H 8172Pharmaceuticals

Health and Safety - Prescription Drug Savings and Transparency Act of 2026

This bill mandates a study to determine if consolidating Medicaid prescription drug management would save the state money.

Held for study

Population
Affected

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Introduced Feb 27, 2026Committee House Finance

Plain-English Summary

This legislation authorizes the Office of the Auditor General to conduct a comprehensive study on the potential benefits of consolidating prescription drug management within Rhode Island's Medicaid program. The study will compare the current system against models used in other states, such as a single statewide preferred drug list or state-administered fee-for-service models. The bill mandates that pharmacy benefit managers and related entities provide unredacted financial and operational data to the Auditor General to facilitate this review. A final report with recommendations is due to the state legislature by March 31, 2027.

For younger readers

This bill is about checking if the state is spending money wisely on medicine for people who need help paying for it. Right now, the state pays different companies to manage these medicines. This new rule tells a special office to study if it would be better and cheaper to have just one system instead of many. It forces the companies to show their math and price lists so the state can see if they are getting a good deal. The results of this study will be shared in 2027.

Who & Where It Applies

Impacted groups

Medicaid beneficiariesPharmacy Benefit Managers (PBMs)PharmaciesTaxpayersHealthcare providers

Impacted communities

All

Constitutional & Fiscal Check

The bill requires private entities to provide "unredacted access" to proprietary data "notwithstanding any contractual provision to the contrary." This could potentially invite legal challenges based on the Contracts Clause (Article I, Section 10) or the Fourth Amendment regarding unreasonable administrative searches of business records. However, given that these entities receive state funds, the state generally maintains broad auditing authority, making the constitutional risk low to moderate.

Estimated cost

Amount unknown

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Increases transparency and accountability for corporate Pharmacy Benefit Managers (PBMs) by mandating the disclosure of financial data and rebate structures often kept hidden.
Aims to protect the Medicaid budget and potentially redirect savings back into the social safety net to better support low-income families and individuals with disabilities.
Seeks to improve continuity of care and access to medication for Medicaid beneficiaries by potentially simplifying the complex system of multiple drug lists and plans.
Establishes a study rather than immediate action, delaying potential relief or improvements for Medicaid beneficiaries until at least 2027.
Consolidation of drug lists could potentially lead to a more restrictive formulary, limiting the specific medication choices available to patients.
If the study recommends a single private PBM model rather than a state-administered model, it may further entrench corporate control over public health resources.

For Conservatives

Promotes fiscal responsibility by auditing government spending and seeking to eliminate waste and inefficiency in the Medicaid program.
Utilizes data-driven analysis to potentially reduce the tax burden on Rhode Island residents by lowering administrative costs.
Increases oversight of the opaque pricing structures used by intermediaries, ensuring the state is not being overcharged for services.
Mandates that private companies turn over proprietary data and trade secrets to the government, interfering with corporate autonomy and private contracts.
Could lead to a recommendation for a single state-administered system, expanding the size and scope of government bureaucracy.
Incurs immediate government spending to fund the study and potential consultants before any savings are realized.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 91 additions

SECTION 1. Legislative findings and purpose. The general assembly finds and declares that:

(1) The Rhode Island Medicaid program represents a substantial portion of the state budget and provides essential health coverage to children, seniors, people with disabilities, and low-income working families.

(2) Prescription drug benefits account for a significant and growing share of Medicaid expenditures, and the structure used to administer those benefits directly affects program costs, transparency, administrative efficiency, and beneficiary access to medically necessary medications.

(3) Several states, including Kentucky, West Virginia, Ohio, and Connecticut, have improved Medicaid prescription drug oversight by adopting consolidated prescription drug management approaches, including combinations of uniform preferred drug lists, consolidated pharmacy benefit management functions, and centralized administrative oversight.

(4) Research, audits, and multi-state experience demonstrate that consolidated prescription drug management approaches can lower administrative costs for states, increase the share of manufacturer rebates returned to Medicaid, reduce administrative burdens for prescribers and pharmacies, and improve continuity of care for beneficiaries, particularly when individuals change plans or eligibility categories.

(5) Audits and oversight reviews in multiple states have found that incomplete disclosure, contractual confidentiality provisions, and the routing or reclassification of Medicaid pharmacy- related payments through affiliates or non-pharmacy cost categories have impeded effective oversight, necessitating clear statutory authority for regulator access to relevant information.

(6) The purpose of this act is to require an independent, comprehensive, and fiscally rigorous evaluation conducted by the office of the auditor general to determine whether Rhode Island would benefit from consolidating prescription drug management within the Medicaid program, and to ensure that such evaluation is based on complete and accurate information regarding Medicaid prescription drug expenditures.

SECTION 2. Title 23 of the General Laws entitled "HEALTH AND SAFETY" is hereby amended by adding thereto the following chapter: 23-106-1. Short title. This act shall be known and may be cited as the "Prescription Drug Savings and Transparency Act of 2026." 23-106-2. Authority to conduct independent study.

(a) The office of the auditor general is authorized and directed to conduct a performance, financial, and/or cost-effectiveness study to evaluate whether Rhode Island would benefit from consolidated prescription drug management for the Medicaid program. As deemed necessary to conduct the study, the office of the auditor general may contract with an independent pharmacy pricing and audit consultant (PPAC) or other qualified external entities with expertise in Medicaid prescription drug management, pharmacy benefit audits, and fiscal analysis.

(b) The study shall evaluate and compare, at a minimum, the following prescription drug management structures currently implemented by one or more state Medicaid programs:

(1) Administration of the pharmacy benefit through Medicaid managed care organizations utilizing multiple pharmacy benefit managers and multiple preferred drug lists, representing Rhode Island’s current status quo;

(2) Administration of the pharmacy benefit under a single, statewide preferred drug list, regardless of claims-processing or administrative structure including, but not limited to, models used in the states of Connecticut, Kentucky, and West Virginia;

(3) Administration of the pharmacy benefit through a single state-contracted pharmacy benefit manager, such as in the state of Kentucky, through direct state contracting; and

(4) Administration of the pharmacy benefit under a state-administered fee-for-service model, including through a fiscal agent or administrative services organization, such as in the state of Connecticut;

(c) In conducting the study, the office of the auditor general shall retain full and independent authority to evaluate fiscal assumptions, cost estimates, methodologies, the receipt, allocation, and accounting of manufacturer rebates, administrative fees, and projected financial outcomes. 23-106-3. Scope of analysis. The study required under this act shall evaluate the prescription drug management structures identified in § 23-106-2 and shall include, but not be limited to:

(1) A comparison of current Medicaid prescription drug expenditures with projected expenditures under distinct prescription drug management models currently implemented by one or more state Medicaid programs, including fiscal impacts to the state budget;

(2) An assessment of administrative costs, pricing transparency, rebate aggregation and retention, pharmacy reimbursement methodologies, and oversight implications;

(3) An analysis of impacts on Medicaid beneficiary access, provider prescribing practices, utilization management requirements, and continuity of care;

(4) A review of cost savings, health outcomes, and implementation challenges experienced by states that have adopted the structures identified in § 23-106-2; and

(5) Recommendations for any statutory, regulatory, procurement, or contract changes necessary to implement any such structure within Medicaid, if determined to be in the best interest of the state. 23-106-4. Required information.

(a) Any private entity including, but not limited to, any pharmacy benefit manager, managed care organization, group purchasing organization, rebate aggregator, claims processor, administrator, subcontractor, affiliate, parent, subsidiary, or related entity, that receives, retains, administers, manages, negotiates, or is otherwise paid or reimbursed any funds, fees, rebates, price concessions, or other remuneration, directly or indirectly, in connection with prescription drug benefits provided under the Rhode Island Medicaid program, shall, notwithstanding any contractual provision to the contrary, upon request of the office of the auditor general or contractors working in conjunction with the auditor general for purposes of performing this study, provide timely, complete, and unredacted access to information, data, and records reasonably necessary to carry out the study required under this chapter.

(b) Information subject to subsection (a) of this section shall include, but not be limited to, records relating to:

(1) All Medicaid pharmacy claims, including ingredient costs, dispensing fees, administrative fees, utilization data, and any other amounts paid, received, retained, or transferred in connection with Medicaid prescription drug benefits;

(2) All rebates, price concessions, discounts, administrative charges, service fees, data fees, or other forms of compensation or remuneration, regardless of how such amounts are characterized or reported;

(3) Any arrangements, agreements, or transactions through which compensation related to Medicaid prescription drug benefits is assigned, shared, transferred, aggregated, retained, or reclassified, including amounts embedded in or attributed to non-pharmacy services or other cost categories;

(4) All contracts, subcontracts, and amendments relating to Medicaid prescription drug benefits, including contracts with manufacturers, wholesalers, pharmacies, intermediaries, or affiliated entities;

(5) Formularies, preferred drug lists, utilization management criteria, step therapy protocols, and prior authorization policies applicable to Medicaid prescription drug benefits; and

(6) Any other information necessary to evaluate the fiscal, administrative, and operational impacts of consolidated prescription drug management within the Medicaid program.

(1) Shall be used solely for purposes of the study authorized by this chapter;

(2) Shall be protected from public disclosure to the extent permitted by law, including as confidential commercial or proprietary information; provided that, such designations shall not be used to withhold information from the office of the auditor general; and provided, further, that aggregated or de-identified findings may be included in the final report; and

(3) Shall be subject to appropriate data security and privacy protections. 23-106-5. Enforcement. This chapter shall be enforced by the office of the auditor general and the attorney general. Nothing in this chapter shall be construed to limit or restrict the authority of the office of the auditor general, the attorney general, or any other state official under any other provision of law. 23-106-6. Reporting. The office of the auditor general shall submit a written report of findings and recommendations, including any proposed legislation, to the speaker of the house of representatives, the president of the senate, and the chairs of the house and senate finance committees no later than March 31, 2027. 23-106-7. Severability. If any provision of this chapter or its application to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of the chapter.

SECTION 3. This act shall take effect upon passage.