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H 7189Insurance

Insurance - Pharmacy Freedom of Choice - Fair Competition and Practices

This bill requires pharmacy benefit managers to pay independent pharmacies the same rates they pay their own affiliated pharmacies.

Held for study
Population
Affected
75
Email Legislator
Introduced Jan 21, 2026Committee House Health & Human Services

Plain-English Summary

This bill mandates that Pharmacy Benefit Managers (PBMs) must reimburse independent or non-affiliated pharmacies at the same rate they reimburse their own affiliated pharmacies for the same drugs and services. It prohibits PBMs from using contract terms or performance metrics to create payment disparities. The legislation requires PBMs to provide reimbursement data to the Office of the Health Insurance Commissioner (OHIC) to verify compliance. Additionally, these requirements apply to Medicaid managed care organizations. The goal is to ensure fair competition and prevent discrimination against pharmacies that are not owned by the PBMs.

For younger readers

There are companies called Pharmacy Benefit Managers (PBMs) that manage medicine plans for insurance companies. Sometimes, these companies also own their own pharmacy stores. This bill creates a rule that these companies must play fair. They are not allowed to pay their own stores more money for medicine than they pay other local pharmacy stores. This helps make sure that all pharmacies, whether big or small, are treated equally for doing the same job. The state government will watch these companies to make sure they follow the rules and do not cheat.

Who & Where It Applies

Impacted groups
Independent PharmaciesPharmacy Benefit Managers (PBMs)Medicaid Managed Care OrganizationsAffiliated/Chain PharmaciesHealth Insurance Companies
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
Amount unknown
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Protects small, independent businesses and community pharmacies from predatory pricing practices by large corporate conglomerates, helping to maintain local economic stability.
  • Ensures equitable access to healthcare for Medicaid recipients by preventing PBMs from steering patients only to their own pharmacies, thereby improving health equity.
  • Increases corporate accountability and transparency by requiring PBMs to disclose reimbursement data to state regulators, curbing the power of opaque healthcare middlemen.
  • Could potentially lead to PBMs lowering reimbursement rates for their affiliated pharmacies to match the lower independent rates rather than raising independent rates, which would not benefit the workers.
  • Does not directly address the high cost of prescription drugs themselves, but rather focuses on the dispute between two types of business entities regarding profit distribution.
  • May inadvertently increase administrative costs for the state's Medicaid program if the mandatory reimbursement parity results in higher overall payouts without a corresponding increase in funding.
For Conservatives
  • Promotes free market competition by preventing vertically integrated monopolies from manipulating market rates to disadvantage their competitors.
  • Supports small business owners and entrepreneurs by leveling the playing field against massive corporations that use their size to distort the market.
  • Increases market transparency, allowing for a clearer understanding of pricing structures without necessarily imposing direct government price controls on the consumer end.
  • Increases government regulation and interference in private business contracts by dictating how companies must structure their reimbursement rates.
  • Expands the size and scope of the administrative state by granting more oversight and rulemaking authority to the Office of the Health Insurance Commissioner.
  • Could potentially drive up insurance premiums if PBMs lose the ability to negotiate specific network savings and pass those costs on to the consumer.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 31 additions

SECTION 1. Chapter 27-29.1 of the General Laws entitled "Pharmacy Freedom of Choice — Fair Competition and Practices" is hereby amended by adding thereto the following section: 27-29.1-12. Fair pharmacy reimbursement and anti-discrimination.

(a) Reimbursement parity. A pharmacy benefit manager shall not reimburse a non-affiliated pharmacy or pharmacist in an amount less than the net effective reimbursement, inclusive of all fees, adjustments, incentives, and other remuneration, paid directly or indirectly to an affiliated pharmacy or pharmacist for the same drug or service.

(b) Anti-discrimination. A pharmacy benefit manager shall not impose contractual terms, reimbursement methodologies, performance metrics, or other requirements that have the effect of reimbursing non- affiliated pharmacies or pharmacists at a lower rate than affiliated pharmacies or pharmacists for the same drug or service.

(c) Transparency of affiliated reimbursement. Upon request by the office of the health insurance commissioner (“OHIC”), a pharmacy benefit manager shall provide reimbursement data reasonably necessary to verify compliance with this section, including data relating to affiliated pharmacies.

(d) Enforcement. This section shall be enforced by OHIC and the attorney general pursuant to their existing authority under law.

(e) Medicaid applicability. All Medicaid managed care organizations, and all pharmacy benefit managers contracted by or on behalf of Medicaid managed care organizations, shall comply with the provisions of this section with respect to all Medicaid pharmacy benefits, whether administered directly or through a pharmacy benefit manager.

(f) Prohibition on evasion. A pharmacy benefit manager, insurer, or Medicaid managed care organization shall not avoid compliance with this section through affiliation structures, subcontracting, differential pricing metrics, reimbursement methodologies, or contractual arrangements designed to favor affiliated pharmacies or pharmacists.

(g) Rulemaking. The OHIC may promulgate and adopt rules and regulations necessary to implement and enforce this section.

SECTION 2. This act shall take effect upon passage.