INSURANCE -- PHARMACY BENEFIT MANAGERS ACT, the official text

H8579 2026 -- H 8579 ======== LC006503 ======== 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: Representatives Spears, and Donovan Date Introduced: May 22, 2026 Referred To: House Health & Human Services It is enacted by the General Assembly as follows: 1 SECTION 1. Title 27 of the General Laws entitled INSURANCE is hereby amended by 2 adding thereto the following chapter: 3 CHAPTER 84 4 PHARMACY BENEFIT MANAGERS ACT 5 27-84-1. Short title. 6 This chapter shall be known and may be cited as the Pharmacy Benefit Managers Act. 7 27-84-2. Definitions. 8 For the purpose of this chapter: 9 (1) Controlling person means any person or entity that directly or indirectly has the power 10 to direct or cause to be directed the management, control or activities of a pharmacy benefit 11 manager. 12 (2) Health insurance commissioner or commissioner means the office of health 13 insurance commissioner. 14 (3) Insured or covered individual means any person who is entitled to have pharmacy 15 services paid by an insurer pursuant to a policy, certificate, contract, or agreement of insurance or 16 coverage. 17 (4) Insurer means an insurance carrier as defined in chapters 18, 19, 20, and 41 of this 18 title. 19 (5) Pharmacy benefit management services means the management or administration of 1 prescription drug benefit for an insurer, directly or indirectly through another entity, and regardless 2 of whether the pharmacy benefit manager and the insurer are related, or associated by ownership, 3 common ownership, organization or otherwise. Such management or administration of prescription 4 drug benefit includes, but is not limited to: 5 (i) The administration or management of prescription drug benefits; 6 (ii) Claims processing, retail network management, or payment of claims to pharmacies for 7 dispensing prescription drugs; 8 (iii) Clinical or other formulary or preferred drug list development or management; 9 (iv) Negotiation or administration of rebates, discounts, payment differentials, or other 10 incentives, for the inclusion of particular prescription drugs in a particular category or to promote 11 the placement of particular prescription drugs on a formulary or preferred drug list; 12 (v) Patient compliance, therapeutic intervention, or generic substitution programs; 13 (vi) Disease management; 14 (vii) Drug utilization review or prior authorization; 15 (viii) Adjudication of appeals or grievances related to prescription drug coverage; 16 (ix) Contracting with network pharmacies; and 17 (x) Controlling the cost of covered prescription drugs. 18 (6) Pharmacy benefit manager or PBM shall have the meaning provided in § 27-19- 19 26.2. 20 (7) Rebate means all price concessions paid by a manufacturer to a pharmacy benefit 21 manager or insurer, including rebates, discounts, and other price concessions that are based on the 22 actual or estimated utilization of a prescription drug. Rebates also include price concessions based 23 on the effectiveness of a drug as in a value-based or performance-based contract. 24 (8) Restricted pharmacy network shall have the meaning provided in § 27-29.1-1. 25 (9) Spread pricing means any amount charged or claimed by a pharmacy benefit manager 26 for a prescription drug that exceeds the amount paid by the pharmacy benefit manager to a 27 pharmacy or pharmacist for the dispensing of the prescription drug. 28 27-84-3. Certificate of authority required. 29 (a) No person, firm, association, corporation or other entity may act, offer to act as, or hold 30 itself out to be a pharmacy benefit manager, without having a valid certificate of authority as a 31 pharmacy benefit manager issued by the health insurance commissioner. 32 (b) Any person, firm, association, corporation or other entity that violates this section shall, 33 in addition to any other penalty provided by law, be liable for restitution and compensatory 34 damages to any insurer, pharmacy or covered individual, or other person harmed by the violation LC006503 - Page 2 of 11 1 and shall also be subject to either a penalty not exceeding the greater of ten thousand dollars 2 ($10,000) for the first violation and fifteen thousand dollars ($15,000) for each subsequent 3 violation; or the aggregate gross receipts attributable to all violations. 4 27-84-4. Requirements for pharmacy benefit managers. 5 (a) Any person, firm, association or corporation who applies to be certified as a pharmacy 6 benefit manager shall make an application to the commissioner in such form(s) and supplements 7 required by the commissioner. The commissioner may issue a certificate of authority to applicants 8 that have complied with the requirements of this chapter. The commissioner may reject an 9 application filed by a pharmacy benefit manager that fails to comply with the requirements of this 10 chapter. 11 (b) For each business entity, the officer(s) and director(s) named in the application and the 12 successors thereof shall be responsible for the business entity s compliance with the applicable 13 laws, rules and regulations of this state. 14 (c) Applicants to be a pharmacy benefit manager shall make an application to the health 15 insurance commissioner upon a form to be furnished by the commissioner. The application shall 16 include or be accompanied by the following information and documents: 17 (1) All basic organizational documents of the pharmacy benefit manager including, but not 18 limited to, any articles of incorporation, articles of association, partnership agreement, trade name 19 certificate, trust agreement, shareholder agreement, and other applicable documents and all 20 amendments to those documents; 21 (2) The bylaws, rules, regulations, or similar documents regulating the internal affairs of 22 the pharmacy benefit manager; 23 (3) The names, addresses, official positions, and professional qualifications of the 24 individuals who are responsible for the conduct of affairs of the pharmacy benefit manager; 25 including, all members of the board of directors, board of trustees, executive committee, or other 26 governing board or committee; the principal officers in the case of a corporation or the partners or 27 members in the case of a partnership or association; shareholders holding directly or indirectly ten 28 percent (10%) or more of the voting securities of the pharmacy benefit manager; and any other 29 person who exercises control or influence over the affairs of the pharmacy benefit manager; 30 (4) Annual financial statements or reports for the two (2) most recent years which prove 31 that the applicant is solvent and any information that the health insurance commissioner may 32 require in order to review the current financial condition of the applicant; 33 (5) A statement describing the business plan of the pharmacy benefit manager including, 34 but not limited to, information pertaining to staffing levels and activities proposed in this state and LC006503 - Page 3 of 11 1 nationwide. The plan shall provide details setting forth the pharmacy benefit manager s capability 2 for providing a sufficient number of experienced and qualified personnel in the areas of claims 3 processing, recordkeeping and underwriting; 4 (6) Standards and practices utilized by the pharmacy benefit manager for: 5 (i) The creation of pharmacy networks and contracting with network pharmacies and other 6 providers in compliance with chapter 29.1 of title 27, including promotion and use of independent 7 and community pharmacies and patient access and minimizing excessive concentration and vertical 8 integration of markets; 9 (ii) Development of pricing models used by pharmacy benefit manager both for their 10 services to an insurer and for the payment of services to a pharmacy benefit manager by a third- 11 party administrator; and 12 (iii) Protection of consumers; and 13 (7) Any other pertinent information that may be required by the commissioner on any of 14 the following related to a pharmacy benefit manager s operations in any state including, but not 15 limited to: 16 (i) Conflicts of interest between pharmacy benefit managers and insurers; 17 (ii) Deceptive practices in connection with the performance of pharmacy benefit 18 management services; 19 (iii) Anti-competitive practices in connection with the performance of pharmacy benefit 20 management services; and 21 (iv) Unfair claims practices in connection with the performance of pharmacy benefit 22 management services. 23 (d) The applicant shall make available, for inspection by the office of the health insurance 24 commissioner, copies of all contracts with insurers, third-party benefit administrators, and other 25 persons or entities utilizing the services of the pharmacy benefit manager in this state. 26 (e) A pharmacy benefit manager shall immediately notify the office of the health insurance 27 commissioner of any material change in its ownership, control, or other fact or circumstance 28 affecting its qualification for a certificate of authority in this state. Any pharmacy benefit manager 29 holding a certificate issued under this chapter shall inform the office of the health insurance 30 commissioner by a means acceptable to the commissioner of a change of address within thirty (30) 31 days of the change. 32 27-84-5. Certificate of authority term, renewal, and fees. 33 (a) Any person, firm, association or corporation who applies to be certified as a pharmacy 34 benefit manager shall provide with the submission of an application to the office of the health LC006503 - Page 4 of 11 1 insurance commissioner a fee of ten thousand dollars ($10,000) for each year or fraction of a year 2 in which a certificate shall be valid. 3 (b) Every pharmacy benefit manager s certificate shall expire twenty-four (24) months after 4 the date of issue. Every certificate issued pursuant to this chapter may be renewed for the ensuing 5 period of twenty-four (24) months upon the filing of an application and renewal fee of ten thousand 6 dollars ($10,000) in conformity with this chapter. 7 (c) If an application for a renewal certificate shall have been filed with the office of the 8 health insurance commissioner at least two (2) months before its expiration, then the certificate 9 sought to be renewed shall continue in full force and effect either until the issuance by the health 10 insurance commissioner of the renewal certificate applied for or until five (5) days after the 11 commissioner shall have refused to issue such renewal certificate and given notice of such refusal 12 to the applicant. 13 (d) The health insurance commissioner may refuse to issue a pharmacy benefit manager s 14 certificate of authority if, in the commissioner s judgment, the applicant or any member, principal, 15 officer or director of the applicant, is not trustworthy and competent to act as or in connection with 16 a pharmacy benefit manager, or that any of the foregoing has given cause for revocation or 17 suspension of such license, or has failed to comply with any prerequisite for the issuance of such 18 license. 19 (e) Pharmacy benefit manager applicants and certificate holders shall be subject to 20 examination by the office of the health insurance commissioner as often as the commissioner may 21 deem it expedient. The commissioner may promulgate any necessary regulations establishing 22 methods and procedures for facilitating and verifying compliance with the requirements of this 23 chapter. 24 (f) The commissioner may issue a replacement for a currently in-force certificate that has 25 been lost or destroyed. Before the replacement certificate shall be issued, there shall be on file with 26 the office of the health insurance commissioner a written application for the replacement certificate, 27 affirming under penalty of perjury that the original certificate has been lost or destroyed, together 28 with a fee of two thousand dollars ($2,000). 29 27-84-6. Reporting requirements for pharmacy benefit managers. 30 (a) On or before July first of each year, every pharmacy benefit manager shall report to the 31 office of the health insurance commissioner, in a statement subscribed and affirmed as true under 32 penalties of perjury, the information requested by the commissioner including, but not limited to: 33 (1) Any pricing discounts, rebates of any kind, inflationary payments, credits, clawbacks, 34 fees, grants, chargebacks, reimbursements, other financial or other reimbursements, incentives, LC006503 - Page 5 of 11 1 inducements, refunds or other benefit received by the pharmacy benefit manager; 2 (2) The terms and conditions of any contract or arrangement, including other financial or 3 other reimbursements incentives, inducements or refunds between the pharmacy benefit manager 4 and any other party relating to pharmacy benefit management services provided to an insurer 5 including, but not limited to, dispensing fees paid to pharmacies; 6 (3) The following information attributable to patient utilization of prescription drugs 7 covered by insurers in the state including, but not limited to: 8 (i) The aggregated dollar amount of rebates and fees collected from pharmaceutical 9 manufacturers; 10 (ii) The aggregated dollar amount of rebates and fees collected from pharmaceutical 11 manufacturers that were passed to insurers; 12 (iii) The aggregated dollar amount of rebates and fees collected from pharmaceutical 13 manufacturers passed to covered individuals at the point of sale of a prescription drug; and 14 (iv) The aggregated dollar amount of rebates and fees collected from pharmaceutical 15 manufacturers that were retained by the pharmacy benefit manager. 16 (4) A response to a set of standard questions developed by the commissioner regarding 17 business practices including, but not limited to, spread pricing, pharmacy network development, 18 and utilization management; 19 (5) The rebate percentage and dollar amount retained by the pharmacy benefit manager for 20 every rebate, discount, price concession or other consideration under each rebate contract; and 21 (6) The dollar amount of any other compensation paid by a drug manufacturer to a 22 pharmacy benefit manager for services, including distribution management services, data or data 23 services, marketing or promotional services, research programs, or other ancillary services, under 24 each rebate contract. 25 (b) The office of the health insurance commissioner may require the filing of quarterly or 26 other statements, which shall be in such form and shall contain such matters as the commissioner 27 shall prescribe. 28 (c) The commissioner may address to any pharmacy benefit manager or its officers any 29 inquiry in relation to its provision of pharmacy benefit management services or any matter 30 connected therewith. Every pharmacy benefit manager or person so addressed shall reply in writing 31 to such inquiry promptly and truthfully, and such reply shall be, if required by the office of the 32 health insurance commissioner, subscribed by such individual, or by such officer or officers of the 33 pharmacy benefit manager, as the commissioner shall designate, and affirmed by them as true under 34 the penalties of perjury. LC006503 - Page 6 of 11 1 (d) In the event any pharmacy benefit manager or person does not submit the report 2 required by subsection (a) of this section, the commissioner is authorized to levy a civil penalty 3 against such pharmacy benefit manager or person not to exceed ten thousand dollars ($10,000) per 4 day for each day beyond the date the report is due or the date specified by the commissioner for 5 response to the inquiry. 6 (e) Not later than October 1 of each year, the commissioner shall publish the aggregated 7 data from all reports for that year required by this section in an appropriate location on the office 8 of health insurance commissioner s Internet website. The combined aggregated data from the 9 reports must be published in a manner that does not disclose or tend to disclose proprietary or 10 confidential information of any pharmacy benefit manager or insurer. 11 (f) All information, documents and material disclosed by a pharmacy benefit manager 12 under this section and in the possession or under the control of the office of the health insurance 13 commissioner shall be deemed confidential and not subject to disclosure except to the extent such 14 information is included on an aggregated basis across all pharmacy benefit managers in the 15 published report required by subsection (e) of this section. This subsection shall not apply to 16 information, documents and materials where they are in the possession and under the control of a 17 person or entity other than the commissioner. 18 27-84-7. Additional obligations. 19 (a) No pharmacy benefit manager shall violate any provisions of the state law applicable 20 to pharmacy benefit managers. 21 (b) No pharmacy benefit manager shall permit any subcontractor, affiliate, subsidiary, or 22 other individual or entity performing pharmacy benefit management services for a pharmacy 23 benefit manager to take any action which would violate any provision of law if taken by the 24 pharmacy benefit manager. A pharmacy benefit manager shall be responsible for the actions of any 25 subcontractor, affiliate, subsidiary, or other individual or entity who violates any provision of this 26 article in performance of any pharmacy benefit management services for such pharmacy benefit 27 manager whether or not the pharmacy benefit manager was aware of, or sanctioned, the conduct. 28 27-84-8. Grounds for suspension or revocation of certificate of authority. 29 (a) The commissioner may revoke or suspend the certificate of any pharmacy benefit 30 manager if, after notice and hearing, the director determines that the pharmacy benefit manager or 31 any member, principal, officer, commissioner, or controlling person of the pharmacy benefit 32 manager, has: 33 (1) Violated any applicable laws, regulations, or orders of the commissioner or another 34 state s authority who oversees pharmacy benefit managers, or has violated any law in the course of LC006503 - Page 7 of 11 1 his or her dealings in such capacity after such certificate of authority has been issued or renewed 2 pursuant to this chapter; 3 (2) Provided materially incorrect, materially misleading, materially incomplete or 4 materially untrue information in the application for a certificate of authority; 5 (3) Obtained or attempted to obtain a certificate of authority through misrepresentation or 6 fraud; 7 (4) Used fraudulent, coercive or dishonest practices; 8 (5) Demonstrated incompetence; 9 (6) Demonstrated untrustworthiness; or 10 (7) Demonstrated financial irresponsibility in the conduct of business in this state or 11 elsewhere; 12 (8) Improperly withheld, misappropriated or converted any monies or properties received 13 in the course of business in this state or elsewhere; 14 (9) Intentionally misrepresented the terms of an actual or proposed contract; 15 (10) Admitted to or been found to have committed any insurance unfair trade practice or 16 fraud; 17 (11) Had a pharmacy benefit manager certificate, registration, or license, or its equivalent, 18 denied, suspended or revoked in any other state, province, district or territory; 19 (12) Failed to pay state income tax or comply with any administrative or court order 20 directing payment of state income tax; or 21 (13) Ceased to meet the requirements for a certificate of authority under this chapter. 22 (b) Before revoking or suspending the certificate of authority of any pharmacy benefit 23 manager pursuant to the provisions of this chapter, the commissioner shall give notice to the holder 24 of the certificate of authority and shall hold, or cause to be held, an adjudicatory proceeding in 25 conformity with chapter 35 of title 42. 26 (c) If a pharmacy benefit manager s certificate of authority in accordance with this section 27 is revoked or suspended by the commissioner, then the commissioner shall forthwith give notice to 28 the pharmacy benefit manager. For good cause shown, the commissioner may delay the effective 29 date of a revocation or suspension to permit the pharmacy benefit manager to satisfy some or all of 30 its contractual obligations to perform pharmacy benefit management services in the state. 31 (d) No individual, corporation, firm or association whose certificate of authority as a 32 pharmacy benefit manager has been revoked pursuant to subsection (a) of this section, and no firm 33 or association of which such individual is a member, and no corporation of which such individual 34 is an officer or director, and no controlling person of the holder of the certificate of authority shall LC006503 - Page 8 of 11 1 be entitled to obtain any certificate of authority under the provisions of this chapter for a minimum 2 period of one year after such revocation, or, if such revocation be judicially reviewed, for a 3 minimum period of one year after the final determination thereof affirming the action of the 4 commissioner in revoking such certificate. 5 (e) If any such certificate of authority held by a firm, association or corporation be revoked, 6 no member of such firm or association and no officer or director of such corporation or any 7 controlling person of the pharmacy benefit manager shall be entitled to obtain any certificate of 8 authority under this chapter for the same period of time, unless the commissioner determines that 9 such member, officer or director was not personally at fault in the matter on account of which such 10 certificate of authority was revoked. 11 (f) The commissioner shall retain the authority to enforce the provisions of and impose any 12 penalty or remedy authorized by this chapter against any person or entity who is under investigation 13 for or charged with a violation of this chapter, even if the person s or entity s certificate of authority 14 has been surrendered, or has expired or has lapsed by operation of law. 15 (g) A pharmacy benefit manager subject to this chapter shall report to the commissioner 16 any administrative action taken against the holder of the certificate of authority in another 17 jurisdiction or by another governmental agency in this state within thirty (30) days of the final 18 disposition of the matter. This report shall include a copy of any order, consent order, decision or 19 other relevant legal documents. 20 (h) Within thirty (30) days of the initial pretrial hearing date, a pharmacy benefit manager 21 subject to this chapter shall report to the commissioner any criminal prosecution of the holder of 22 the certificate of authority taken in any jurisdiction. The report shall include a copy of the initial 23 complaint filed, the order resulting from the hearing and any other relevant legal documents. 24 (i) Chapter 35 of title 42 ( administrative procedures ) shall apply to any notice or hearing 25 by the commissioner in accordance with this section. 26 27-84-9. Penalties for violations. 27 (a) The commissioner, in addition to any other power conferred by law, may, in any one 28 proceeding by order require the pharmacy benefit manager who violates the provisions of this title, 29 or related regulation to make restitution and pay compensatory damages, in an amount to be 30 determined by the commissioner, to any person injured by the unlawful actions of said holder of 31 certificate of authority and to pay to the people of this state a penalty in a sum not exceeding either 32 the greater of ten thousand dollars ($10,000) for each offense and fifteen thousand dollars ($15,000) 33 for each subsequent violation; or the aggregate gross receipts attributable to all offenses. 34 (b) Upon the failure of such a holder of a certificate of authority to pay the penalty ordered LC006503 - Page 9 of 11 1 pursuant to subsection (a) of this section within twenty (20) days after the mailing of the order, 2 postage prepaid, registered, and addressed to the last known place of business of the holder of the 3 certificate of authority, unless the order is stayed by an order of a court of competent jurisdiction, 4 the commissioner may revoke the holder s certificate of authority or may suspend the same for such 5 period as the commissioner determines. 6 27-84-10. Funds collected for penalties, application, and renewal fees -- Health 7 insurance market integrity fund. 8 The office of the health insurance commissioner shall deposit all penalties recovered into 9 the health insurance market integrity fund restricted receipt account established pursuant to § 42- 10 157.1-5. 11 27-84-11. Applicability of other laws. 12 Nothing in this chapter shall be construed to exempt a pharmacy benefit manager from 13 complying with any other applicable state laws or regulations. 14 27-84-12. Assessments. 15 Holders of a certificate of authority issued pursuant to this chapter shall be assessed by the 16 commissioner for the operating expenses of the office of the health insurance commissioner 17 including, but not limited to, any reasonable expenses of any experts, consultants, and contractors, 18 that are attributable to regulating such pharmacy benefit managers in such proportions as the 19 commissioner shall deem just and reasonable. 20 27-84-13. Rules and regulations. 21 The office of the health insurance commissioner shall promulgate rules and regulations 22 necessary to effectuate the purpose of this chapter, including procedures for notice to insurers, 23 covered individuals, employers, and other organizations of the provisions of this chapter. 24 SECTION 2. This act shall take effect on January 1, 2027. ======== LC006503 ======== LC006503 - Page 10 of 11 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 department of business regulation to operate such a business in this state. Further, this act 3 would empower the health insurance commissioner to oversee all pharmacy benefit managers and 4 penalize violations. 5 This act would take effect on January 1, 2027. ======== LC006503 ======== LC006503 - Page 11 of 11