Skip to main content
S 2563Pharmaceuticals

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

Mandates a state study to determine if consolidating Medicaid prescription drug management would save money and improve transparency.

Introduced37 Yea0 Nay1 Not voting
Population
Affected
35
Email Legislator
Introduced Feb 13, 2026Committee Senate Health & Human Services

Plain-English Summary

This legislation mandates the Rhode Island Office of the Auditor General to conduct a comprehensive study on the state's Medicaid prescription drug program. The goal is to determine if the state can save money and improve efficiency by consolidating how it manages pharmacy benefits, rather than using multiple different managers. The bill grants the Auditor General the authority to request and receive unredacted data from private companies involved in the Medicaid program to complete this analysis. A report with findings and recommendations must be submitted to the legislature by March 31, 2027.

For younger readers

This bill tells the state government to do a big homework assignment called a study. The government pays for medicine for people who need help, but right now, they use many different companies to manage it. This bill asks if it would be smarter and cheaper to use just one system instead. To figure this out, the companies involved have to show the government their private records. The goal is to see if Rhode Island can save money and make sure people get the medicine they need more easily.

Who & Where It Applies

Impacted groups
Medicaid BeneficiariesPharmacy Benefit Managers (PBMs)Managed Care OrganizationsTaxpayersPharmacies
Impacted communities
All

Constitutional & Fiscal Check

Moderate risk

There is a moderate constitutional risk regarding the Contracts Clause and the Fourth Amendment. The bill mandates that private entities provide "unredacted access" to proprietary records "notwithstanding any contractual provision to the contrary." While the state has broad power to audit Medicaid funds, compelling the disclosure of trade secrets and overriding existing private confidentiality agreements could lead to litigation claiming unreasonable search and seizure or unconstitutional interference with private contracts.

Estimated cost
Amount unknown
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Promotes transparency and accountability by forcing private Pharmacy Benefit Managers (PBMs) to disclose data regarding rebates and pricing, combating corporate opacity in healthcare.
  • Aims to reduce administrative waste and costs within the Medicaid system, potentially freeing up public funds to be reinvested into expanding care or other social services.
  • Seeks to improve continuity of care for low-income populations by exploring a unified drug list, ensuring patients don't lose access to medication when their specific plan changes.
  • Delays immediate action on high drug costs by requiring a study that won't be completed until 2027, rather than implementing known reforms immediately.
  • Does not guarantee a transition to a non-profit or state-run model, leaving open the possibility of simply consolidating power with a single corporate monopoly.
  • Allocates state resources to pay for external consultants and auditors rather than directly funding healthcare services for the poor during the study period.
For Conservatives
  • Focuses on fiscal responsibility by identifying opportunities to reduce state spending and eliminate administrative waste within the Medicaid budget.
  • Utilizes a data-driven approach to ensure that taxpayer dollars are being used efficiently before committing to a permanent change in government structure.
  • Increases oversight of the Medicaid program to prevent fraud, waste, and abuse by scrutinizing the flow of money between the state and contractors.
  • Empowers the government to override private contracts and force businesses to disclose proprietary trade secrets and confidential financial data.
  • Could lead to the creation of a larger government bureaucracy if the state decides to take over pharmacy benefit management directly.
  • Interferes with the free market by potentially moving toward a government-controlled single-payer style system for Medicaid drugs rather than competitive private management.

Votes

Loading votes...

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.

(c) Information provided pursuant to this section:

(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.