapter, even if the person's or entity's certificate of authority
LC005062/SUB B - Page 9 of 12
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has been surrendered, or has expired or has lapsed by operation of law.
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(g) A pharmacy benefit manager subject to this chapter shall report to the commissioner
3
any administrative action taken against the holder of the certificate of authority in another
4
jurisdiction or by another governmental agency in this state within thirty (30) days of the final
5
disposition of the matter. This report shall include a copy of any order, consent order, decision or
6
other relevant legal documents.
7
(h) Within thirty (30) days of the initial pretrial hearing date, a pharmacy benefit manager
8
subject to this chapter shall report to the commissioner any criminal prosecution of the holder of
9
the certificate of authority taken in any jurisdiction. The report shall include a copy of the initial
10
complaint filed, the order resulting from the hearing and any other relevant legal documents.
11
(i) Chapter 35 of title 42 ("administrative procedures") shall apply to any notice or hearing
12
by the commissioner in accordance with this section.
13
27-84-9. Penalties for violations.
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(a) The commissioner, in addition to any other power conferred by law, may, in any one
15
proceeding by order require the pharmacy benefit manager who violates the provisions of this title,
16
or related regulation to make restitution and pay compensatory damages, in an amount to be
17
determined by the commissioner, to any person injured by the unlawful actions of said holder of
18
certificate of authority and to pay to the people of this state a penalty in a sum not exceeding either
19
the greater of ten thousand dollars ($10,000) for each offense and fifteen thousand dollars ($15,000)
20
for each subsequent violation; or the aggregate gross receipts attributable to all offenses.
21
(b) Upon the failure of such a holder of a certificate of authority to pay the penalty ordered
22
pursuant to subsection (a) of this section within twenty (20) days after the mailing of the order,
23
postage prepaid, registered, and addressed to the last known place of business of the holder of the
24
certificate of authority, unless the order is stayed by an order of a court of competent jurisdiction,
25
the commissioner may revoke the holder's certificate of authority or may suspend the same for such
26
period as the commissioner determines.
27
27-84-10. Applicability of other laws.
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(a) Nothing in this chapter shall be construed to exempt a pharmacy benefit manager from
29
complying with any other applicable state laws or regulations.
30
(b) Notwithstanding the provisions of 2026--H 7127 Substitute A, as amended, Article 12,
31
Section 13, relating to the Pharmacy Benefit Manager Transparency Reporting and Study Act, shall
32
have no force and effect and is hereby superseded by the provisions of this chapter.
33
27-84-11. Assessments.
34
Holders of a certificate of authority issued pursuant to this chapter and holders of a
LC005062/SUB B - Page 10 of 12
1
provisional certificate of authority shall be assessed by the commissioner for the operating expenses
2
of the office of the health insurance commissioner including, but not limited to, any reasonable
3
expenses of any experts, consultants, and contractors, that are attributable to regulating such
4
pharmacy benefit managers in such proportions as the commissioner shall deem just and
5
reasonable.
6
27-84-12. Rules and regulations.
7
The office of the health insurance commissioner shall promulgate rules and regulations
8
necessary to effectuate the purpose of this chapter, including procedures for notice to insurers,
9
covered individuals, employers, and other organizations of the provisions of this chapter.
10
SECTION 2. This act shall take effect on January 1, 2027.
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LC005062/SUB B
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LC005062/SUB B - Page 11 of 12
EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO INSURANCE -- PHARMACY BENEFIT MANAGERS ACT
***
1
This act would require pharmacy benefit managers to apply for a certificate of authority
2
from the office of the health insurance commissioner to operate such a business in this state.
3
Further, this act would empower the health insurance commissioner to oversee all pharmacy benefit
4
managers and penalize violations.
5
This act would take effect on January 1, 2027.
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LC005062/SUB B
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LC005062/SUB B - Page 12 of 12