JP Morgan's Fiduciary Failure

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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 [e-mail]

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.

Episode Transcript

Speaker 1 (00:00):
Welcome to another Tuesday Morning with Justin.
I'm Justin Futrell, benefitAdvisor at True North Companies,
and today we've got a reallyintriguing topic.
The headline to center theconversation is JP Morgan sued
by employees over PBM PharmacyBenefit Manager relationship

(00:23):
with CVS.
A JP Morgan Chase employee issuing JPMorgan because of them
being a bad fiduciary of theplan.
What does that mean?
They're making bad decisions inthis employee's perspective.
So, yes, we'll dive into it,but first I want to put you in

(00:44):
the shoes of the plaintiff, thisJP Morgan employee, to see how
we got here.
Now, when something goes wrongwith you, what do you do?
When something goes wrong withyour body, your health, you see
a doctor.
Now I'm lucky to have a lot ofdoctor friends and I called one
of them, dr Ryan Owen, and heexplained to me the process.

(01:06):
When someone comes in, there'san acronym called SOAP.
That is Subjective, objectiveAssess and Plan.
Now a doctor is going to askquestions, they're going to
gather information.
They might do an exam.
They might objectively run sometests to see what's going on
with your body, mightobjectively run some tests to

(01:26):
see what's going on with yourbody.
Ultimately, they're going tomake 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 ofattack to treat this, we're
going to prescribe a medication.

(01:47):
This medication isteraflunomide.
I hope I did okay inpronouncing that.
Teraflunomide is what I cantell you for sure is the actual
cost.
The average retail price is$7,961.

(02:07):
So, round up, it's $8,000.
Now average retail pharmacieshave the average price is $30.
Yes, I fumbled on my wordsbecause I don't know how insane

(02:27):
this can be in our healthcaresystem before we start to see
changes.
So bottom line $8,000 is theaverage retail price, but you
can get it from pharmacies for$30.
So the lawsuit let's go back toit.
If you're this employee, wouldyou be upset if you were told

(02:48):
you had to pay your fulldeductible and out-of-pocket
maximum instead of only paying$30?
So the plaintiff shared that,okay.
Okay, here we are.
The plaintiff shared no prudentfiduciary would agree or allow
for its plan, the health plan,and participants and

(03:09):
beneficiaries to pay a pricethat is more than 200 times
higher than the price availableto any individual who just walks
into a pharmacy and pays out ofpocket.
200 times greater.
No wonder there's a lawsuit,right?
And it's not that hard gang.

(03:30):
It's not that hard to do a fewclicks online to see if this is
a prudent price.
I mean, how long are we goingto continue to hire bad actors
as we think about PBMs?
Let's see.
Do you remember there are threebig players in the PBM market?
There's CVS Caremark, optumrx,a part of UnitedHealthcare, and

(03:55):
then Express Scripts.
Those are the big three.
Now, the reason this lawsuit isrelevant is because there are
pass-through PBMs, meaningthey're pass-through prices.
It's 100% transparent and 100%commitment to give rebates back.
Part of the problem in ourhealthcare system is inflation

(04:16):
that comes from rebatesOftentimes, yes, drug rebates,
manufacturer rebates, placementrebates, bonuses, etc.
So if you're the patient andyou go to the pharmacy, you have
no choice who your pharmacybenefit manager is.
If it's CVS Caremark, it's CVSCaremark.

(04:37):
That's all you know.
But someone is making thatdecision.
The person making that decisionis who's in charge of your
health plan, the plan sponsor ofyour health plan Most often a
CFO and the HR director, the HRleader and the financial leader

(04:57):
of the company.
That's who's ultimately thefiduciary responsible.
To make an argument about whythey chose someone like CBS
Caremark in this case.
General rule of thumb if youhave more than 100 employees,
you should be working with atransparent pharmacy benefit

(05:17):
manager partner.
Or else maybe you don't want to, maybe you want to go with
everyone else and what willhappen is you end up being sued,
just like the leaders atJPMorgan Chase and what we saw
months ago at Johnson Johnsonthe same situation.
So if you're a fiduciary or ifyou just want to make sure your

(05:40):
health plan is doing a good jobtaking care of you, then make
sure there's a good benefitadvisor, like myself or someone
else doing good things in thehealthcare industry, to give an
objective consultation, maybelike the SOAP Subjective
objective, assess and plan.
All right, have a good day,gang.