House Rep. Proposes Designating PBMs as Health Plan Fiduciaries

September 24, 2024
Hall Benefits Law, LLC

U.S. House Rep. Nick Langworthy (R-NY) recently proposed during a House Oversight Committee Meeting that pharmacy benefit managers (PBMs) should be health plan fiduciaries. As fiduciaries under federal law, PBMs would have to make decisions that lower health plan costs and benefit patients.

According to Langworthy, the lack of a fiduciary duty to health plans is one reason PBMs charge excessive fees, push more expensive prescription drugs, and profit from benefits and rebates that rightfully belong to the plans. In response, executives from the three major PBMs controlling about 80% of the prescription drug market – UnitedHealth’s OptumRx, CVS Health’s CVS Caremark, and Cigna’s Evernorth Care Management & Express Scripts – argued that making PBMs fiduciaries would not fit with their role of managing pharmacy benefits.

One PBM executive claimed it is lowering customers’ overall net and pharmacy costs under its contracts, pointing to popular but expensive weight-loss drugs such as Wegovy, Sazenda, and Zepbound. However, members of Congress present at the meeting expressed no sympathy for the PBMs’ position. House Rep. Jake Auchincloss (D-Mass.)  presented the PBM executives with a list comparing the government’s National Average Drug Acquisition Cost (NADAC) to the cost under a contract between a PBM and an employer. For example, teriflunomide, a drug that treats multiple sclerosis, has a NADC cost of $16 for a 30-day supply. The PBM contract cost through the employer is $6,229.

Members of both parties have voiced frustration over the monopoly that the three major PBMs have on the prescription drug market. This monopoly is limiting competition and increasing drug prices. While some states have imposed fiduciary duties for PBMs under state law, PBMs continue to argue that a blanket fiduciary duty at the federal level is impossible.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and H.R./employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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