Pharmacy benefit manager (PBM) arrangements continue to face heightened scrutiny, but recent and proposed legislation does not relieve plan sponsors of their core fiduciary responsibilities. In a recent Plan Sponsor article, Matthew Modafferi and Terence Park emphasize that self-funded plans must remain actively engaged in negotiating contract terms and conducting meaningful audits to ensure compliance and control costs. Key provisions—such as fiduciary standards of care, audit rights, and pricing and rebate structures—require close attention, as unfavorable or unclear terms can expose plans to significant financial and legal risk.
Not all audits provide true transparency, particularly where PBMs limit access to data or restrict review of affiliated entities. While new regulatory efforts aim to increase disclosure around PBM compensation and practices, gaps remain, especially with respect to affiliates and subcontractors. As a result, plan sponsors cannot rely solely on evolving regulations and must instead take a proactive approach by negotiating stronger agreements, demanding full data access, and conducting independent audits to meet their fiduciary obligations and protect plan assets.
Read the full article with Plan Sponsor.
Senior Associate
