Rhode Island would license pharmacy benefit managers

Rhode Island would put pharmacy benefit managers, or PBMs, under a new state licensing system. Under the Pharmacy Benefit Managers Act, a company could not act as a PBM, offer to act as one or even hold itself out that way without a certificate of authority from the health insurance commissioner.

That matters because PBMs sit in the middle of prescription drug coverage. The bill defines their work broadly, from claims processing and retail network management to payments to pharmacies, prior authorization, formulary management and other tools that affect what covered people can get and what they pay at the counter.

The paperwork behind the power

Getting that certificate would mean opening the books. A PBM would have to submit organizational documents, governing rules, the names and qualifications of key leaders, recent financial statements, a business plan and details about its networks, pricing models and consumer protections. Contracts with insurers, third-party administrators and other users of PBM services would also be subject to inspection by the commissioner.

The license would not be permanent. Each certificate would cost $10,000 per year or fraction of a year, expire after 24 months and eventually be available on a provisional basis for up to two years after the commissioner issues guidance on how to apply.