TheHealthCareBlog reports on a recent Federal Appeals Court case which worked to their benefit and participants’ detriment. The text of the AISHealth.com article is included in the post.

I want to put this in English for most people who aren’t fully steeped in the rules regarding benefits and fiduciaries. Basically, the appeals court ruled that Caremark was a contract administrator, nothing more, nothing less, and didn’t have to comply with the much more onerous requirements that a plan fiduciary would consider. Had they been a fiduciary, they would have had to act with a care to the “exclusive benefit” of the plan participants in a fashion which a “prudent man” who was well-versed in such matters would.

Had the court ruled that Caremark was a fiduciary, they would have had to show that their rebate schemes were for the exclusive benefit of the participants, which of course they aren’t. This was a dodged bullet by Caremark, but my guess is that the plaintiffs are not finished with this case. I think this will go forward to the Supremes, because this question of whether or not a contract administrator can exercise discretion is one that is critical to the health of patients and plans alike, and difficult to resolve. Until the courts actually interpret what is, and is not, subject to the requirements of ERISA (the federal law which defines most employee benefit plans), there will be the kind of abuse that Caremark continues to engage in to the benefit of insurance companies and the detriment of insureds.

If you read the quoted article on TheHealthCareBlog, keep in mind that it is written from the insurance company perspective and is definitely biased in that direction. When they make statements like

” PBM customers generally don’t want their PBMs to be fiduciaries. “Customers want the PBM to do what the Carpenters did here, enter into a contract,” she says. “You do not want them to be in charge of what this court calls ‘discretion.’ There is no discretion about it. In a contract, here it is, here is the price. It’s spelled out.”

…keep in mind that the “customers” they are referring to are insurance companies. Next to the gun lobbyists, the insurance lobby is one of the most powerful in the country. What the courts should be giving attention to is the underrepresented and very large group of insureds, who most certainly are at the discretion of PBMs, even PBMs who have gastroenterologists rule on psychiatric medications.

In other news, the Caremark/CVS merger is still under siege by Express Scripts. From a consumer standpoint, such a merger could be of benefit to anyone who has Caremark as a PBM, since it gives them storefront access to medications which presumably would be priced favorably to Caremark and by extension, patients and insurance companies. I see absolutely no consumer benefit to the merger of two PBMs — Caremark and ExpressScripts. In fact, it would be terrible for the consumer since the majority of insured prescriptions for Medicare and private insurance would be administered by one national PBM. That, in my opinion, creates a monopoly and puts far too much power in the hands of the PBMs.

It’s easy to tell how much is at stake just by watching the salvos over the bow by Caremark, CVS and ExpressScripts. What gets lost in the heat of battle is the folks like you and me, who pay lots of money for insurance and end up still paying lots of money for prescriptions, too.

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