AH041 - ERISA Litigation Outlook and Meeting CAA Requirements: What Can Plan Fiduciaries Do?

Transcript

Lightly edited for clarity.

[00:27] Justin Venneri: Hello and thank you for listening to this episode of Astonishing Healthcare. We've got a good one for you today and this one's for all the plan sponsors out there, benefits directors, benefits brokers and consultants and others responsible for pharmacy benefit programs. I have three experts with me in the studio. Chris Deacon is here, founder of VerSan Consulting. Most of you may know her from her experience working for the State of New Jersey and trying to fix that healthcare budget and the contracts. We also have Jonathan Levitt with us, trial attorney and co-founding partner at Frier Levitt, the New Jersey based pharmacy related law firm. And Julie Selesnick is here too, Senior Counsel in the employee benefits and ERISA Group at Berger Montague based in Washington D.C.  

We're going to have a fun discussion, hopefully educational, as educational as it can be or as fun as it can be, about what's going on in and around pharmacy benefits and healthcare policy and law and of course the Consolidated Appropriations Act.  

And so the genesis of this podcast episode was AJ Loiacono, our co-founder and CEO at Capital Rx, asking who out there is helping plan fiduciaries understand what's going on and what they have to do per the aforementioned CAA and to avoid lawsuits. You're all at the top of my list for who I would ask. So, I'm grateful you could join me for this.  

John, we've seen a couple of lawsuits this year aimed at employers, Johnson and Johnson earlier in the year, Wells Fargo a little later. And then there's several states that are going after PBMs for various reasons. There's been lots of webinars, conference presentations, other warnings, some fear mongering related to the CAA and its provisions. So how do you explain what the intent and actual requirements of the CAA are and mean for or the team at a larger employer or other payers?

[02:06] Jonathan Levitt: Thank you Justin. So, you know Consolidated Appropriations Act -- CAA 2021 -- it requires a plan to report annual data to different departments: Department of Human Services, Health and Human Services, Department of Labor, Department of Treasury. So, the data includes information about drug utilization, spending and rebates, but the problem is that the plans don't have this data intrinsically. There's a lot of data behind the scenes about retained rebates and spread pricing that they don't have, that if they're going to try to report accurately, they literally just don't have the data.  

And so, what do they do? They have to kind of rely upon these other providers, the PBMs and PBMs’ sister companies, rebate aggregators, and PBM owned specialty pharmacies and retail pharmacies. So the thing that makes the CAA so interesting to us is pretty much one sentence in there. It requires that PBMs disclose and describe their direct compensation and indirect compensation of themselves or any affiliates. And obviously no plan has that information. No plan knows about retained rebates. No plan really knows about -- when I say plan, I mean big employer group -- they don't know about the spread pricing that PBM has.  

And so here's the thing about the fiduciary duty under the CAA. A big employer group is allowed to go and retain service providers like PBMs and those rebate aggregators, but only if the service provider's compensation is reasonable. That one word in that statute, reasonable, means that part of that fiduciary duty is to ensure reasonableness. I don't know how you really do that without truly monitoring and auditing the PBM. And what we have experienced is that a very large percentage of plans rely upon a broker or coalition or a PBM just to give data. Sometimes the PBM just give the data directly to the departments and they won't give our plan employers any of the information directly. They say, no, we already gave it to you, and if you want us to give it to you, you have to pay a lot of money.  

So I think the intent of the CAA was to create this transparency and to create like a clear fiduciary duty. But I don't think that a lot has really changed. Most of the employers that we represent don't see this data and when they ask for it, they're not given it. And we have to go to litigation, which is something I guess we'll maybe talk about in another question.

[04:29] Justin Venneri: And just one thing. It's all vendors, right? Any service provider that the plan would pay that provides a service to members. So, it goes beyond just pharmacy benefits, right?

[04:40] Jonathan Levitt: Yes, I agree with that, yes.

Related Content

• AH004 - Data, Fiduciary Responsibility, and Reversing Trend with Jeff Hogan
• The Consolidated Appropriations Act & Prescription Drug Data Collection (RxDC): New Rules & Regulations Equal New Responsibilities
• Self-funded plans ignore the Consolidated Appropriations Act at their peril

[04:43] Justin Venneri: Cool. And then I'm gonna do a little quick round robin like survey before we get into some more questions, and this will come to you, Julie and Chris too. I've heard a lot of people compare this situation to the 401k lawsuits in the early 2000s. John, starting with you on a 1 to 10 scale, how similar? 1, Not at all. 10, identical. Is it to that scenario? And do you think we'll see more cases as part two of this question brought in 2025?

[05:09] Jonathan Levitt: So, Justin, I'm going to go with a five because there are many similarities. I think it's, it's sort of the same general statute. And the similarity is there's a fiduciary duty. But I think in the financial part of it, like the 401k, the pension part of it, I think the duty is pretty clear from litigation and from regulations and from standards in the industry, right? So that part's really the same. But then when you look at the part of statute and the fiduciary duty owed by big employers when it comes to managing their pharmacy benefit, that duty has not been fully articulated by courts, by regulators.  

And so, what's the duty? If there's a Mark Cuban drug for $79 and there's a, you know, a drug that whatever PBM has on their formula, that's $5,000, you know, is the full articulation of that fiduciary duty owed by the employer to the employee that we have to really try to select that cheaper drug if it's efficacious and so forth? How far do you have to go to audit? You go to the PBM, you ask for data, they say, we're not giving you that data. Does the fiduciary duty require that you square up and you get the PBM, the headlock and say, give me that data?  

So I think that the technical law is very similar. That's why I'm giving a five. But for employers who are trying to understand how do I satisfy that fiduciary duty I owe to employee, I don't think that has been fully articulated by the courts. And I think there's a lot of waiting by a lot of employers. Oh, let's see what happens with Johnson & Johnson and Wells Fargo. And I think there's going to be a lot more of these cases. Obviously, the law firm that brought this case, a sophisticated law firm, I'm sure they probably have some financial backing and they'll probably -- I think that employers are waiting to see what does the judge do on that motion to dismiss that's been filed in Johnson & Johnson. If the case goes away, employers, big sigh of relief. If it doesn't go away, I think that there's going to be a lot more copycat suits in the next year, two years.

[07:10] Justin Venneri: Chris, thanks for standing by. And Julie, we'll get to you very shortly, too. Chris, same question to you. How similar do you think the situation is to the 401k pension lawsuits of the early 2000s and what's your rationale for that?

[07:22] Christin Deacon: So, I think that if you had asked me this question a few years ago and I probably even wrote about it a couple years ago, I would have said a lot more similar. But today I think that I understand that there is quite a big difference. And I don't see the flood of litigation leading to the sort of systemic change that the 401k litigation wave actually, you know, ushered in. And here's why. In addition to sort of some of the points that Jonathan laid out, when you are evaluating whether record keeping fees, for example, in the 401k space are reasonable, right, you benchmark them. Is $5 per record reasonable? Well, if the market is $10, yes. If it's $2, no. But when it comes to healthcare purchasing decisions, and you know, I'm talking about both the pharmacy benefit and quite possibly the more sort of difficult on the medical side, it's much more complicated because there are differing variables. I'm now considering quality, considering disruption for my members and provider relationships. If I'm geographically dispersed, I’m having to think about network size and network.  

It's almost as if, you know, the 401k litigation is kind of like driving a car on a single plane, you know, a single surface. But with healthcare, we've introduced like flying a plane. We've got all kinds of variables, got quality and all these things I just mentioned. And so, it's not as straightforward as the 401k litigation. And so, I don't think that there's going to be, again, that sort of systemic change. I think there will be more litigation. I think we will get some answers from the court. But more than that, I think that Congress and the agencies, and specifically the agency should be doing more to help clarify what they meant in the CIA and what the fiduciary duties truly are of some of these organizations, because it's a mess out there right now and with people trying to understand whose role is what and who should trust who. I think that all, you know, sort of all three of those are going to play a role in clarifying that for everybody.

[09:27] Justin Venneri: Got it. And I see heads nodding on the Zoom here, if you could see us. Coming over to you, Julie. Same question. Anything you'd add to what Chris and John just laid out?

[09:37] Julie Selesnick: Yeah, I mean, I agree with both of their comments. And I would say that so far, the cases that have been brought, I think, are pretty dissimilar to the 401 litigation, because the 401k litigation, or at least the massive litigation that everyone thinks of, are about excessive fees. And sort of the way to prevail in one of those cases has been to show that you have a fiduciary process in place, that you're doing benchmarking of fees regularly, and that you have independent advisors looking at the fees and letting you know whether they're reasonable or not, and vetting your vendors. None of those things are currently functional in healthcare. And even when plans try and do this, it's very difficult.  

So many, especially smaller plans don't even have a fiduciary committee or any sort of process with their healthcare plan and with any of the decisions they make. And that's something plans can control and should be controlling immediately, because that's in their ability to change. But when it comes to benchmarking and when it comes to having independent outside advisors look at costs and make sure things are being done properly and in accordance with contracts, there's a lot of stonewalling you get from the vendor -- either the carrier or the PBM -- that doesn't want to let you do this. And so it's very difficult for a plan to be able to even defend itself against a case like that right now, which is why the CAA really was passed to give plans the ability to monitor their service providers better. But it's not working.  

And, you know, Chris is right. Congress needs to make it work better. The DOL needs to make it work better. Health and Human Services needs to make it work better. That being said, we're going to see more lawsuits. I think what's interesting is that there have been no lawsuits filed yet that sort of follow the framework, the fee litigation, which are just based on 408(b)(2) disclosures and, you know, whether the fees are reasonable. And here I like that we have this tantalizing sort of suggestions in J & J and Wells Fargo that, you know, Aon's compensation probably wasn't reasonable. But that's where we're at so far. And I'm waiting for the case that says, okay, they either got a compensation disclosure and absurdly thought this was acceptable, and so they're, you know, breaching their fiduciary duty, or they're breaching their fiduciary duty because they didn't get a compensation disclosure. So, this is an automatic prohibited transaction because that's what the CAA says, and therefore this transaction is legal.  

So I do think we're going to see a lot more cases. I think they're going to change in nature. But I think that, you know, we're only at the very beginning of the slog.

[12:07] Christin Deacon: Another, if I could, and Jonathan mentioned this, are the fees reasonable? Is it reasonable to pay X for this service? Or you know, well, what fee am I looking at? And I think in the health space, you know, the medical space, this is particularly unsettled. Am I looking at the PMPM that I'm paying Blue Cross Blue Shield to be the administrator of my self-funded plan or am I looking at the PMPM and the prices negotiated by Blue Cross Blue Shield for the services that I'm getting from Hospital X? And so, is that reasonable? Because that's the price that we know we're seeing 10 times Medicare, 30 times Medicare. Clearly unreasonable. It's the price that was negotiated by the party that I hired. But I'm paying a mere, you know, $30 per member per month. Like what is being evaluated for reasonableness is going to be key. And then also add in this, the next layer that the entity that I'm paying to administer my self-funded plan also owns the providers that they're negotiating with. Now we're talking prohibited transactions and – right? It's, it's just, it's much more messy than the 401k space.

[13:18] Justin Venneri: That's a, that's a really interesting point. You know, this is definitely not about Capital Rx here, but we do talk about the separation of church and state often, as AJ puts it. You know, administration, administrate, flat fee versus other, you know, fulfillment you can make money off the price of a drug that way. Great. And I can see how it's more complicated than it seems on paper, so to speak.  

Chris, you have the dual experience I described in the opening and you know, you've been in the seat of getting that data that John, you and Julie are talking about, having to dig through it and then yourself for your, for the plan and the plan members of the State of New Jersey and then as a consultant helping other people do this work. What are a few of the specific areas you see plan fiduciaries struggling with and how do you help them?

[14:05] Christin Deacon: I think getting their hands on the data is probably first and foremost. It's the biggest challenge that every employer in America faces. And if they've managed to get it, trying to get past the shackles and handcuffs of what they can do with it after that is probably the second biggest challenge. And then third, just negotiating good contracts. I mean, we've all heard the PBM executives and the TPA executives sit before Congress or other boards and say, you know, it's two parties coming to an agreement and a negotiation. But if you've been on the other side of that table and you've tried to, you know, modify the definition of what a clean claim is or what a rebate is, or, you know, try to define what specialty means, they're not allowing you the red pen for the most part. Like, that's a really difficult thing.  

So I would say those are the three biggest challenges. And the CAA put some wind under our sails, I think, to get access to that data. But again, I think we need Congress to step in and not clear up the mess they made, but certainly clarify some of it. And there are bills that hopefully can get passed in the next few weeks or in lame duck that go a long way to clarifying what employers will get access to in a very detailed manner and without draconian NDA clauses and gag clauses attached to them with what they can do with it.

[15:24] Justin Venneri: John, anything you'd add based on all the contract work you've done over the years?

[15:28] Jonathan Levitt: Yes, thank you, Justin. And I would add to Chris, one of the things that, we have this plan group and we have a sort of trial litigation part of our firm, and I'm involved. And Julie's saying there's there's not a lot out there about this. So, behind the scenes we have these confidential arbitrations and it's plan, you know, big employer group versus PBM and rebate aggregator. And we're on a Zoom call like this. It's usually with an arbitration panel early on in the case. We're trying to explain to a panel the things we're talking about. And the issue comes up about the data. We want spread, you know, want retained rebates and explaining there's the insurance companies, there's the PBM, there's a rebate aggregator, there's a wholly owned specialty pharmacy going through all this. And I have lawyers from big firms in New York City telling a panel on a Zoom call like this, John -- me -- is trying to hijack our data. It's not the plans data, it's our data, PBM's data. And I can see the faces of the arbitration panel. And at the end of the call, they're like, they tell the PBM, you have to give this data about rebates, rebate aggregator. We want all money, because the PBM, to answer Justin's question, the PBM says we didn't retain anything. We defined rebate to be whatever we say rebate is. And everything else is an administrative fee, or a data fee, or obviously, you two know, there's all these other terms they use. And so I've had a couple panels that are saying, we don't care what you call it, you need to give this data.  

Now, not every big employer group is going to go to that step to file an arbitration where they have the power to actually get things using arbitration rules. A lot of folks are just looking at their contract which says you could do one audit every X years. You can look at a few contracts. And I think, Chris, one of the things you said was, what can they do with it? The contract usually says you can't do anything. The person that did the audit can't share with anybody. They can't tell a lawyer; they can't testify at a hearing.  

So, Justin, the definitions in these contracts are of critical importance. If you define rebate to be whatever you want it to be, and you're the PBM, everything else is an administrative fee or something else. And so, I am telling you in these arbitrations, in this employer group versus PBM and rebate aggregator, every insurance company, PBM and rebate aggregator saying, you can't have this rebate data. You can only have what we received, not what the rebate aggregator received or -- there's another middleman sometimes in the case of some of the PBMs. And some of that data is overseas and we don't have even have access to it. We're experiencing that. So, I think good definitions are super important.

[18:03] Julie Selesnick: And if I can just add on to this, because I do also spend a lot of my time trying to help clients get data and use the data. And I agree with what both Chris and John have said. These are contracts of adhesion. I don't care how powerful you are in regular life, when you're sitting across the table from CVS or from United, you might as well be, you know me. It's not powerful. It's very difficult to change the terms of these contracts.  

One good thing the CAA has led to, though, I've found at least, is you can get some agreement to add some language that sort of allows for new types of access based on CAA language that it's difficult for a carrier or PBM to say no to because it just tracks the language of the law and says like, for instance, these audit provisions are not meant to interfere with ongoing access to de-identified claims data, you know, on an as requested basis. And you know, once you have that in there, and now as time goes on, all of these PBMs and carriers have attested that they also no longer have gag clauses in their own contracts with pharmacies and providers. So, it's hard now for them to rely on the same old excuse that, well, they can't because it's confidential. But you just attested to the federal government that it's not and that you don't have that. And you know, now we also have arguments that we can say this is public information in many cases -- you have to post it on websites and put it in machine readable files. What do you mean we can't have it?  

But what I see happening, and the bigger problem now that my clients have are one, you guys touched on it. Sometimes you can get the data like your vendor can get it, and they're not supposed to share the results with the client, who's doing this on behalf of -- that's absurd. But what's happening that I see a lot to vendors is a HIPAA is being weaponized against them. They're saying, oh, we can't give you this because it'll be a HIPAA violation, or to give it to you, you're going to have to jump through these crazy coups like send us your financials for the past five years, invasive things that are inappropriate and if you don't have counsel that'll push back on that, the vendor will be like, I'm not doing that, I give up. Or they'll do it and, you know, now United knows your company's financials. Just ridiculous sort of constraints on the ability of plans to have independent vendors try and help them and get the data and verify the data.  

So that's where I think a lot of the effort is shifting to. It's easier now to sort of add some language that theoretically helps you get the data, but then when you go to negotiate the downstream agreements, it's just ridiculous.

[20:24] Christin Deacon: And I have, and it's actually a script that I've prepared, because I've done this enough to hear the HIPAA weaponization that happens. And the great part about it is you can really flip that on its head if you know what HIPAA actually means and stands for. Yes, it has to do with privacy of personal health information. But more than that, it has to do with the standardization of data and specific formats so the data can be shared in a specific and standardized way across industry, and they have to use those formats in order to access clearinghouses and money. So, we know they use it, right? So anyway, if you're able to have that conversation and flip that to their general counsel, I find that to be extremely entertaining and useful.

[21:09] Justin Venneri: I love it. I will link, I will link everything in the show notes. This is great.

[21:15] Jonathan Levitt: Can I add one more short thing, Justin? It sort of goes to one of your prior questions and about the reasonableness of fees that Julie and Chris also mentioned. I just want to make one more small point is that when you have a vertically integrated company that, you know, there's a PBM and insurance company, specialty pharmacy, own physicians, they have a rebate aggregator. Those are all no bid contracts. Aetna is not bidding out its PBM contract to Express Scripts or Optum and so forth. I'm not trying to pick on CVS Health. You say the same thing for every major PBM. That's, by the way, the  nice thing about Capital Rx we love so much is like, you know, you guys have separated church and state and you're not profiting from especially pharmacy, a rebate aggregator, you know, whole network. It clears up most of the issues.

[21:59] Justin Venneri: Julie, back to you. Sue, I'm curious for your thoughts on the merits and you alluded to this earlier with J & J and Wells Fargo, to an extent of those lawsuits. How do you think they could play out? What are some key things that listeners should extrapolate or consider given their own plans?

[22:17] Julie Selesnick: So I think that it's hard to tell what courts are going to do. And going into this, everyone should understand that courts are pretty hostile to ERISA's standing lately. And so, it's very difficult to get past these procedural hurdles that say you, the plaintiff, has the right to bring this claim in court because you're not only the plan is injured, but you're personally injured and you can prove that.  

So starting there, you have to show sort of this concrete personal injury. I think that both complaints should survive that hurdle because both claim that the actual named plaintiffs have paid more than they should have out of pocket. So, then the other question to get past that beginning procedural hurdle is does this state a claim? Is this something that ERISA can address? And the question is, if they succeed and this goes past this, it will really call into question the traditional PBM model of AWP pricing, MAC list pricing, sort of using these lists to sort of manipulate prices on an ongoing basis so that prices fluctuate wildly. You know, within a plan from one month to the next. And obviously Capital Rx uses, NADAC and lots of other transparent PBMs are moving to that. And that would probably eliminate cases like this. Just doing that.  

But in the traditional model, if these cases go forward and are successful, I think that plans are going to have to question, can I even participate in a model like this anymore? Because this could be me at any point in time. I can look at my Gleevec prices right now and they're ridiculous. And, you know, I don't think. I don't even know if I'm getting the proper amount of rebates back, But I know that my plan participants could get it much cheaper if they paid the Cuban price, or the GoodRx, price or the Capital Rx price, or any listed price that they can look up online. And that's what makes these cases sort of have more traction, I think, so far also than the healthcare side cases. Drug prices are available, and so we can all look them up right now. I can know what something could cost me anywhere with or without insurance. And that's very different on the healthcare side where it's still super opaque and you can't really know those things.  

So here you can see that there's a spread and you can see that everyone's paying wildly different prices and that these things are fluctuating and not based on reality. And I think as time goes on, the cases that are brought will change to reflect rulings in the earlier cases. So, whatever happens in J & J and Wells Fargo are going to inform the filings in the next two cases. And yes, I do think we'll have at least two more cases in 2025, and I think 2026 will spawn a bunch.  

I also think that plans need to look at what's happening on the sort of non federal governmental plan level. And notice that states all across the country and attorneys generals and municipalities and Cities are suing PBMs directly. So those are examples of, on behalf of the plan, suing. And so if I'm an employer, I think it's coming to a point where I want to start thinking, do I want to be a plaintiff or defendant? If I'm going to stay in this type of arrangement, I'm going to have to make that decision. Or if I start to see, you know, these rulings come out in a negative fashion for plans, then I shouldn't be in this type of.

[25:26] Justin Venneri: Got it. And Chris, I'm wondering, how about implications for channel partners like benefit brokers and consultants?

[25:34] Christin Deacon: Yeah. So, I think huge implications. You know, it didn't go unnoticed in some of this litigation. And I think both J & J and Wells Fargo, while not named as defendants, were certainly named by name in the pleadings. And that was Aon, who is, you know, the trusted advisor for the employer in selecting these plans. So, if I'm J & J or Wells Fargo, their HR team, and I relied upon this trusted vendor who represented to me that they were looking out from my bottom line and what was best for my plan and presenting me with these reports, and they have my data in their warehouse. If that motion to dismiss survives, I'm pointing that way and I'm saying, if I'm on the hook, you're on the hook. That's my guess as to what's going to happen.  

So, I think that there's huge implications for sort of the broker consultant community. With respect to other partners, you know, I think it's going to impact everybody in the ecosystem. If you look at some of the complaints, you see that part of the pleading standard is saying, well, what was the alternative? Right? And you know, this is where folks like Capital Rx come in, is showing that there is a real alternative. Like it's not pie in the sky that you don't have to have one of the three big PBMs. Like there are alternatives that handle big books of business because you have to give that judge the ability to say you could have done something differently and you didn't. So huge implications across the board.

[27:03] Justin Venneri: Interesting. And you kind of answered one of my other questions. So, I'm going to skip around a little bit. And I know this is one of those conversations that we could do for an entire day, most likely, invite others into it. Can I ask a silly question potentially here? And I'll start with you, John. Is there enough urgency out there in the market to establish the processes that would need to be showed to be quote, unquote safe if you're a large employer or other?

[27:26] Jonathan Levitt: I don't think so. I think Julie, Chris both kind of made the point like it's either sue or be sued kind of thing. And people are just waiting. But I think that there's this, like, it's not just sue or be sued. If people did feel a sense of urgency, you could, as a big employee group, do a reasonable audit. You could look at the formulary, you could look at, you could at least ask, hey, under the CAA paper -- and we have a whole checklist for plans -- but dear insurance company, PBM, we have a duty to ask about spread pricing and about retained rebates and the formulary. We have a series of questions. We'd like to have a meeting. Imagine that you get sued and instead of saying, as Julie is saying, a defense is like there's a technical defense, like there's no standing or no injury, imagine you say, you say that stuff because that's an ERISA defense. But you also say, actually we also honored our fiduciary duty by doing all these things. We looked at the formulary, we looked at rebate, we saved X dollars, we looked at the rebates and, you know, we found out Instead of getting 31.7%, you know, we only got 25%, and we did a settlement and that money came back into the plan, and we use it to reduce fees for the next year. So I think it's sue or be sued or audit. And I think, I don't know Julie and Chris feel, I feel like there is a fiduciary duty to do some level of audit and not to have the coalition or your broker do the audit for you. And I think that's the best way to not get sued as a big employer.

[28:48] Justin Venneri: Julie, what do you think?

[28:50] Julie Selesnick: I agree that there is a fiduciary duty to monitor all of your service providers. And if that's an audit, or if it's ongoing monitoring of daily claims data feeds, and making sure that contracts are being followed, whatever it is. I think there's an added wrinkle here. The idea that the broker would do the audit in a PBM that the broker might hold the contract for because it's their Rx coalition -- and by the way, they might have also got indirect compensation for steering you into it -- is like this huge pile of conflicts that I can't imagine brokers aren't going to be sued for in the future because all the big ones do this. This is the sort of triple, quadruple dipping here. I think all of us have been on webinars where, I'm sure, we've all said the fox is guarding the hen house. But that's what happens when you let the vendor that is sort of responsible for procuring this or doing it then monitor themselves and tell you how they're doing. You can't do that.  

And so, absolutely, a bare minimum fiduciary obligation is to monitor these service providers. And that might mean doing audits, that might mean reviewing claims data against the way things are supposed to be priced. But the second half of that is doing something about it with what you find you can't just sort of do it and say, okay, we performed this sort of perfunctory function of, we looked at this and looked at that and had this three-page report written. It's like, okay, what'd you do afterwards based on what you found? And did you try and make changes?  

I also think that plans should be looking at, state laws are passing now much faster than federal laws and they're much, some of them are much better than the CAA and other laws because they're much more specific, particularly about access to claims data and the ability to steer outside of your network contracts, including your PBM contracts, if there's a lower price alternative. And so, in states that have laws like that, plans should be using them because they're not subject to state law, hey're exempt from ERISA, but their vendors are. Especially if their vendors are insurance companies and other companies doing business in that state, those vendors are regulated by those laws. And so plans can use those laws to help be better fiduciaries.

[30:51] Justin Venneri: That makes sense, Chris, go ahead.

[30:53] Christin Deacon: And I think I'm going to go back and try and remember sort of the heart of your question. And that was do you think that there's enough urgency right now? And I think it was yesterday that the Kaiser Family Foundation came out with their annual average premium for a family in the United States and it's up 7% and we're now at $25,000+. You could buy a car for every employee you have for the cost of just getting access to pay for healthcare with your insurance because everybody has out of pocket. If there was any urgency, we wouldn't be here, right? Just like people say, it's unsustainable. No, no, no. We're sustaining it and we'll probably be back here next year with the same kind of numbers. There is not enough urgency. I wish there was, and I think people like us on the phone feel an urgency. But if you go into the typical average C Suite in America, are they feeling an urgency? No. They might be reading the headlines, and they know that healthcare costs go up and they think, well, I can't do anything about that. They have not woken up yet. We haven't had that correction point in the market that we need. I think it's going to happen quick. I think it's going to happen sort of all at once and the dust will settle. But we need more urgency. I think that's why these lawsuits are so important. They will bring the urgency, but I'm still waiting for it.

[32:15] Justin Venneri: And then I'm just going to go right to my last question. We've been at it for a while here and I'm sure we could do a follow up episode on this. What's the most astonishing or surprising thing you've seen related to this discussion that you can share, of course, because I'm sure the three of you have seen a ton that you can't share. Chris, you want to go first?

[32:32] Christin Deacon: Sure. I think that probably the most astonishing thing to me that I've seen thus far in this space is the extent to which leaders will look past clear conflicts of interest in order to not rock a boat, right, when they know they could be making better financial decisions for their employees. But because of existing relationships, long lasting relationships, inability or unwillingness to rock a boat or move the status quo, they sort of stay put. Why that is most disturbing to me is because, you know, yes, there is a financial implication, but when there are financial implications for families and hardworking Americans, there are also health implications because when there are massive financial implications of accessing care, they don't access care, or they can't heal from their cancer because they're stressed about their bills. So, I absolutely think that there is, you know, there's a huge impact that we could be having on employees and employers. We just have to be willing to make those hard decisions and show some leadership from the very top at the political spectrum to boardrooms across America.

[33:40] Justin Venneri: Thanks, Chris. John, same question to you.

[33:42] Jonathan Levitt: Yeah, I think self-funded plans not doing a basic audit or relying upon a broker or a coalition to give them data about spread pricing and rebate retention, the unwillingness of those plans to conduct their own independent audit is the most astonishing thing, I would say. I think it's very in line with what Christin just said. I think what I'm learning behind the scenes now in this rebate space is what I learned from 2017 through 2023 in the DIRP space. How PBMs are playing games behind the scenes and pretending they don't have data. I am astonished at that. Just lack of transparency, a level of hiding data that makes me think that no one in the country, no self-funded employer in the country has accurate data. You can't get it unless you fight pretty hard to get it. My last astonishing thing is, and it's everything we talked about, Office of Personnel Management, OPM, they did the audit of Express Scripts and they said, hey, we think that Ascent Health has additional rebates. And basically ESI said, we'll give you another 15 million, we'll get you from 29 to 33%, but we're not giving you anything from Ascent Health. And that was the end of the audit. The United States government employees, that plan, they got some more money and they let Ascent Health keep the rest. So there's a lot of astonishing things happening, Justin, in the industry right now. (Read OIG Audit of Federal Employee Pharmacy Benefits Plan Reveals Express Scripts Retained $44.9 Million in Overpayments and Unreported Rebates for more.)

[35:09] Justin Venneri: Julie, last but not least, please. Would love to hear a story from you or something that you think you'd like to shine a light on.

[35:15] Julie Selesnick: Yeah. So I was trying to think of, like, one story, and I can't. And so what astonishes me the most is just the utter lawlessness in all of this and how healthcare does not function like any other sector of our economy. And it's so dysfunctional. It's very easy to point out all the things that employers are doing wrong and what they're getting wrong, but they're also sort of in this vortex of misinformation. And John and Chris hit on it where they're being told, you know, oh, the data is in a different country. This is offshore, so you don't have a right to that information. And you can look at a PBM contract from one of the big PBMs, and it's just full of antitrust violations and things that clearly violate tons of US laws. But for whatever reason, this is how it's done here.  

And there's this collective Stockholm Syndrome or something where everyone's just like, I have tried nothing and I'm out of ideas. And everyone's afraid to push back. They're afraid they're not going to be able to access medical care or drugs for their employees. And it's just a crazy hostage situation. Something has to give. And I think that shipping away on every level.  

So, I do think that we're seeing lawsuits all over the place. And it's not just in ERISA. I think we're seeing antitrust suits, consumer actions. Now the FTC is suing, you're seeing state lawsuits. I think these guys need to be sued under consumer law, state law, every single law that you can bring in that's being violated, and it really is going to be a death by a thousand cuts environment. But I just think every day you can find out a new thing and have to take to your fainting couch because you're shocked that this is going on and there's like, no bottom. And so just. I think it's going to take a lot of tenacity and people are going to have to keep bringing these lawsuits while legislation continues to be passed, clarified, and on the state and federal level. But eventually, hopefully, we'll make some progress past where we are now.

[37:21] Justin Venneri: A fainting couch?

[37:23] Jonathan Levitt: I never heard that before. I love that. I have one right here, by the way.

[37:27] Justin Venneri: That's great. All right, well, thank you all so much for joining us today. Look forward to staying in touch and hope you have a great rest of your day.

[37:34] Jonathan Levitt: Thank you, Justin.  

[37:34] Christin Deacon: Thanks, everyone.

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• Christin Deacon
• Jonathan Levitt
• Julie Selesnick

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