Employer group calls for pharmacy benefit managers to be fiduciaries
ERIC notes that its own employer members have been fiduciaries for decades.
The ERISA Industry Committee, a group for employers with self-funded benefit plans, says Congress should make pharmacy benefit managers fiduciaries.
The employers that belong to ERIC typically act as fiduciaries for their self-insured plans, meaning that, under the terms of the Employee Retirement Income Security Act of 1974, they have a “duty to act in the best interest of plan participants” and a “duty to help control costs,” according to an issue brief ERIC posted last week.
A PBM is a company that helps an employer-sponsored health plan or other plan buy prescription drugs, design drug benefits, administer the benefits and establish the prices paid by the patients and plans.
If Congress made PBMs fiduciaries, “PBMs would be subject to the same fiduciary duties that have applied to employer health plan sponsors for 50 years now, and the same fiduciaries that have protected plan participants and beneficiaries from paying unreasonably high prices for covered benefits and excessive or hidden fees,” according to ERIC.
ERIC suggested that Congress could make PBMs fiduciaries by extending the definition of “fiduciary” already in ERISA section 3(21).
Related: Pharmacy benefit managers, version 2.0 (post J&J lawsuit)
Congress could also state that a PBM becomes an ERISA fiduciary if it agrees to serve an ERISA plan, ERIC said.
The PBM battles
Critics, including pharmacies, some employers and some state regulators, have accused PBMs of increasing their own fee revenue by pushing up prescription list prices to create big, misleading discounts.
ERIC was making its proposal as the Federal Trade Commission was preparing to begin an administrative action against three large PBMs in connection with allegations that they kept the cost of insulin high.
PBMs say insulin prices rose because of the manufacturers’ actions.
Figures from IQVIA, an independent research firm, show that they cut the cost of insulin sharply between 2019 and 2023, the PBMs say.
The ERISA fiduciary duty fights
Efforts to make PBMs fiduciaries could add to legislation and litigation associated with U.S. Labor Department’s efforts to apply a fiduciary duty of care to more types of companies.
In recent years, the department has been engaged in a long, complicated fight over efforts to make at least some annuity sellers fiduciaries.
Since 2008, the department has backed broadening fiduciary responsibility during the Obama and Biden administrations and opposed broadening fiduciary responsibility during the Trump administration.