The PBM FAIR Act would amend ERISA to treat pharmacy benefit managers (PBMs) as fiduciaries when they perform core prescription-drug management functions for group health plans. Specifically, it would deem a person or entity a fiduciary if it maintains a prescription drug network or formulary, or if it negotiates rebates and other price concessions, processes and pays prescription drug claims, or performs utilization review and management on behalf of a group health plan or related plan sponsor or insurer.
The bill also expands ERISA disclosure requirements for compensation tied to PBM services and third-party administrative services, including direct and indirect compensation connected to drug networks, formularies, claims processing, provider networks, records maintenance, and reimbursement negotiations. It further clarifies that a covered service provider generally cannot be the responsible plan fiduciary for required disclosures, while allowing a PBM to serve as the responsible plan fiduciary for its own employee plan. Finally, it bars indemnification or contractual liability waivers for entities deemed fiduciaries under the new PBM provision, and applies the changes to plan years beginning at least 12 months after enactment.
Impact
If enacted, the bill would materially expand ERISA fiduciary obligations to PBMs and certain related service providers in the group health plan market, creating new federal duties of loyalty and care for entities involved in prescription drug pricing, claims administration, and formulary management. It would also require more detailed compensation disclosures and invalidate contract terms that attempt to shield these fiduciaries from liability, affecting PBMs, third-party administrators, group health plans, plan sponsors, insurers, and potentially drug supply-chain intermediaries such as rebate aggregators and group purchasing organizations.
Sentiment
Based on the bill’s sponsorship and the absence of recorded committee debate or votes in the provided materials, the available sentiment appears generally supportive and reform-oriented. The bipartisan list of sponsors suggests interest across party lines in increasing transparency and accountability in prescription drug benefit management. No formal opposition is documented in the supplied record, but the structure of the bill indicates a policy response to concerns about PBM practices and their effect on drug costs and plan oversight.
Contention
The main likely point of contention is the bill’s decision to classify PBMs as ERISA fiduciaries for a broad set of activities, which could expose them to expanded liability and alter existing business arrangements. PBMs and affiliated intermediaries may object to the prohibition on indemnification and the potential compliance burden of new disclosure and fiduciary standards, while employers, plan sponsors, and consumer advocates may support the measure as a way to curb opaque pricing practices and conflicts of interest. Another possible issue is how broadly the fiduciary definition reaches beyond traditional PBMs to third-party administrators and other entities involved in drug benefit administration.
Related
To amend the Employee Retirement Income Security Act of 1974 to ensure that pharmacy benefit managers are considered fiduciaries, and for other purposes.
Urges the attorney general and the Louisiana Department of Insurance to investigate pharmacy benefit managers (PBMs) for potential violations of law and to urge and request the legislature to pass legislation prohibiting PBMs from owning or having a financial interest in pharmacies in this state
Sets controls on Medicaid prescription drug costs by imposing transparency and accountability requirements on managed care organizations (MCOs) and their pharmacy benefit managers (PBMs).