Lawsuit Draws Attention to Fiduciary Responsibilities (Part 2)

April 30, 2024

After a lawsuit against Johnson & Johnson, employers are taking a closer look at pharmacy benefit managers and how their broker can help.

Lawsuit Draws Attention to Fiduciary Responsibilities (Part 2)

In last month’s blog, we discussed the class action lawsuit recently filed against Johnson & Johnson (J&J). The lawsuit alleges that J&J failed to meet its fiduciary responsibilities in its selection of a pharmacy benefit manager (PBM).

According to the lawsuit, J&J failed to act in the best interest of employees who participated in their health plan by:

  • Failing to conduct an open RFP in selecting its PBM
  • Relying on a broker with a financial conflict of interest
  • Failing to participate in negotiating the terms and conditions of its PBM contract
  • Failing to incentivize employees to purchase lower-priced generic drugs over high-price brand name drugs
  • Paying for generic specialty drugs at an average markup of 498% above cost
  • Allowing its PBM’s in-house mail-order pharmacy to fill medications with higher prices than those charged by retail pharmacies for the same drugs
  • Engaging a PBM that profited by charging their customers more than a pharmacy charges for medication.

As a result of these failures, the company’s employees and their families purportedly paid millions more for their prescription medications than they needed to. In one example cited by the lawsuit, employees paid more than $10,000 for a medication that was available for $40 without insurance.

With our PBM-agnostic approach, The Miller Group helps clients develop a pharmacy strategy that saves both them and their employees money in their group health plan. Our services include:  

  1. Full service PBM procurement,
  2. Uncovering hidden sources of PBM revenue,
  3. Negotiating complex pharmacy contracts to help clients understand what they are buying and why the small print matters,
  4. Arming clients with the knowledge to make sound purchasing decisions,
  5. Providing annual market checks to keep up with the ever-changing pharmacy benefit landscape,
  6. Plan design modeling to drive savings and access for employees,
  7. Educating employees on ways to save money,
  8. Auditing to ensure prescriptions are processed in accordance with contract guarantees,
  9. Working with PBM on behalf of clients to recover overpayment on claims processed incorrectly, and underpayment of rebates owed to the plan.

While meeting fiduciary standards is ultimately the employer’s responsibility, a broker with a robust pharmacy management service can help you avoid the mistakes described in the J&J lawsuit. This collaboration will ensure compliance with legal requirements and enhance the overall management of pharmacy benefits.

Keep in mind that this is a vast and complicated topic, and we can only touch the surface of it in a blog. In the coming months, The Miller Group will send out additional information and compliance tools to clients. In the meantime, this guide from the U.S. Department of Labor provides a more extensive discussion of employers’ fiduciary responsibilities under a group health plan.

About The Author

Tracy Johnson

Tracy Johnson
Email As Director of Pharmacy, Benefits, Tracy has more than 20 years of experience with customized pharmacy benefit solutions. Tracy works with clients to help drive down pharmacy benefit expenses embedded in an employer’s healthcare costs. She provides easy-to-understand reporting, shares regular updates on pharmacy benefit trends and industry insights, manages carrier relationships and serves as a subject matter expert for clients and account team associates.

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