The Rising Fiduciary Risks of Prescription Drug Overspending

For years, prescription drug costs were treated as an unfortunate but unavoidable part of employer-sponsored health plans. Complex, opaque, and largely outsourced, pharmacy was often viewed as something to manage at arm’s length. 

That approach is becoming increasingly risky. 

As prescription drug spend continues to rise, employers are facing a new reality. Overspending is no longer just a financial issue. It is a fiduciary one. 

Fiduciary Responsibility Has Evolved

Plan fiduciaries are expected to act prudently and solely in the interest of plan participants. Historically, that responsibility focused heavily on retirement plans and investment oversight. 

Healthcare benefits are now entering that same conversation. 

Employers are being asked to demonstrate: 

• Active oversight of benefit decisions 
• Reasonable processes for evaluating vendors 
• Understanding of cost drivers and incentive structures 
• Willingness to challenge industry norms when they conflict with participant interests 

Pharmacy, with its rapidly escalating costs and layered intermediaries, sits squarely in the center of that expectation. 

Why Prescription Drug Spend Draws Scrutiny

Prescription drugs represent one of the opaquest areas of the health plan. That opacity creates risk. 

Several factors are driving increased fiduciary exposure. 

1. Costs Are Rising Faster Than Oversight

Specialty medications, high-cost therapies, and evolving treatment protocols are pushing pharmacy spend upward at a pace many employers did not anticipate. 

When spend increases without a clear understanding of why, fiduciary questions follow. 

2. “Industry Standard” Is No Longer a Defense

Relying on common market practices is becoming less defensible. Courts and regulators increasingly expect fiduciaries to understand the implications of the decisions they approve, not just the prevalence of those decisions in the market.

Accepting opaque models without scrutiny may be viewed as passive, not prudent.

3. Incentives Are Often Misaligned

Rebates, spread pricing, and volume-based arrangements can reward higher list prices or increased utilization. When fiduciaries approve structures that benefit intermediaries at the expense of plan participants, exposure increases. 

Intent matters less than outcome. 

Where Fiduciary Risk Often Hides

Fiduciary risk does not usually stem from a single decision. It accumulates quietly. 

Common blind spots include: 

• Contracts that limit audit rights or transparency 
• Formularies influenced by rebate economics rather than lowest net cost 
• Specialty sourcing decisions made without independent review 
• Lack of documented evaluation of alternatives 

Over time, these gaps can create a narrative of insufficient oversight. 

What Prudent Oversight Looks Like Today

Managing fiduciary risk does not require perfection. It requires process.

Prudent employers are beginning to:  

• Ask deeper questions about pharmacy economics and incentives 
• Document how vendors are evaluated and monitored 
• Review pharmacy performance outside of renewal cycles 
• Seek independent perspectives when complexity exceeds internal resources 

This approach signals intent, diligence, and good-faith effort.  

The Role of Brokers and Advisors

Brokers and consultants play a critical role in helping employers navigate this shift. 

Advisors who understand pharmacy risk can: 

• Translate complex structures into clear implications 
• Help clients identify where oversight is lacking 
• Support documentation of decision-making processes 
• Elevate pharmacy from a transactional benefit to a governance priority 

This is where advisory values truly differentiate.

Looking Ahead

Prescription drug overspending is no longer just about rising costs. It is about responsibility. 

As scrutiny increases, employers who can demonstrate thoughtful, informed oversight will be better positioned to protect both their plans and their organizations. 

Those who continue to treat pharmacy as a “black box” may find themselves answering questions they were never prepared to address.