JP Morgan's Fiduciary Failure

JP Morgan Chase faces a lawsuit from an employee claiming the company failed its fiduciary duty by maintaining a pharmacy benefit manager relationship that forces employees to pay inflated prices for medications. The case highlights how PBMs can create massive price disparities, with one medication costing $8,000 through the plan versus just $30 at retail pharmacies.

• Employees diagnosed with conditions requiring expensive medications are being harmed by non-transparent PBM relationships
• The medical process follows SOAP (Subjective, Objective, Assessment, Plan) but breaks down at the pharmacy level
• Price differences can be extreme - up to 200 times higher through certain PBMs
• Three major players dominate the PBM market: CVS Caremark, OptumRx, and Express Scripts
• Companies with over 100 employees should work with transparent, pass-through PBMs
• Health plan fiduciaries (typically CFOs and HR directors) are ultimately responsible for PBM selection
• Similar lawsuits have affected other major companies like Johnson & Johnson

If you're concerned about your health plan's pharmacy benefits, consult with a knowledgeable benefit advisor, such as myself, who can provide objective analysis of your current arrangements.

Music by Alex Lambert.

Contact Justin via text 740-525-5259 or via email JFutrell@TrueNorthCompanies.com

I welcome the opportunity to hear your feedback from this episode!

Thanks again to my musically gifted friend Alex Lambert for the music. Also thanks to Kevin Asehan for the edits.

Chapters

• 0:00 JP Morgan Sued Over PBM Relationship
• 1:25 The Patient's Medical Journey Explained
• 2:28 The Shocking 200x Price Difference
• 3:51 Understanding PBM Market Players
• 5:34 Fiduciary Responsibility and Transparency

Transcript

Speaker 1: 0:18

Welcome to another Tuesday Morning with Justin. I'm Justin Futrell, benefit Advisor at True North Companies, and today we've got a really intriguing topic. The headline to center the conversation is JP Morgan sued by employees over PBM Pharmacy Benefit Manager relationship with CVS. A JP Morgan Chase employee is suing JPMorgan because of them being a bad fiduciary of the plan. What does that mean? They're making bad decisions in this employee's perspective. So, yes, we'll dive into it, but first I want to put you in the shoes of the plaintiff, this JP Morgan employee, to see how we got here.

Speaker 1: 1:08

Now, when something goes wrong with you, what do you do? When something goes wrong with your body, your health, you see a doctor. Now I'm lucky to have a lot of doctor friends and I called one of them, dr Ryan Owen, and he explained to me the process. When someone comes in, there's an acronym called SOAP. That is Subjective, objective Assess and Plan. Now a doctor is going to ask questions, they're going to gather information. They might do an exam. They might objectively run some tests to see what's going on with your body, might objectively run some tests to see what's going on with your body. Ultimately, they're going to make an assessment and create a plan for that patient. So if you're the patient, imagine a doctor comes and tells you or someone in your life, hey, you have multiple sclerosis and as part of our plan of attack to treat this, we're going to prescribe a medication. This medication is teraflunomide. I hope I did okay in pronouncing that. Teraflunomide is what I can tell you for sure is the actual cost. The average retail price is $7,961. So, round up, it's $8,000. Now average retail pharmacies have the average price is $30. Yes, I fumbled on my words because I don't know how insane this can be in our healthcare system before we start to see changes. So bottom line $8,000 is the average retail price, but you can get it from pharmacies for $30.

Speaker 1: 2:58

So the lawsuit let's go back to it. If you're this employee, would you be upset if you were told you had to pay your full deductible and out-of-pocket maximum instead of only paying $30? So the plaintiff shared that, okay. Okay, here we are. The plaintiff shared no prudent fiduciary would agree or allow for its plan, the health plan, and participants and beneficiaries to pay a price that is more than 200 times higher than the price available to any individual who just walks into a pharmacy and pays out of pocket. 200 times greater. No wonder there's a lawsuit, right? And it's not that hard gang. It's not that hard to do a few clicks online to see if this is a prudent price. I mean, how long are we going to continue to hire bad actors as we think about PBMs? Let's see. Do you remember there are three big players in the PBM market? There's CVS Caremark, optumrx, a part of UnitedHealthcare, and then Express Scripts. Those are the big three.

Speaker 1: 4:16

Now, the reason this lawsuit is relevant is because there are pass-through PBMs, meaning they're pass-through prices. It's 100% transparent and 100% commitment to give rebates back. Part of the problem in our healthcare system is inflation that comes from rebates Oftentimes, yes, drug rebates, manufacturer rebates, placement rebates, bonuses, etc. So if you're the patient and you go to the pharmacy, you have no choice who your pharmacy benefit manager is. If it's CVS Caremark, it's CVS Caremark. That's all you know.

Speaker 1: 4:56

But someone is making that decision. The person making that decision is who's in charge of your health plan, the plan sponsor of your health plan Most often a CFO and the HR director, the HR leader and the financial leader of the company. That's who's ultimately the fiduciary responsible. To make an argument about why they chose someone like CBS Caremark in this case. General rule of thumb if you have more than 100 employees, you should be working with a transparent pharmacy benefit manager partner. Or else maybe you don't want to, maybe you want to go with everyone else and what will happen is you end up being sued, just like the leaders at JPMorgan Chase and what we saw months ago at Johnson Johnson the same situation. So if you're a fiduciary or if you just want to make sure your health plan is doing a good job taking care of you, then make sure there's a good benefit advisor, like myself or someone else doing good things in the healthcare industry, to give an objective consultation, maybe like the SOAP Subjective objective, assess and plan. All right, have a good day, gang.