The Employer's Guide Blog for Overseeing PBMs

The Definition of Oversee: to watch over and direct (an undertaking, a group of workers, etc.) in order to ensure a satisfactory outcome or performance.

Fiduciary rule revival: Should it apply to pharmacy benefits managers?

The $280 billion drug-benefit industry has fought off efforts by a number of states to impose a fiduciary standard by arguing that U.S. employment law takes precedence. But the federal government could try and overcome that resistance with new regulation, or press Congress to solidify such a change through legislation.

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Some of the biggest players in the industry have warned that a fiduciary standard could be deeply damaging to their business. Express Scripts Holding Co., which agreed to be bought by health insurer Cigna Corp. this year, said in a 2015 filing that a fiduciary rule “could have a material adverse effect upon our financial condition, results of operations and cash flows.”

Tyrone’s Commentary:

The Pharmaceutical Care Management Association or PCMA is ‘the’ trade arm for large PBMs like Express Scripts, Optum, CVS Health and others. Nothing comes out of that camp which hasn’t first been vetted by its membership. Stephanie Kanwit, outside counsel for the trade group said and I quote, “PBMs aren’t fiduciaries for their customers and they don’t want to be.” This isn’t true as a handful of PBMs do want to put their clients’ interests first even above their own; meaning they don’t benefit at all from spreads, manufacturer revenue or poor clinical management. The law of common sense tells us that if a vendor’s fees go down then so too does the client’s cost.

Benefit managers don’t believe a fiduciary designation will lower drug costs, said Stephanie Kanwit, outside counsel for the trade group Pharmaceutical Care Management Association. They’re responsible for honoring a contract, she said. “It’s an idea whose time should never come,” she said. “PBMs aren’t fiduciaries for their customers and they don’t want to be.”

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Tyrone Squires, MBA, CPBS

I am the proud founder and managing director of TransparentRx, a fiduciary-model PBM based in Las Vegas, Nevada. We help health plan sponsors reduce pharmacy spend, by as much as 50%, without cutting benefits or shifting costs to employees.

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