The effect of complying with ERISA brings with it valuable cost savings and quality of care benefits.
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Sponsors of ERISA plans are required to operate the Plan “solely in the exclusive interest of Plan Participants”, strive to get a fair, honest and reasonable deal for Plan Participants, and ensure that all vendor payments with Plan Assets are reasonable and disclosed.
Despite their discretion in creating formularies and pricing structures for their clients and network pharmacies, and their obligation to negotiate fair deals for their clients, PBMs reject the notion that they are subject to ERISA as “parties-in-interest”. This isn’t surprising as their practices clearly violate each of the above-noted requirements. As PBMs and their trade associations fight state regulation and DOL disclosure obligations that seek greater transparency and more fair business dealings, PNPS embraces them. Indeed, everything PNPS does – from pricing to formulary creation to therapeutic substitution recommendations – conforms to the spirit and letter of ERISA.
Understanding this, PNPS contracts with TPAs, Plan Sponsors and other payors in a way that no other PBM or PBA does: we embace ERISA and include language in our contracts that explicitly details our pledge to act in a manner that fully supports the obligations of a party-in-interest -- to act in the exclusive interest of the Plan Participant. Some of the language included in our contract follows below:
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WHEREAS, TPAs, and their health plan sponsoring customers, operate in a complex regulatory environment dominated by the Employee Retirement Income Security Act of 1974 (ERISA), as amended, the Sarbanes-Oxley Act, and other state and federal laws and regulations. ERISA defines a person who provides services to the plan as a party-in-interest and any person who, with respect to an employee benefit plan, exercises any discretionary authority or control with regard to managing a plan or its assets, as a fiduciary. This environment requires TPAs, sponsors of ERISA plans, and service vendors to those health plans, to refrain from entering into certain types of relationships, to operate in a manner that ensures full transparency and full disclosure, and to act prudently, reasonably, and in the exclusive interest of the health plan’s Plan Beneficiaries.
WHEREAS, PNPS may be considered a party-in-interest (as that term is defined in ERISA) to the employee benefit plans that they service. If the activities of PNPS causes it to satisfy the legal definition of a “party-in-interest,” then PNPS will adhere to the party-in-interest legal restrictions, to the extent applicable, operate in good faith with respect to the plan and, and with respect to such activities, undertake no action that is not in the best interest of Plan Beneficiaries. To the extent that PNPS is deemed to be a fiduciary under the legal definition of ERISA with respect to the employee benefit plans they service, PNPS will adhere to the fiduciary standards set out in ERISA and operate as a reasonably prudent person would under like or similar circumstances.
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To learn more about the importance of being ERISA compliant with respect to the management of your pharmacy benefit program, we encourage you to download or view on-line our PowerPoint presentation entitled "Smoke and Mirrors: An Overview of the Pharmacy Benefit Management Industry". It provides valuable insight as to how we operate our program and why PNPS is the only company in the country to approach pharmacy benefit expense management the way it does.
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