Health & Welfare Fiduciary Governance

/Overview

Health and welfare plans and plan fiduciaries are squarely in the crosshairs of plaintiffs’ firms. Currently, one of the most acute issues involves fiduciary duties related to the evaluation of pharmacy benefit manager (PBM) performance, fees, and guarantees to ensure plan assets are not wasted. The wave of litigation that focuses on prescription drug benefits will continue to intensify as federal and state governments further regulate pharmacy industry practices and plaintiffs refine their arguments.

Nixon Peabody offers deep industry knowledge to guide you through PBM plan administration and reduce pharmacy benefit costs. We are well-versed in all aspects of fiduciary compliance—including evaluating your existing PBM contract, managing PBM requests for proposal, advising on new PBM implementation, guiding annual financial and contract compliance audits and recovery, and more. We’re particularly skilled in negotiating market-forward fee arrangements and strong contractual protections against hidden PBM revenue streams.

Our counsel helps clients mitigate fiduciary risks and enhance cost efficiency to achieve their business objectives.

/Representative experience

• PBM RPF and implementation for group health plan with 300,000+ members: Advised client in connection with a PBM RFP in which the incumbent was not retained. Our assistance included drafting RFP materials, working with pharmacy consultants to analyze RFP responses, participating in finalist meetings, negotiating the contract, and resolving implementation issues. We successfully achieved greater revenue transparency for the plan and reduced annual expenditures by over $50 million.
• Contract negotiations for large multiemployer group health plan: Advised on the renegotiation of a PBM agreement following a market check. We guided the client through the contracting process successfully and efficiently by utilizing our template PBM contract to improve PBM revenue transparency and ensure that negotiated pricing terms were accurately drafted.
• Audit and recovery: Following a comprehensive audit, we were retained by the client to assist with contractual and reconciliation disputes. The anticipated amount at issue is over $45 million due to multi-year violations.
• Contract negotiations for national retailer: We are advising this client on a medical and PBM RFP, evaluating carve-in and carve-out PBM alternatives. The anticipated cost savings are several million dollars.
• Audit and recovery: Following a rebate and ingredient cost audit, we are advising this client with a reconciliation dispute. The anticipated amount at issue is over $500,000.
• PBM RFP and contracting: Representing a multinational financial services corporation in its evaluation and selection of a pharmacy benefits manager.
• Audit and recovery: Assisting a client with a $350,000 rebate reconciliation dispute.