Approximately one year ago, Ohio’s Attorney General announced a four-part proposal calling for quick action from the state’s legislature to shine a bright light on PBM contracts. The goal was to cut down on the hidden cash flows to non-fiduciary PBMs. AG Yost’s proposal called for:
- Drug purchases in the state to be conducted under a master PBM contract that is administered by a single contact point
- Ohio’s Auditor of State to have full power to review all PBM contracts, purchases and payments
- The state to prohibit nondisclosure agreements on drug pricing.
- PBMs to operate as fiduciaries, uh-oh!
So, what is the difference between a fiduciary PBM and one that isn’t? There are some very big differences.
- Fiduciary PBMs must provide full disclosure
- Fiduciary PBMs provide more transparency
- Fiduciary PBMs are a better value (ex. less reliance on Rx consultants or vendors to reduce drug costs)
- Final plan costs are usually lower with Fiduciary PBMs
In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relationship, good conscience requires the fiduciary to act at all times for the sole and interest of the one who trusts.
A fiduciary ideally would not have a conflict of interest. It has been said that fiduciaries must conduct themselves “at a level higher than that trodden by the crowd” and that “[t]he distinguishing or overriding duty of a fiduciary is the obligation of undivided loyalty.
Pharmacy Benefit Managers whose business models are predicated on hidden cash flows will be very reluctant to provide full disclosure. A leopard cannot change its spots. However, plan sponsors who are relentless in their pursuit of radical transparency can significantly reduce pharmacy spend without sacrificing benefit levels or asking employees to pay more.
