2026 -- H 8579 SUBSTITUTE A

========

LC006503/SUB A

========

     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:

     SECTION 1. Title 27 of the General Laws entitled "INSURANCE" is hereby amended by

adding thereto the following chapter:

CHAPTER 84

PHARMACY BENEFIT MANAGERS ACT

     27-84-1. Short title.

     This chapter shall be known and may be cited as the "Pharmacy Benefit Managers Act."

     27-84-2. Definitions.

     For the purpose of this chapter:

     (1) "Controlling person" means any person or entity that directly or indirectly has the power

to direct or cause to be directed the management, control or activities of a pharmacy benefit

manager.

     (2) "Health insurance commissioner" or "commissioner" means the office of health

insurance commissioner.

     (3) "Insured" or "covered individual" means any person who is entitled to have pharmacy

services paid by an insurer pursuant to a policy, certificate, contract, or agreement of insurance or

coverage.

     (4) "Insurer" means a health insurance carrier as defined in chapters 18, 19, 20, and 41 of

this title.

     (5) "Pharmacy benefit management services" means the management or administration of

prescription drug benefit for an insurer, directly or indirectly through another entity, and regardless

of whether the pharmacy benefit manager and the insurer are related, or associated by ownership,

common ownership, organization or otherwise. Such management or administration of prescription

drug benefit includes, but is not limited to:

     (i) The administration or management of prescription drug benefits;

     (ii) Claims processing, retail network management, or payment of claims to pharmacies for

dispensing prescription drugs;

     (iii) Clinical or other formulary or preferred drug list development or management;

     (iv) Negotiation or administration of rebates, discounts, payment differentials, or other

incentives, for the inclusion of particular prescription drugs in a particular category or to promote

the placement of particular prescription drugs on a formulary or preferred drug list;

     (v) Patient compliance, therapeutic intervention, or generic substitution programs;

     (vi) Disease management;

     (vii) Drug utilization review or prior authorization;

     (viii) Adjudication of appeals or grievances related to prescription drug coverage;

     (ix) Contracting with network pharmacies; and

     (x) Controlling the cost of covered prescription drugs.

     (6) "Pharmacy benefit manager" or "PBM" shall have the meaning provided in § 27-19-

26.2.

     (7) "Rebate" means all price concessions paid by a manufacturer to a pharmacy benefit

manager or insurer, including rebates, discounts, and other price concessions that are based on the

actual or estimated utilization of a prescription drug. Rebates also include price concessions based

on the effectiveness of a drug as in a value-based or performance-based contract.

     (8) "Restricted pharmacy network" shall have the meaning provided in § 27-29.1-1.

     (9) "Spread pricing" means any amount charged or claimed by a pharmacy benefit manager

for a prescription drug that exceeds the amount paid by the pharmacy benefit manager to a

pharmacy or pharmacist for the dispensing of the prescription drug.

     27-84-3. Certificate of authority required.

     (a) No person, firm, association, corporation or other entity may act, offer to act as, or hold

itself out to be a pharmacy benefit manager, without having a valid certificate of authority as a

pharmacy benefit manager issued by the health insurance commissioner. Notwithstanding the

requirements of this section, for a period of up to two (2) years after the date on which the health

insurance commissioner issues a guidance document outlining the application process for entities

to obtain a valid certificate of authority as a pharmacy benefits manager, a person, firm, association,

LC006503/SUB A - Page 2 of 12

corporation or other entity may act, offer to act as, or hold itself out to be a pharmacy benefit

manager if it has obtained a provisional pharmacy benefit manager certificate of authority (a

provisional certificate of authority) issued by the health insurance commissioner. The health

insurance commissioner may establish minimum registration standards required for a provisional

certificate of authority. Any person, firm, association or corporation who applies for a provisional

certificate of authority shall make an application to the commissioner in such form(s) and

supplements as required by the commissioner. The commissioner may issue a provisional

certificate of authority to applicants that have complied with the commissioner's minimum

provisional certificate of authority standards. The commissioner may reject an application for a

provisional certificate of authority that fails to comply with the minimum standards. Upon at least

sixty (60) days' notice, the commissioner may advise a holder of a provisional certificate of

authority that the provisional certificate of authority will expire as of a certain date. The

commissioner may revoke a provisional certificate of authority upon at least sixty (60) days' notice

for any reason. For each business entity, the officer(s) and director(s) named in the provisional

certificate of authority and the successors thereof shall be responsible for the business entity's

compliance with the applicable laws, rules and regulations of this state.

     (b) Any person, firm, association, corporation or other entity that violates this section shall,

in addition to any other penalty provided by law, be liable for restitution and compensatory

damages to any insurer, pharmacy or covered individual, or other person harmed by the violation

and shall also be subject to either a penalty not exceeding the greater of ten thousand dollars

($10,000) for the first violation and fifteen thousand dollars ($15,000) for each subsequent

violation; or the aggregate gross receipts attributable to all violations.

     27-84-4. Requirements for pharmacy benefit managers.

     (a) Any person, firm, association or corporation who applies to be certified as a pharmacy

benefit manager shall make an application to the commissioner in such form(s) and supplements

required by the commissioner. The commissioner may issue a certificate of authority to applicants

that have complied with the requirements of this chapter. The commissioner may reject an

application filed by a pharmacy benefit manager that fails to comply with the requirements of this

chapter.

     (b) For each business entity, the officer(s) and director(s) named in the application and the

successors thereof shall be responsible for the business entity's compliance with the applicable

laws, rules and regulations of this state.

     (c) Applicants to be a pharmacy benefit manager shall make an application to the health

insurance commissioner upon a form to be furnished by the commissioner. The application shall

LC006503/SUB A - Page 3 of 12

include or be accompanied by the following information and documents:

     (1) All basic organizational documents of the pharmacy benefit manager including, but not

limited to, any articles of incorporation, articles of association, partnership agreement, trade name

certificate, trust agreement, shareholder agreement, and other applicable documents and all

amendments to those documents;

     (2) The bylaws, rules, regulations, or similar documents regulating the internal affairs of

the pharmacy benefit manager;

     (3) The names, addresses, official positions, and professional qualifications of the

individuals who are responsible for the conduct of affairs of the pharmacy benefit manager;

including, all members of the board of directors, board of trustees, executive committee, or other

governing board or committee; the principal officers in the case of a corporation or the partners or

members in the case of a partnership or association; shareholders holding directly or indirectly ten

percent (10%) or more of the voting securities of the pharmacy benefit manager; and any other

person who exercises control or influence over the affairs of the pharmacy benefit manager;

     (4) Annual financial statements or reports for the two (2) most recent years which prove

that the applicant is solvent and any information that the health insurance commissioner may

require in order to review the current financial condition of the applicant;

     (5) A statement describing the business plan of the pharmacy benefit manager including,

but not limited to, information pertaining to staffing levels and activities proposed in this state and

nationwide. The plan shall provide details setting forth the pharmacy benefit manager's capability

for providing a sufficient number of experienced and qualified personnel in the areas of claims

processing, recordkeeping and underwriting;

     (6) Standards and practices utilized by the pharmacy benefit manager for:

     (i) The creation of pharmacy networks and contracting with network pharmacies and other

providers in compliance with chapter 29.1 of title 27, including promotion and use of independent

and community pharmacies and patient access and minimizing excessive concentration and vertical

integration of markets;

     (ii) Development of pricing models used by pharmacy benefit manager both for their

services to an insurer and for the payment of services to a pharmacy benefit manager by a third-

party administrator; and

     (iii) Protection of consumers; and

     (7) Any other pertinent information that may be required by the commissioner on any of

the following related to a pharmacy benefit manager's operations in any state including, but not

limited to:

LC006503/SUB A - Page 4 of 12

     (i) Conflicts of interest between pharmacy benefit managers and insurers;

     (ii) Deceptive practices in connection with the performance of pharmacy benefit

management services;

     (iii) Anti-competitive practices in connection with the performance of pharmacy benefit

management services; and

     (iv) Unfair claims practices in connection with the performance of pharmacy benefit

management services.

     (d) The applicant shall make available, for inspection by the office of the health insurance

commissioner, copies of all contracts with insurers, third-party benefit administrators, and other

persons or entities utilizing the services of the pharmacy benefit manager in this state.

     (e) A pharmacy benefit manager shall immediately notify the office of the health insurance

commissioner of any material change in its ownership, control, or other fact or circumstance

affecting its qualification for a certificate of authority in this state. Any pharmacy benefit manager

holding a certificate issued under this chapter shall inform the office of the health insurance

commissioner by a means acceptable to the commissioner of a change of address within thirty (30)

days of the change.

     27-84-5. Certificate of authority term, renewal, and fees.

     (a) Any person, firm, association or corporation who applies to be certified as a pharmacy

benefit manager shall provide with the submission of an application to the office of the health

insurance commissioner a fee of ten thousand dollars ($10,000) for each year or fraction of a year

in which a certificate shall be valid. Any person, firm, association or corporation who applies for a

provisional certificate of authority as a pharmacy benefit manager shall provide with the submission

of an application to the office of the health insurance commissioner a fee of ten thousand dollars

($10,000).

     (b) Every pharmacy benefit manager's certificate of authority shall expire twenty-four (24)

months after the date of issue. Every certificate of authority issued pursuant to this chapter may be

renewed for the ensuing period of twenty-four (24) months upon the filing of an application and

renewal fee of ten thousand dollars ($10,000) in conformity with this chapter.

     (c) If an application for a renewal certificate of authority shall have been filed with the

office of the health insurance commissioner at least two (2) months before its expiration, then the

certificate sought to be renewed shall continue in full force and effect either until the issuance by

the health insurance commissioner of the renewal certificate applied for or until five (5) days after

the commissioner shall have refused to issue such renewal certificate and given notice of such

refusal to the applicant.

LC006503/SUB A - Page 5 of 12

     (d) The health insurance commissioner may refuse to issue a pharmacy benefit manager's

certificate of authority if, in the commissioner's judgment, the applicant or any member, principal,

officer or director of the applicant, is not trustworthy and competent to act as or in connection with

a pharmacy benefit manager, or that any of the foregoing has given cause for revocation or

suspension of such license, or has failed to comply with any prerequisite for the issuance of such

license.

     (e) Pharmacy benefit manager applicants and certificate holders shall be subject to

examination by the office of the health insurance commissioner as often as the commissioner may

deem it expedient. The commissioner may promulgate any necessary regulations establishing

methods and procedures for facilitating and verifying compliance with the requirements of this

chapter.

     (f) The commissioner may issue a replacement for a currently in-force certificate that has

been lost or destroyed. Before the replacement certificate shall be issued, there shall be on file with

the office of the health insurance commissioner a written application for the replacement certificate,

affirming under penalty of perjury that the original certificate has been lost or destroyed, together

with a fee of two thousand dollars ($2,000).

     27-84-6. Reporting requirements for pharmacy benefit managers.

     (a) On or before July first of each year, every pharmacy benefit manager shall report to the

office of the health insurance commissioner, in a statement subscribed and affirmed as true under

penalties of perjury, the information requested by the commissioner including, but not limited to:

     (1) Any pricing discounts, rebates of any kind, inflationary payments, credits, clawbacks,

fees, grants, chargebacks, reimbursements, other financial or other reimbursements, incentives,

inducements, refunds or other benefit received by the pharmacy benefit manager;

     (2) The terms and conditions of any contract or arrangement, including other financial or

other reimbursements incentives, inducements or refunds between the pharmacy benefit manager

and any other party relating to pharmacy benefit management services provided to an insurer

including, but not limited to, dispensing fees paid to pharmacies;

     (3) The following information attributable to patient utilization of prescription drugs

covered by insurers in the state including, but not limited to:

     (i) The aggregated dollar amount of rebates and fees collected from pharmaceutical

manufacturers;

     (ii) The aggregated dollar amount of rebates and fees collected from pharmaceutical

manufacturers that were passed to insurers;

     (iii) The aggregated dollar amount of rebates and fees collected from pharmaceutical

LC006503/SUB A - Page 6 of 12

manufacturers passed to covered individuals at the point of sale of a prescription drug; and

     (iv) The aggregated dollar amount of rebates and fees collected from pharmaceutical

manufacturers that were retained by the pharmacy benefit manager.

     (4) A response to a set of standard questions developed by the commissioner regarding

business practices including, but not limited to, spread pricing, pharmacy network development,

and utilization management;

     (5) The rebate percentage and dollar amount retained by the pharmacy benefit manager for

every rebate, discount, price concession or other consideration under each rebate contract; and

     (6) The dollar amount of any other compensation paid by a drug manufacturer to a

pharmacy benefit manager for services, including distribution management services, data or data

services, marketing or promotional services, research programs, or other ancillary services, under

each rebate contract.

     (b) The office of the health insurance commissioner may require the filing of quarterly or

other statements, which shall be in such form and shall contain such matters as the commissioner

shall prescribe.

     (c) The commissioner may address to any pharmacy benefit manager or its officers any

inquiry in relation to its provision of pharmacy benefit management services or any matter

connected therewith. Every pharmacy benefit manager or person so addressed shall reply in writing

to such inquiry promptly and truthfully, and such reply shall be, if required by the office of the

health insurance commissioner, subscribed by such individual, or by such officer or officers of the

pharmacy benefit manager, as the commissioner shall designate, and affirmed by them as true under

the penalties of perjury.

     (d) In the event any pharmacy benefit manager or person does not submit the report

required by subsection (a) of this section, the commissioner is authorized to levy a civil penalty

against such pharmacy benefit manager or person not to exceed ten thousand dollars ($10,000) per

day for each day beyond the date the report is due or the date specified by the commissioner for

response to the inquiry.

     (e) Not later than October 1 of each year, the commissioner shall publish the aggregated

data from all reports for that year required by this section in an appropriate location on the office

of health insurance commissioner's Internet website. The combined aggregated data from the

reports must be published in a manner that does not disclose or tend to disclose proprietary or

confidential information of any pharmacy benefit manager or insurer.

     (f) All information, documents and material disclosed by a pharmacy benefit manager

under this section and in the possession or under the control of the office of the health insurance

LC006503/SUB A - Page 7 of 12

commissioner shall be deemed confidential and not subject to disclosure except to the extent such

information is included on an aggregated basis across all pharmacy benefit managers in the

published report required by subsection (e) of this section. This subsection shall not apply to

information, documents and materials where they are in the possession and under the control of a

person or entity other than the commissioner.

     27-84-7. Additional obligations.

     (a) No pharmacy benefit manager shall violate any provisions of the state law applicable

to pharmacy benefit managers.

     (b) No pharmacy benefit manager shall permit any subcontractor, affiliate, subsidiary, or

other individual or entity performing pharmacy benefit management services for a pharmacy

benefit manager to take any action which would violate any provision of law if taken by the

pharmacy benefit manager. A pharmacy benefit manager shall be responsible for the actions of any

subcontractor, affiliate, subsidiary, or other individual or entity who violates any provision of this

article in performance of any pharmacy benefit management services for such pharmacy benefit

manager whether or not the pharmacy benefit manager was aware of, or sanctioned, the conduct.

     27-84-8. Grounds for suspension or revocation of certificate of authority.

     (a) The commissioner may revoke or suspend the certificate of authority of any pharmacy

benefit manager if, after notice and hearing, the director determines that the pharmacy benefit

manager or any member, principal, officer, commissioner, or controlling person of the pharmacy

benefit manager, has:

     (1) Violated any applicable laws, regulations, or orders of the commissioner or another

state's authority who oversees pharmacy benefit managers, or has violated any law in the course of

his or her dealings in such capacity after such certificate of authority has been issued or renewed

pursuant to this chapter;

     (2) Provided materially incorrect, materially misleading, materially incomplete or

materially untrue information in the application for a certificate of authority;

     (3) Obtained or attempted to obtain a certificate of authority through misrepresentation or

fraud;

     (4) Used fraudulent, coercive or dishonest practices;

     (5) Demonstrated incompetence;

     (6) Demonstrated untrustworthiness; or

     (7) Demonstrated financial irresponsibility in the conduct of business in this state or

elsewhere;

     (8) Improperly withheld, misappropriated or converted any monies or properties received

LC006503/SUB A - Page 8 of 12

in the course of business in this state or elsewhere;

     (9) Intentionally misrepresented the terms of an actual or proposed contract;

     (10) Admitted to or been found to have committed any insurance unfair trade practice or

fraud;

     (11) Had a pharmacy benefit manager certificate, registration, or license, or its equivalent,

denied, suspended or revoked in any other state, province, district or territory;

     (12) Failed to pay state income tax or comply with any administrative or court order

directing payment of state income tax; or

     (13) Ceased to meet the requirements for a certificate of authority under this chapter.

     (b) Before revoking or suspending the certificate of authority of any pharmacy benefit

manager pursuant to the provisions of this chapter, the commissioner shall give notice to the holder

of the certificate of authority and shall hold, or cause to be held, an adjudicatory proceeding in

conformity with chapter 35 of title 42.

     (c) If a pharmacy benefit manager's certificate of authority in accordance with this section

is revoked or suspended by the commissioner, then the commissioner shall forthwith give notice to

the pharmacy benefit manager. For good cause shown, the commissioner may delay the effective

date of a revocation or suspension to permit the pharmacy benefit manager to satisfy some or all of

its contractual obligations to perform pharmacy benefit management services in the state.

     (d) No individual, corporation, firm or association whose certificate of authority as a

pharmacy benefit manager has been revoked pursuant to subsection (a) of this section, and no firm

or association of which such individual is a member, and no corporation of which such individual

is an officer or director, and no controlling person of the holder of the certificate of authority shall

be entitled to obtain any certificate of authority under the provisions of this chapter for a minimum

period of one year after such revocation, or, if such revocation be judicially reviewed, for a

minimum period of one year after the final determination thereof affirming the action of the

commissioner in revoking such certificate.

     (e) If any such certificate of authority held by a firm, association or corporation be revoked,

no member of such firm or association and no officer or director of such corporation or any

controlling person of the pharmacy benefit manager shall be entitled to obtain any certificate of

authority under this chapter for the same period of time, unless the commissioner determines that

such member, officer or director was not personally at fault in the matter on account of which such

certificate of authority was revoked.

     (f) The commissioner shall retain the authority to enforce the provisions of and impose any

penalty or remedy authorized by this chapter against any person or entity who is under investigation

LC006503/SUB A - Page 9 of 12

for or charged with a violation of this chapter, even if the person's or entity's certificate of authority

has been surrendered, or has expired or has lapsed by operation of law.

     (g) A pharmacy benefit manager subject to this chapter shall report to the commissioner

any administrative action taken against the holder of the certificate of authority in another

jurisdiction or by another governmental agency in this state within thirty (30) days of the final

disposition of the matter. This report shall include a copy of any order, consent order, decision or

other relevant legal documents.

     (h) Within thirty (30) days of the initial pretrial hearing date, a pharmacy benefit manager

subject to this chapter shall report to the commissioner any criminal prosecution of the holder of

the certificate of authority taken in any jurisdiction. The report shall include a copy of the initial

complaint filed, the order resulting from the hearing and any other relevant legal documents.

     (i) Chapter 35 of title 42 ("administrative procedures") shall apply to any notice or hearing

by the commissioner in accordance with this section.

     27-84-9. Penalties for violations.

     (a) The commissioner, in addition to any other power conferred by law, may, in any one

proceeding by order require the pharmacy benefit manager who violates the provisions of this title,

or related regulation to make restitution and pay compensatory damages, in an amount to be

determined by the commissioner, to any person injured by the unlawful actions of said holder of

certificate of authority and to pay to the people of this state a penalty in a sum not exceeding either

the greater of ten thousand dollars ($10,000) for each offense and fifteen thousand dollars ($15,000)

for each subsequent violation; or the aggregate gross receipts attributable to all offenses.

     (b) Upon the failure of such a holder of a certificate of authority to pay the penalty ordered

pursuant to subsection (a) of this section within twenty (20) days after the mailing of the order,

postage prepaid, registered, and addressed to the last known place of business of the holder of the

certificate of authority, unless the order is stayed by an order of a court of competent jurisdiction,

the commissioner may revoke the holder's certificate of authority or may suspend the same for such

period as the commissioner determines.

     27-84-10. Applicability of other laws.

     (a) Nothing in this chapter shall be construed to exempt a pharmacy benefit manager from

complying with any other applicable state laws or regulations.

     (b) Notwithstanding the provisions of 2026--H 7127 Substitute A, as amended, Article 12,

Section 13, relating to the Pharmacy Benefit Manager Transparency Reporting and Study Act, shall

have no force and effect and is hereby superseded by the provisions of this chapter.

     27-84-11. Assessments.

LC006503/SUB A - Page 10 of 12

     Holders of a certificate of authority issued pursuant to this chapter and holders of a

provisional certificate of authority shall be assessed by the commissioner for the operating expenses

of the office of the health insurance commissioner including, but not limited to, any reasonable

expenses of any experts, consultants, and contractors, that are attributable to regulating such

pharmacy benefit managers in such proportions as the commissioner shall deem just and

reasonable.

     27-84-12. Rules and regulations.

     The office of the health insurance commissioner shall promulgate rules and regulations

necessary to effectuate the purpose of this chapter, including procedures for notice to insurers,

covered individuals, employers, and other organizations of the provisions of this chapter.

     SECTION 2. This act shall take effect on January 1, 2027.

========

LC006503/SUB A

========

LC006503/SUB A - Page 11 of 12

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- PHARMACY BENEFIT MANAGERS ACT

***

     This act would require pharmacy benefit managers to apply for a certificate of authority

from the office of the health insurance commissioner to operate such a business in this state.

Further, this act would empower the health insurance commissioner to oversee all pharmacy benefit

managers and penalize violations.

     This act would take effect on January 1, 2027.

========

LC006503/SUB A

========

LC006503/SUB A - Page 12 of 12