Is The PBM A Fiduciary? I Don’t Think So.

I’m not a lawyer, but with the potential repealing of the Maine law regarding PBMs, it’s time to think about this question.

Here’s a definition from

A fiduciary duty is an obligation to act in the best interest of another party. For instance, a corporation’s board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust’s beneficiaries, and an attorney has a fiduciary duty to a client.

A fiduciary obligation exists whenever the relationship with the client involves a special trust, confidence, and reliance on the fiduciary to exercise his discretion or expertise in acting for the client. The fiduciary must knowingly accept that trust and confidence to exercise his expertise and discretion to act on the client’s behalf.

Just looking at this definition, it raises a few eyebrows:

  1. Can the PBM be responsible to its shareholders and to the clients?
  2. Does the PBM act on behalf of the client?

The fiduciary relationship basically makes the PBM into a cost-plus model where profits and costs are know. There are already lots of transparency standards for clients to leverage in designing their PBM contracts.

I struggle to see a comparable fiduciary business relationship out there. Suggestions?

On the second point, the whole PBM model around benefit design and interventions has been set up as consultative where the PBM provides ideas and models for the payer to select from. They don’t get to chose what’s best for them. I’m not sure that the lobbyists for the original plan would want this. If I’m a PBM with a mail order pharmacy, I believe that this is the best model to save money, drive adherence, and avoid errors. So, as a fiduciary, wouldn’t I have to put in a mandatory mail program with mandatory generics lots of utilization management programs and a closed formulary? That’s what’s best financially in most (all cases).

I’m all in favor of disclosure of conflicts of interest. PBMs should explain how they make money to their clients so it’s clearly understood.

In this older post on another blog, a physician talks about physicians having some fiduciary responsibility, but I don’t think this goes far enough. If the physician has a fiduciary responsibility to the patient, wouldn’t they have to disclose their profit based on different choices:

  • If you choose this medication and fill it from my in-office dispensing, I make $X versus you choosing this other drug.
  • If you get this procedure done, I get a referral from my colleague plus I make $X on performing the surgery.

Of course, maybe the issue is that Maine (and others) have tried to use fiduciary to focus on the financial controls around the PBM business model instead of the business practices about helping payers understand their decisions (the legal breakdown on MDs seems more business focused):

  • This will affect X% of the population.
  • This will save you $X compared to your other options over here.
  • This will be a win-win for us because we make money as your GFR goes up.
  • We charge manufacturers an administrative fee for managing the rebate contracts and will keep that.

When the DC regulation around PBM fiduciary responsibility went to court, it was struck down. Will Maine finally end up in the same bucket? Will others follow?

I guess the question for people to ask is what has happened to Maine’s pharmacy costs in the past few years. Has there been an advantage (or disadvantage) to this law?

2 Responses to “Is The PBM A Fiduciary? I Don’t Think So.”

  1. Mr. George Van Antwerp,
    To be blunt, your statement that mandatory mail order programs are always the best financial decisions for payer in all cases is simply not the case and is proven with over 100 employer prescription analysis done by my company, ApproRx. Then, when implemented, the savings come to fruition 100% of the time. I am more than willing to provide our data to you to show you how and why this is done.
    As a small PBM competing against the big boys for business we have actually changed our business model to look for accounts that are using Mail Order from the Big 4 PBMs. We have done this because we learned that is where the low hanging fruit is and the easiest accounts to pick off and move to our PBM. They are the easiest because of high Rx distribution prices charged by these Big 4 mail order facilities.
    I know you will never believe these mail order facts, no one does until after the analysis, but if one truly believes in fiduciary responsibility, one can send us any account using mail order and we will do a bottom line analysis. We will do this total analysis, contract language included, at no charge to anyone. An analysis of a real world account is the only way to prove of what is the least expensive route of Rx distribution for a payer……and definitely the only way you will believe.
    Other issues in this blog
    PBM decisions are business decisions that they make to increase long term profits, to that end:
    The lack of competition was the cause of price changes in Maine. The lack of competition was caused by the unwillingness of the large PBMs to disclose profits streams and create a transparency model in Maine, because to do so would jeopardized their profits in the other 49 states. Unfortunately ApproRx did not have a sales force in Maine to take advantage of this situation.
    Also do not forget the $29.3 million in fines the PBMs had to pay in Maine for unfair and fraudulent business activities. Here again PBMs chose to pay the fines to protect profits in other states rather than go to court and be required to show profit techniques.

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