One of the main advantages of using a fiduciary to manage your pharmacy benefits is that they are required to put the interests of their clients before their own financial gain. For instance, it has been reported that insurance professionals who are not obligated to uphold a fiduciary standard will recommend insurance products to their clients solely based on which ones come with the highest commissions, not necessarily because the recommendations are in their clients’ best interests. Here are 8 reasons you need a fiduciary PBM.
- Conflicts of interest are minimized: A fiduciary pharmacy benefit manager must disclose any conflicts of interest and cannot profit from recommending certain products or investments.
- Professionalism and expertise: A fiduciary pharmacy benefit manager is held to a high standard of professionalism and is required to have a certain level of expertise.
- Transparency: Fiduciary pharmacy benefit managers must provide full disclosure of all fees, including their take rate, and costs associated with the pharmacy benefit management services they recommend and offer.
- Customized advice: A fiduciary pharmacy benefit manager takes the time to understand their client’s unique financial situation and goals and provides customized advice accordingly.
- Fiduciary duty to act in client’s best interest: A fiduciary pharmacy benefit manager is legally bound to act in the best interest of the clients, not their own or their firm’s interest.
- To the best of their knowledge, ensure that all pharmacy benefit advice is accurate and comprehensive.
- Refrain from engaging in any potential conflicts of interest; and
- Make pharmaceutical benefit suggestions that are consistent with the goals, objectives, and risk tolerance of their clients.
As stated above, a fiduciary pharmacy benefit manager (PBM) is required by law to act in the best interests of their clients. Along with these instances, the “suitability standard” that is applied to brokers, insurance agents, and other financial professionals is far less stringent than the fiduciary requirement. The only requirement of the suitability criteria is that recommendations to clients are appropriate if a coverage objective fulfills their needs and goals (the last bullet point in the list). Since the fiduciary standard would cost them money in the form of fees as well as the additional expense of adhering to the new standard of care, many pharmacy benefit managers would prefer to be held to a suitability standard than live up to the 8 reasons you need a fiduciary PBM.