Trust Is Not a Fiduciary Strategy
Why “I trusted them” stopped being a defense
Executive Brief
For years, the pharmacy deal ran on trust. You read the summary. You took the rebate guarantee at face value. You assumed the fine print matched the pitch. You accepted your broker’s assurances. So did almost everyone who signed before you.
The law has caught up with that habit. The Consolidated Appropriations Act made the plan sponsor, personally, the fiduciary of pharmacy spending. Not the broker. Not the PBM. Not the TPA. You.
And under that standard, trusting them is no longer a position a court will respect. Here’s the part worth sitting with: the duty was always yours. Now the liability is too.
The question is whether you can show what you did about it.
The Rules Already Changed. Enforcement Is Catching Up.
Most of the attention on the CAA went to the headline reforms. The quieter shift was structural. The gag clauses are gone, and you now have to attest you removed them. Broker and consultant compensation has to be disclosed. Pharmacy and drug cost data has to be reported.
Each of those rules assumes one thing: a fiduciary who looks. The law stopped treating “we didn’t know” as a neutral fact. It started treating it as a failure to ask.
That’s the change.
The obligation moved from following the rules to proving you understood the deal you signed.
Your Employees Are the Plaintiffs Now
This stopped being theoretical in 2024. In Lewandowski v. Johnson & Johnson, an employee sued her own employer, alleging the company breached its ERISA duty by mismanaging the drug plan and letting participants overpay.
The emblematic number from the filing: the plan paid $10,239.69 for each 90-pill teriflunomide prescription, a generic MS drug, which the complaint flags as “not a typo.”
On the retail side, the same 90-pill prescription could be filled at Rite Aid for $77.41, Walmart for $76.41, ShopRite for $41.05, Wegmans for $40.55, and $28.40 at Cost Plus Drugs.
Months later, a similar suit landed against Wells Fargo. Whatever each case’s final outcome, the pattern is the signal. The people you cover are now reading their own pharmacy claims and asking who was minding the contract.
Take a minute to think about who’s harmed. The harm lands on the family having to pay out-of-pocket before meeting a deductible. Your sickest employees are paying an inflated list price for their drugs. The lawsuit is just the moment that cost gets a name and a docket number.
Trust Is Not a Defense
The Schlichter line of 401(k) fiduciary cases settled the standard years ago, and it’s a two-step test. Asking for disclosure is step one. Evaluating whether what you got is reasonable is step two. Most fiduciaries do the first and skip the second. The gap between them is where liability lives.
A court won’t ask whether you trusted your PBM. It’ll ask what documented, reasonable steps you took to understand and monitor the deal made on your participants’ behalf.
“I trusted them” answers a question nobody’s asking.
So the strategy isn’t trust. It’s evidence. You don’t have to be an expert in PBM contracts. You have to be able to show your work. And here’s the uncomfortable arithmetic of timing: you can’t produce evidence you never gathered. The file you’ll want when the question comes is the one you start before it does.
Trust is not a fiduciary strategy. You must show your work.
The deal was built to stay invisible. The pricing, the spread, the clause on page 47. None of it was meant for you to see.
That’s changing. Here’s the part that should land as relief, not pressure.
A contract can be read against a standard. The markup can be measured. The weak link can be found. And the moment it becomes visible, it becomes yours to fix.
Once you see it, you can change it.
What to Do First Thing Monday
- Pull your PBM contract and find two sections: data rights, audit rights, and fee disclosures. Read them as a plaintiff’s attorney would, not as the person who signed.
- Ask your benefits lead one question: “Can we show, in writing, the steps we took to confirm our PBM’s pricing is reasonable?” The answer tells you where you stand.
- Submit your contract for scoring. Upload your PBM contract to contractxray.com to receive a free Quick Look report identifying where your contract stands.
- Calendar a 30-minute fiduciary review with your CFO and General Counsel this month. One agenda item: what’s documented, and what isn’t.
In Closing
The shift here isn’t punitive. It’s an invitation to govern the thing you’re already responsible for. Employers who look, document, and act are the ones returning real dollars to wages and benefits. That’s the whole point of the duty.
Here’s to clearer thinking, stronger plans, and better outcomes for the people who rely on us.
All the best,
P.S. Next week we stop talking about the standard and start measuring against it. We scored real PBM contracts, the kind employers sign every day, against a fiduciary benchmark. Most failed. One “transparent” PBM came back at 21 out of 100. The findings, and what they mean for your contract.
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