You need a Fiduciary for your Pharmacy Benefit Plan.
From 2006-present, there have been over 400 class action lawsuits filed against ERISA retirement plan fiduciaries, alleging their failure to prudently manage the investments and/or administrative expenses of 401(k) and 403(b) plans, for the sole benefit of plan participants and beneficiaries. Excessive investment management fees, advisor compensation and record keeper fees were deducted from participant account balances, because plan fiduciaries did not adequately educate themselves on these financial details and did not require their plan vendors to disclose all revenue sharing and other industry compensation practices. Over $1B in verdicts or settlement payments have been made by or on behalf of these defendant plan fiduciaries (with the total growing every month). This does not include the hundreds of millions expended on attorney fees to defend against these claims.
History is about to repeat itself with respect to the fiduciaries of Pharmacy Benefit Plans.
Companies looking to do right by their employees and stay in compliance with ERISA should at the minimum look at the following tasks.
Identify a group of management level employees to serve on a health benefit plan fiduciary committee.
Provide the fiduciary committee with all resources necessary to obtain fiduciary and subject matter training from an independent pharmacy benefit expert.
Encourage the fiduciary committee to carefully review the requirements of Section 202 of the CAA and obtain the indirect compensation disclaimers required thereunder to avoid financially conflicted consultants. This full disclaimer should be drafted by your PBM counsel, not the vendor’s counsel.
Request and obtain all your pharmacy claims data from the PBM (accompanying each claims invoice), for analysis and modeling.
Have your PBM contract and consulting services agreement reviewed by special PBM counsel to obtain a fully independent assessment of the strengths and weaknesses of those key contracts.
The fiduciary role is a powerful one, built on trust and security. Formalizing this role for your Prescription Drug Benefit Plan is the wise, prudent, and necessary decision for every company seeking to do right by their employees.
