By Jackie Grady, Grady Legal
The Department of Health and Human Services finalized a rule back in May that would require pharmaceutical companies to disclose the list price of drugs in their direct-to-consumer advertisements. The impetus for this was greater transparency for consumers.
Not surprisingly, pharmaceutical companies have filed suit pushing back on this regulation. Why? According to them, listing drug prices would actually confuse consumers because it’s not really the price.
This is exactly why healthcare costs are out of control. Over the years, carriers, manufacturers and pharmaceutical companies have created a web of rebates, subsidies and negotiated rates with various insurance carriers so the price of medicine will vary between patients.
If pharmaceutical companies think that disclosing pricing in direct-to-consumer ads will confuse people, then what does that mean for employer-sponsored insurance plans? If there are back-door deals and subsidies, then an employer needs to understand what these deals are. Failure to inquire may open up potential liability for an Employee Retirement Income Security Act (ERISA) claim.
Under ERISA, the benefit manager and those involved with benefit decisions have a fiduciary duty to ensure that all aspects of the health plan are in the best interest of the employees, including pharmacy-related benefits. Health plan administrators should do their due diligence to determine what prescription costs will be. Some companies employ a Pharmacy Benefit Manager, or PBM. The administrator should know how much the Pharmacy Benefit Manager is making and how those numbers are reached. This is critical so that there is no violation of ERISA’s prohibition on unreasonable compensation.
Bottom line: if pharmaceutical companies are wary of advertising their prices because of these back-door deals, then employers and health plan administrators and managers should be even more wary of what is going on with their pharmacy benefits.
Hidden costs in pharmaceuticals shouldn’t be healthcare. To learn how to take control of healthcare costs, check out Maestro Health’s webinar, “The hot mess of healthcare: How to cut through the fraud, waste & abuse,” where I discussed all of this and more.