Products October 5, 2016

Providers Partner on Pharmacy Cost Control Solution

Mercer has revealed a new approach to help employers contain specialty pharmacy costs. 

Reported by

A new solution created by Mercer in partnership with Envolve Pharmacy Solutions and Magellan Rx Management aims to deliver highly competitive specialty drug pricing and targeted clinical management options to employer-sponsored health programs.

The solution also delivers patient assistance program facilitation and access to limited distribution drugs, according to the firms.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

“We are very excited to bring this innovative solution to our clients to help them provide specialty medications to their employees and families in a more affordable way,” explains David Dross, Mercer’s managed pharmacy practice leader. “We believe that this new approach provides an important addition to plan sponsors in managing the complex and rapidly changing specialty pharmacy space.”

The firms believe their new alliance “comes at a critical time as specialty medications represent 35% to 40% or more of pharmacy-related costs for employers despite treating just 1% to 2% of members.”

“While specialty biotech medications are therapeutic breakthroughs for chronic disease conditions like Hepatitis C and Multiple Sclerosis, they come with a hefty price tag, costing as much as $80,000 or more per treatment,” the firms warn. “For the entire U.S. healthcare market, specialty medication spending has nearly doubled since 2011, reaching more than $150 billion.”

Mercer adds that both Envolve Pharmacy Solutions and Magellan Rx Management specialize in the complexities of working with providers, health plans, pharmacy benefit managers and other stakeholders.

For more information on the program, visit www.mercer.com. 

Compliance October 5, 2016

Lawsuit a Warning That Small 401(k)s Should Hire Expertise

The lawsuit alleges fiduciary breaches for holding 401(k) plan assets mostly in one company stock and notes that the plan’s trustee had “no meaningful expertise” in portfolio management.
Reported by

Participants in the Emerald Coast Eye Institute (ECEI) 401(k) plan have filed a lawsuit alleging that the company and its founder Samuel Poppell breached their fiduciary duties of prudence under the Employee Retirement Income Security Act (ERISA) by not properly diversifying investments.

Poppell selected and controlled investments in the plan, and plan participants did not have authority to choose how their assets were invested. According to the complaint, he chose to significantly concentrate the ECEI plan assets in a single holding, VirnetX, and further failed to remove this holding as it continued to lose value. The ECEI plan’s non-cash investments were at times entirely concentrated, or nearly entirely concentrated, in VirnetX.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

The complaint notes that Poppell was not a licensed or registered investment adviser or financial professional, and he did not maintain certifications in any investment related area. He had no meaningful expertise, education, or professional knowledge in finance, investment management, or portfolio management. It also claims that on multiple occasions, he rejected suggestions and recommendations, including from the plan’s third-party administrator to retain a qualified investment adviser or manager to manage the ECEI plan portfolio.

The lawsuit says the defendants learned of VirnetX through online message boards and “unqualified or speculative” investment blog-type websites. They did not conduct sufficient or adequate due diligence of VirnetX or many of the other securities purchased in the ECEI plan portfolio. VirnetX has widely been identified as, referred to as, and accused of being a “Patent Troll.” Patent Trolls are companies that exist primarily or exclusively to pursue aggressive patent-infringement lawsuits against other companies.

As of December 31, 2014, the ECEI Plan’s total exposure to VirnetX was in excess of 50%, with the remaining holdings concentrated in cash equivalents. By the end of 2014, the ECEI Plan’s position in VirnetX had already declined in value by $543,235.91 since defendants’ initial purchase. On or about the morning of September 16, 2014, VirnetX stock plummeted in value by nearly 50%. Through the filing of the complaint, VirnetX’s share prices have declined over 90% compared to the share price on June 1, 2012.

The lawsuit alleges that defendants knew or should have known that in taking such significant risks they were not acting in the best interest of plan participants and their beneficiaries, particularly in light of the fact that numerous class members were at or near retirement age. In addition, it says, as a result of defendants’ actions, plaintiffs and members of the proposed class suffered significant losses. “In particular, the ECEI Plan suffered actual losses in excess of $600,000, and additional underperformance damages estimated to be in excess of $500,000,” the complaint says.

The lawsuit also contends the named plaintiffs were fired for bringing up their concerns about the plan’s investments to the plan’s third-party administrator and Poppell.

«