New Jersey Bureau of Securities is proposing new N.J.A.C. 13:47A-6.4 to establish, by regulation, the common law fiduciary duty and apply it to broker-dealers and agents, and to codify it for investment advisers and investment adviser representatives.
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The Bureau believes that the proposed new rule is necessary to ensure that persons involved in the securities markets are uniformly held to a high standard in their dealings with the general public and is necessary to ensure the welfare of New Jersey investors.
Under the New Jersey regulation, brokers would have to make recommendations about securities and provide investment advice "without regard to the financial or any other interest of the broker-dealer, agent, adviser, any affiliated or related entity … or any other third party."
Brokers also must recommend the "best of the reasonably available options" when opening or transferring assets to a specific type of account or suggesting that clients purchase securities or other investments.
While no such rule exists [yet] for health insurance brokers or PBMs, it would likely deliver these protections to pharmacies, patients and self-insured employers alike:
Fiduciary responsibility: The model requires PBMs to have a fiduciary duty to its health plan clients. This means PBMs have a legal responsibility to protect the financial interests of their health plan clients.
Patient OOP costs: This section prevents a health plan or its PBM from setting patient copays or coinsurance at a higher level than the actual cost of the drug to the health plan (or its PBM).
Conflict of interest: Requires a PBM to notify health plan clients if the PBM has a conflict of interest. For example, when a PBM owns its own pharmacy operations, it may want to drive business there, instead of focusing on the most cost-effective drug distribution for its health plan client.
Rebate transparency: The act requires a PBM to report rebates and fees in a variety of ways including compensation or remuneration of any kind received or recovered from a pharmaceuticalmanufacturer attributable to the purchase or utilization of covered drugs by eligible persons.
Limiting PBM requirements on pharmacies: Some PBM contracts limit which drug wholesaler or distributor a pharmacy can buy from. Those PBM-specified distributors may serve the PBM’s financial interests more than a pharmacy’s.
The good news is purchasers of PBM services don't have to wait for legislation to benefit from fiduciary standards. All you have to do is require it from the PBM you choose to do business. The benefit is almost always lower costs and better patient healthcare outcomes.