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H 7817Pharmaceuticals

Insurance - Pharmacy Freedom of Choice - Fair Competition and Practices

This bill requires insurance companies and pharmacy managers to cover the exact medication a doctor prescribes without substitution.

Introduced
Population
Affected
68
Email Legislator
Introduced Feb 26, 2026Committee House Health & Human Services

Plain-English Summary

This legislation limits the power of Pharmacy Benefits Managers (PBMs) regarding prescription drug coverage. It mandates that PBMs must accept and cover the specific prescription drug chosen by a doctor or other authorized prescriber for their patient. The bill prohibits PBMs from denying coverage or substituting drugs based on their own cost-saving rules, formularies, or "step therapy" requirements. Essentially, the doctor's decision on medication overrides the insurance middleman's preference. Violations are considered unlawful interference with medical practice and are subject to penalties set by the Department of Business Regulation.

For younger readers

Sometimes, when a doctor gives a sick person medicine, a company called a "pharmacy manager" tries to swap it for a different, cheaper medicine. This bill makes a rule that stops those companies from doing that. If a doctor decides a patient needs a specific medicine to get better, the pharmacy manager has to say yes and pay for that specific one. They cannot force the patient to try a different medicine first. The doctor is in charge of choosing the medicine, not the company.

Who & Where It Applies

Impacted groups
Doctors and PrescribersPharmacy Benefits ManagersPatientsInsurance CompaniesPharmacies
Impacted communities
All

Constitutional & Fiscal Check

This bill faces potential challenges regarding federal preemption under ERISA, as it regulates the administration of employee health benefit plans. While the Supreme Court has recently allowed states more leeway to regulate PBM costs, this bill dictates benefit design (medical necessity criteria), which might infringe on federal authority. Additionally, there could be challenges based on the Contracts Clause, as it significantly alters existing business arrangements between insurers and PBMs.

Estimated cost
Amount unknown
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Prioritizes patient health over corporate profits by ensuring that medical decisions are made by doctors rather than insurance middlemen or financial managers.
  • Eliminates "step therapy" and formulary restrictions, ensuring equitable access to necessary medications for vulnerable populations who often suffer from delayed care due to insurance bureaucracy.
  • Strengthens consumer protection by classifying interference with prescribed treatments as unlawful, holding large pharmacy benefit managers accountable for denying care.
  • Could lead to significant increases in health insurance premiums for working families, as removing cost-control mechanisms allows pharmaceutical companies to charge maximum prices for brand-name drugs.
  • May inadvertently funnel more money to large pharmaceutical corporations by preventing the substitution of equally effective, lower-cost generic alternatives.
  • Fails to address the underlying systemic issue of privatized healthcare, offering a regulatory patch rather than a comprehensive public solution to drug pricing.
For Conservatives
  • Protects the sanctity of the doctor-patient relationship by ensuring medical decisions are made by licensed professionals rather than corporate administrators.
  • Reduces bureaucratic red tape for healthcare providers, allowing them to treat patients without navigating complex and restrictive insurance protocols.
  • Empowers individuals and their physicians to choose the best course of treatment, limiting the ability of third-party entities to dictate personal health decisions.
  • Constitutes heavy-handed government interference in the free market by dictating the terms of contracts between private insurance entities and pharmacy benefit managers.
  • Likely to drive up the cost of doing business for insurance providers and employers, resulting in higher premiums for consumers and reduced market competition.
  • Expands the size and scope of the administrative state by granting the Department of Business Regulation broad new powers to penalize private companies.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 18 additions · 1 deletion

SECTION 1. Section 27-29.1-1 of the General Laws in Chapter 27-29.1 entitled "Pharmacy Freedom of Choice — Fair Competition and Practices" is hereby amended to read as follows: 27-29.1-1. Definitions. For purposes of this chapter, the following terms shall mean:

(1) “Director” shall mean the director of the department of business regulation.

(2) “Eligible bidder” shall mean a retail pharmacy, community pharmacy, or pharmacy department registered pursuant to chapter 19.1 of title 5, irrespective of corporate structure or number of locations at which it conducts business, located within the geographical service area of a carrier and willing to bid for participation in a restricted pharmacy network contract.

(3) “Insured” shall mean 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” shall mean an insurance carrier as defined in chapters 18, 19, 20, and 41 of this title.

(5) “Nonrestricted pharmacy network” shall mean a network that permits any pharmacy to participate on substantially uniform terms and conditions established by an insurer or pharmacy benefits manager.

(6) “Pharmacy benefits manager” shall mean any person or entity who or that is not licensed in Rhode Island as an insurer and that develops or manages pharmacy benefits, pharmacy network contracts, or the pharmacy benefit bid process.

(7) “Prescriber” shall mean any healthcare professional licensed pursuant to the laws of this state and authorized to prescribe drugs to patients to treat or manage any condition of the body or mind. (7)(8) “Restricted pharmacy network” shall mean an arrangement for the provision of pharmaceutical drug services to insureds that under the terms of an insurer’s policy, certificate, contract, or agreement of insurance or coverage requires an insured or creates a financial incentive for an insured to obtain prescription drug services from one or more participating pharmacies that have entered into a specific contractual relationship with the carrier.

SECTION 2. 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: 27-29.1-7.1. Acceptance of prescriber’s-recommended drug.

(a) A pharmacy benefits manager shall accept and honor a prescriber’s chosen prescription drug for a patient.

(b) A pharmacy benefits manager is prohibited from substituting, denying, rejecting, or otherwise failing to authorize coverage for a prescription drug selected by a prescriber for a patient on the basis of the pharmacy benefits manager’s own clinical judgment, cost containment protocol, formulary preference, or step therapy requirement.

(c) Any pharmacy benefits manager’s action that results in the denial, delay, or modification of a prescriber’s chosen drug for a patient shall be deemed an unlawful interference with the practice of medicine and shall be subject to penalties instituted by the director of the department of business regulation.

(d) The director of the department of business regulation or the director’s designee shall promulgate rules, regulations, and penalties necessary to implement this chapter.

SECTION 3. This act shall take effect upon passage.