We have covered the duty (Part One) and the process that proves you honored it (Part Two). Now we get to the specific decision that has moved from back-office task to Exhibit A.
Choosing your pharmacy vendor used to be paperwork. Now it is a fiduciary act with a case file — and the lawyers have found it.
Part 01The Most-Sued Decision in Health Benefits Is One You Probably Rubber-Stamped
Somewhere in your plan sits a contract with a pharmacy benefit manager, or PBM. It governs how your drug spend gets priced, and for most employers it was renewed with roughly the same scrutiny you give the terms-and-conditions box before you click "I agree."
That casual decision is now the single most litigated choice in employer health benefits. The theory is straightforward: if you signed a traditional, opaque PBM arrangement without evaluating whether a more transparent one would have saved the plan money, you may have breached your duty. The pill did not change. The legal temperature around who picked the pricing did.
Part 02Three Lawsuits, One Cracked Door
Here is the real scorecard, because the headlines have oversold this in both directions.
Employees claimed the company mismanaged its drug benefit and made them overpay. A similar suit, Navarro v. Wells Fargo, followed. Both were dismissed — not because the employers were cleared, but on a technicality called standing: the court said the employees could not prove they personally were harmed when the plan overpaid.
Status: both are on appeal, with decisions expected around 2027.
A federal court in New York did what the others had not: it let part of the case proceed, finding the employees had adequately alleged overpayment on specific drugs, on specific dates, at specific markups.
Why it matters: that is the crack in the wall. The plaintiffs' bar spent two years learning how to plead these cases, and one of them finally stuck.
The lesson is not "the sky is falling." The retirement plan lawsuits took years to mature too, and the early ones also stumbled before the floodgates opened. The lesson is that the theory is being refined in real time — and the standing defense that saved J&J and Wells Fargo is not something you want to bet your name on.
Part 03You Already Know How the Sausage Is Priced
You have read the pieces on this site about spread pricing and rebates. You know that a generic costing nine dollars one way can cost nine hundred dollars another, and that the difference does not go to the pharmacist or the patient.
Every one of those pricing games is now potential evidence. Not evidence against the PBM — evidence about whether the fiduciary who hired the PBM was paying attention.
The mechanics you already understand are the exact mechanics a court will ask whether you evaluated.
Part 04How to Fix It: Make the Pharmacy Decision Look Like a Decision
A competitive RFP is the clearest proof of prudence there is.
Why it matters: even keeping your incumbent is defensible if you can show you tested the market.
You do not have to switch.
Why it matters: you have to be able to say you looked, and why you chose what you chose.
Audit language is worth nothing if it is never exercised.
Why it matters: a contract you cannot audit is a contract you cannot govern.
Same rule as always.
Why it matters: the decision is only as strong as the record of how you made it.
The Takeaway
The pharmacy contract is where fiduciary theory stops being abstract. It is concrete, it is being litigated, and it is fixable before it ever becomes your problem. More in The Fiduciary Files is on the way — the documentation that turns all of this into a defense.
We help employers bid the PBM, model transparent and pass-through alternatives side by side, negotiate real audit rights, and document the analysis behind the choice — so the most litigated decision in benefits is also your best-papered one.
Talk to Tess— Tess
