The thing about being a fiduciary is that all responsibility and liability rests on the plan sponsor. You can hire some pretty awful vendors to manage components of your health plan but mismanagement, excess fees, self-dealing, and profiteering are the plan sponsors peril.
Wells Fargo and PBM Hell (pt. 1)
How PBMs Make Money
Broker Compensation - Rx Kick Backs
Broker Compensation is a hot topic these days. With the passing of the CAA, brokers are required to disclose all direct and indirect forms of compensation they receive in exchange for brokering benefit plans for plan sponsors.
Unfortunately, there are myriad indirect forms of compensation that benefit brokers receive - hence our commitment to a fee-only approach. But the recent Johnson & Johnson lawsuit highlights how PBMs can influence broker recommendations and possibly result in conflicted interests. Here is an excerpt provided by our friends at True Scripts:
J&J Fiduciary Lawsuit
Prudence and Conflicts of Interest
While the J&J employee-participant's lawsuit does not specifically allege non-compliance with this new compensation disclosure requirement, the specter of non-compliance is implied. And such implication is tied back into the fiduciary duty to act prudently.
More specifically, the complaint devotes eight paragraphs asserting that plan fiduciaries must act prudently when hiring brokers and consultants to, for example, assist the plan in selecting and negotiating contract terms with a PBM. These paragraphs go on to explain that in many cases, brokers and consultants have a conflict of interest when recommending a particular PBM due to indirect compensation and
"kick-backs" (as the complaint puts it) paid to the brokers/consultants by the PBM.
Based on these points, the complaint asserts that plan fiduciaries must ensure that any broker/consultant they hire to help them select and negotiate with a PBM does not have a conflict of interest that would prevent the broker/consultant from offering objective advice. The exclamation point to these assertions is that a plan fiduciary's failure to obtain the required disclosures from a broker/consultant makes the contract with the broker/consultant a prohibited transaction under ERISA.
Humira Competition Begins
Amjevita, the first biosimilar competitor to Humira hit the U.S. market at the end of January. Showcasing the dysfunction of our healthcare delivery system, the copycat drug came to market with two drastically different list prices. One, a mere 5% discount relative to Humira and another with a 55% discount. Why two prices and who would pay for the more expensive option?
The Blockbuster Drug of our Lifetime Loses its Monopoly Status on January 1, 2023
In 2003, a little drug named Humira hit the market under the name DE27. Analysts believed at the time that Humira, which was approved to treat Rheumatoid Arthritis, would eventually generate between $500M and $1B in sales annually. In 2021, Humira’s global sales totaled $20.7B. Lifetime earnings have eclipsed $200B.
How GoodRx Makes (A Lot) of Money
On the Path to Fixing Healthcare Part 2 - Eliminating Rx Waste
This post is Part 2 in our series on Fixing Healthcare: Eliminating Rx Waste. Part 1 discussed Direct Contracting and can be read here. What if your business’s employee health plan was covering a drug that cost $350 when there was a comparable alternative that would cost you $13?
Industry Reactions: OptumRx to Pass Along Rebates
Even the Best PBM Can't Protect Against These
Knowledge is power, especially when it comes to price variations in healthcare. Many times, the best pricing exists outside of your health plan, but how to get this information in front of employees is the biggest challenge. Even the most transparent PBM arrangements, can’t protect against uninformed decisions.
