Another major lawsuit against a Fortune 50 company regarding Pharmacy pricing
Jeff Bastien
Employee Benefits Broker & Strategic Business Partner | HRiQ Founding Member | Finance & Culture Geek trapped in a Benefits Broker's body! ??
Here we go again. I could just copy and past my last update that was sent on this topic from Johnson & Johnson when their employees sued them over pharmacy costs. This is J&J:
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"... agreed to pay more than $10,000 for a 90-day supply of a generic drug for multiple sclerosis. They found several national pharmacies charged less than $80 for the same drug."
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Now this week's lawsuit against Wells Fargo; look familiar??
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"...for example, the plan [Wells Fargo] paid more than $69,000 for a tube of cancer medication bexarotene that cost as little as $3,750 at other pharmacies, and a markup of nearly 400% on generic "specialty drugs" used to treat certain conditions."
A lawsuit filed against Wells Fargo alleges that the bank mismanaged its employee health insurance plan by overpaying for prescription drugs, including a 400% markup on some medications. The ex-employees are accusing the bank of violating ERISA [remember these WRAP Docs required by Federal law that we put in place], which mandates that companies manage these plans with care and in the best interest of their employees. If the allegations are proven true, it could have serious implications not just for Wells Fargo but also for other companies managing similar plans. Read full article?HERE
ERISA says we have to do what?
Employers offering health and welfare plans to their employees must navigate the responsibilities outlined in ERISA documents that designate them as fiduciaries. As fiduciaries, employers have a legal obligation to act in the best interests of plan participants, ensuring transparency, prudence, and adherence to fiduciary standards. Understanding and fulfilling these fiduciary duties not only mitigates risks but also fosters trust and compliance within the organization's benefits programs.
So yes, if your organization offers health insurance, you are subject to ERISA, whether you have 225,000 employees like Wells Fargo, or if your plumbing company has 12 employees [and everything in between].
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Fully-Insured vs. Self-Insured
Does it matter if you're fully-insured and don't have control of your PBM??
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Absolutely, 100%, NO!
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Being self-insured affords you transparency into these costs with the ability to evaluate different PBMs, formularies, and specialty programs. Being fully-insured doesn't. However, the above scenarios with J&J and Wells Fargo have deep, meaningful impact on your ability to offer employees sustainable benefits at a fair price.
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How about the $70,000 prescriptions hitting your plan than can be sourced for $3,750? Or a $10,000 90-day supply that can be sourced for $80? Both scenarios that compound year over year with increases on top of prior increases.
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Pharmacy gets forgotten fully-insured when we can make just as much of a positive impact. Its arguably even more important to put the focus on it because of the lack of data transparency.?
Push the discussion or "Pay the Price..."
...literally; via compounding health insurance premium increases and constly employee lawsuits that question the employer as a fiduciary and throws a grenade on culture. Penalties for ERSIA violations can be found on the IRS website .
Criminal Penalties can be up to $500,000 for companies, and up to $100,000 and 10 years in prison for individuals
Civil Penalties can be up to $1,677 per day for companies failing to adopt funding improvement or rehabilitation plans
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Fully-Insured? Lets talk about your pharmacy spend in respect to your overall costs. What chronic conditions are being treated with those drugs? How can we help source lower cost generic and specialty medications for your plan members? YES, we can do this while being fully-insured!
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Self-Insured??This is where you are granted access to data that can really be damning, whether you know it or not [as J&J and Wells Fargo are finding out]. When was the last time your PBM was evaluated? Where are you sourcing specialty drugs? Who/where does the profit of your PBM flow through - your company, your current broker?
Call to Action!!
The time is now to protect your organization. Every company offering insurance is subject to these same obligations to their employees. Whether you are in the market or not, reach out for a consult at? [email protected] ?and receive valuable market information including:
I am here to support your organization as the rubber meets the road with healthcare.