As lawsuits hit major companies over prescription drug pricing, it’s a good time to evaluate your pharmacy benefits management. Employee Benefits Compliance Director Nick Karls and Pharmacy Director Nathan Cassin outline proactive measures you can take today to help avoid legal headaches tomorrow.
Have you heard about the current litigation involving the Johnson & Johnson and Wells Fargo group health plans? In both class actions, the employee plaintiffs allege that the companies failed to meet their fiduciary obligations to the plan through mismanagement of the prescription drug benefits they were offered. The lawsuits allege that prices for specific products were not competitive with cash-pay or discount card prices which are available to the public.
While every company and situation is unique, your organization can get ahead of any potential contractual issues with a thorough review of your pharmacy benefits management (PBM) contract. By leveraging multiple solutions in the marketplace, you can negotiate better terms and conditions, which may help to address allegations like those in these lawsuits.
Don’t Panic – Prepare Instead
While our Holmes Murphy Employee Benefits Compliance team is monitoring the progress of these lawsuits, there’s no need to raise the alarm just yet.
It’s important to note that Johnson & Johnson and Wells Fargo are both Fortune 100 employers with funded health plans that hold plan assets in a trust, while most of the companies and clients we work with have fully insured or unfunded, self-insured plans in which no plan assets are held in a trust. Most employers pay the largest percentage of plan claims and expenses, meaning the employer has the greatest incentive to monitor and control plan costs.
Additionally, most of our clients are working tirelessly to provide the best benefits at the most reasonable cost to plan participants. As a result, there is a decreased likelihood of litigation under this novel class action approach.
Despite the reduced probability of a lawsuit for many employers, some vendors and other third parties have seized upon these class actions as potentially lucrative product additions to their suite of solutions. There’s never a guarantee that an employer is immune from this line of litigation, and partners like Holmes Murphy can’t provide legal advice or services. For a full assessment of your legal risk, we recommend discussing these lawsuits with your legal counsel to ensure your company is prepared.
Our Experts Are Here for You
The Holmes Murphy Employee Benefits Compliance team and the Holmes Murphy Pharmacy Consulting team are following this litigation closely and will provide pertinent updates as they become available. We’re proud to support businesses and leaders in understanding fiduciary responsibilities to your group health plan.
If you’d like to learn more about how our team can provide the strategic guidance you need to succeed, contact us today and let’s get started!
