March 07, 2024

Kendra Roberson Speaks to AIS Health About Pharmacy Benefit Manager Industry Challenges

In “PBM Industry Could Face Major Challenges From ERISA Suits,” benefits and executive compensation partner Kendra Roberson spoke to AIS Health’s RADAR on Drug Benefits publication about potentially significant changes in the legal obligations of commercial plan sponsors and pharmacy benefit managers (PBMs) around drug pricing.

“Historically, employers just haven’t had insight into, for example, how much is a PBM reimbursing the pharmacy for a drug, or what amount are the group purchasing organizations (GPOs) getting for rebates? How much of that is getting passed through to the PBM? How much is the PBM passing back through to the plan? Even the most sophisticated employer doesn’t have visibility into those amounts,” Roberson explained.

With no PBM transparency data available, PBM-focused plaintiffs are likely to have a harder time than medical benefit plaintiffs proving a plan sponsor has failed its fiduciary duty, Roberson noted. She added that PBM-related fiduciary responsibility suits will likely deal with allegations “implying that there’s a fiduciary duty for fiduciaries to steer their participants to the lowest-cost drugs or only offer the lowest-cost drugs.”

“I don’t think that’s an accurate depiction of the law,” Roberson said of that legal theory. “I think there’s a fiduciary duty for fiduciaries to look at their overall drug [spend] and make reasonable choices about what’s in their [plan] participants’ best interest in terms of how to administer a plan and a prescription drug benefit. But I wouldn’t say there’s a duty under the law that employers have to offer the lowest-price prescription drug for every drug [category].”

Roberson also stated that the shifting policy picture adds important hints about the nature of future litigation. “The Federal Trade Commission (FTC) is now of the view that…extensive vertical integration by PBMs into the drug supply have put employers and other payers in the marketplace at a severe information disadvantage,” she continued. “In the past, FTC was concerned that mandated disclosure requirements between PBMs and their customers could encourage price coordination and collusion.”

Roberson concluded, “The FTC itself has suggested that it’s appropriate for policymakers to require PBMs to provide accurate and timely information to their buyers.”

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