ERISA Industry Committee wants Congress to deem PBMs fiduciaries

Washington, D.C. – The ERISA Industry Committee released a new issue brief, “PBM Reform: Deem PBMs a “Fiduciary” Under ERISA,” calling for pharmacy benefit managers to be deemed a “fiduciary” under the Employee Retirement Income Security Act. The issue brief details how today’s unregulated PBM industry can increase their own profitability at the expense of employer-sponsored health plans, and calls on Congress to clarify that ERISA’s fiduciary duty standard to employer health benefit plans applies in full to PBMs performing services on behalf of the plan.

“PBMs engage in many practices that have the potential to raise costs for employees and their family members enrolled in an employer-sponsored self-insured health plan. Unfortunately, these practices continue largely unabated because the laws governing employee benefits and health insurance currently do not hold PBMs sufficiently accountable,” said Melissa Bartlett, Senior Vice President of Health Policy, ERIC. “Congress can take decisive action to fix this costly regulatory gap by applying the same fiduciary responsibilities to PBMs as those applied to the employers whose shoes they are standing in when performing these services.”

The issue brief is broken into four sections which:

1. Reviews current law as it applies to an ERISA fiduciary and details ERISA’s fiduciary duties, and the consequences for breaching an ERISA fiduciary duty.
2. Illustrates what actions or inactions taken by an employer plan sponsor can result in claims of fiduciary breach filed against them, with additional illustrations of various PBM practices that could result in liability if the PBM was considered an ERISA fiduciary.
3. Provides information regarding how plan sponsors and PBMs could satisfy their ERISA fiduciary duties if they gave due consideration to reducing the cost of covered prescription drugs by including biosimilars in drug formularies made available to employer-sponsored health plans.
4. Includes a case study comparing the cost of a brand name biologic and biosimilars.

The issue brief concludes by examining what Congress can do to apply ERISA’s fiduciary duties to PBMs.

Commenting on the ability to execute this change Bartlett added, “For 50 years, those with fiduciary responsibilities have been focused on choosing the best options and providing the best value to the plan and its participants. We are asking Congress to vest PBMs with those same responsibilities. Absent this action, PBMs will continue to engage in behaviors that are counter to the best interests of the millions of employees who receive their health care through their employers.”

The full text of ERIC’s issue brief can be found here.

Support for reforming PBM practices, including applying fiduciary standards to PBMs, has broad support from stakeholders in the employer community and bipartisan support in Congress.

• A May 2023 letter from 30 employer groups urging Congress to take meaningful action to implement transparency, accountability, and reform in the PBM industry.
• A September 2023 EmployersRX letter reinforces key PBM reforms including banning spread pricing, transparent, rebates and holding PBMs accountable the same as employers.
• A November 2023 letter from EmployersRX and 50 other organizations representing employers, patients, and a wide range of industry sectors, calling on Congress to pass strong PBM reforms.
• A June 2024 employer statement echoing this message and keeping the issue front of mind for Congressional action.