A recently filed lawsuit against Johnson & Johnson can serve as an example to use when advocating for patients who have insurance through their employers that can potentially hurt them physically and financially. When your patient has an employer-funded health insurance plan where the employer directly pays for all medical costs — called an ERISA plan for the federal law that governs employee benefit plans, the Employee Retirement Income Security Act — there are certain accountability, fairness, and fiduciary responsibilities that the employers must meet. These so-called ERISA plans do not have to follow state utilization management legislation that addresses harmful changes in insurers’ formularies and other policies, so when the plans are not properly overseen and do not mandate the delivery of proper care at the lowest cost, both the patient and employer may be losing out.
The J&J lawsuit serves as a bellwether warning to self-insured employers to demand transparency from their third-party administrators so as not to (knowingly or unknowingly) breach their fiduciary duty to their health plans and employees. These duties include ensuring reasonable plan costs as well as acting in the best interest of their employees. There were multiple complaints in the lawsuit by a J&J employee, stating that she paid a much higher price for her multiple sclerosis drug through the plan than the price she eventually found at a lower cost pharmacy. The allegations state that J&J failed to show prudence in its selection of a pharmacy benefit manager (PBM). In addition, the company failed to negotiate better drug pricing terms, and the design of the drug plan steered patients to the PBM specialty pharmacy, resulting in higher prices for the employees. All of these led to higher drug costs and premiums for employees, which, according to the lawsuit, is a breach of J&J’s fiduciary duties.
Dr. Madelaine A. Feldman
Why Should Rheumatologists Care About This?
With all insurance plans, it feels as though we are dealing with obstacles every day that keep us from giving the excellent rheumatologic care that our patients deserve. Self-insured employers now account for over 50% of commercial health plans, and as rheumatologists caring for the employees of these companies, we can use those transparency, accountability, and fiduciary responsibilities of the employer to ensure that our patients are getting the proper care at the lowest cost.
Not only is the J&J lawsuit a warning to self-insured employers, but a reminder to rheumatologists to be on the lookout for drug pricing issues and formulary construction that leads to higher pricing for employees and the plan. For example, make note if your patient is forced to fail a much higher priced self-injectable biologic before using a much lower cost infusible medication. Or if the plan mandates the use of the much higher priced adalimumab biosimilars over the lower priced biosimilars or even the highest priced JAK inhibitor over the lowest priced one. Let’s not forget mandated white bagging, which is often much more expensive to the plan than the buy-and-bill model through a rheumatologist’s office.
Recently, we have been able to help rheumatology practices get exemptions from white-bagging mandates that large self-insured employers often have in their plan documents. We have been able to show that the cost of obtaining the medication through specialty pharmacy (SP) is much higher than through the buy-and-bill model. Mandating that the plan spend more money on SP drugs, as opposed to allowing the rheumatologist to buy and bill, could easily be interpreted as a breach of fiduciary duty on the part of the employer by mandating a higher cost model.