TJ Bullock | April 23rd, 2026
It’s Tuesday, April 21, 2026, and if you’re a business owner or an HR leader, the ground just shifted under your feet. For years, we’ve talked about the rising cost of healthcare as an annoying line item on a P&L. We complained about premiums going up, we adjusted deductibles, and we moved on.
But as of this month, "moving on" is no longer a legal option.
If you haven’t heard about Stern v. JPMorgan Chase, pull up a chair. A lawsuit that just got the green light in federal court this April has turned a $16 generic drug into a $6,000 legal nightmare. And while you might not have 200,000 employees like JPMorgan, the legal precedent set here applies to every business with a health plan: especially those in that 25 to 300 employee "sweet spot."
At Bullock & Associates, we’ve always said: It’s not your plan, it’s how you’re paying for it. Today, we’re going to look at why your Pharmacy Benefit Manager (PBM) contract might be a ticking time bomb and how you can defuse it.
The headline of the JPMorgan case sounds like a typo. A participant in their health plan needed teriflunomide, a generic medication used to treat multiple sclerosis. If that person had walked into a local pharmacy and paid cash, the cost would have been roughly $16 to $30.
Instead, because it went through the company’s "negotiated" PBM contract, the plan was billed over $6,229.
That is a 38,000% markup. Imagine buying a gallon of milk for $4, only to find out your "discounted" corporate membership charged you $1,520 for it. You’d fire the person who signed that contract on the spot. But in the world of health insurance, these markups have been hidden in plain sight for decades.
Translation:
Under the Employee Retirement Income Security Act (ERISA), if you offer a health plan, you are a fiduciary.
We know: it's a dry, "lawyer-y" word. But in plain English, it means you are legally obligated to manage the plan’s assets (including employee premiums) as if it were your own money. You are the "trustee" of your employees' healthcare dollars.
For years, many mid-size employers thought their only job was to pick a plan and pay the bill. The courts are now saying: Wrong.
In the April 2026 rulings, the court clarified that employers have a duty to monitor what they are paying for. If you allow your plan to pay $6,000 for a $16 drug, you aren't just being "inefficient": you are potentially breaching your fiduciary duty. Your employees (or savvy class-action lawyers) can now sue you for failing to protect their money.
Translation:
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You might be wondering, "How does my PBM get away with this?" They don't do it by accident; they do it by design. Here are the three most common ways they hide profit in your contract:
Spread Pricing
The PBM pays the pharmacy $20 for a drug but bills your company $200. They keep the $180 "spread." They call this a "service fee," but it’s really just a hidden tax on your plan.
Formulary Manipulation
PBMs decide which drugs are "preferred." Sometimes, they will keep an expensive brand-name drug on the preferred list: even if a cheaper generic exists: simply because the brand-name manufacturer gives the PBM a bigger kickback (rebate).
Rebate Retention
Drug manufacturers pay billions in rebates to lower the cost of drugs. In many traditional contracts, the PBM keeps a large chunk of those rebates instead of passing them back to you, the employer.
If you’re curious about how your current setup stacks up, you can take a look at our services for employers to see how we tackle these hidden costs.
The JPMorgan case is a wake-up call, but it’s not all doom and gloom. You can protect your company and your employees by taking three specific steps right now.
I. Demand an Independent Audit
Don't let the PBM grade their own homework. Hire an independent third party to look at your "claims data." If you can’t get your own claims data, that’s a massive red flag. Under the Consolidated Appropriations Act (CAA), you have a legal right to this data.
II. Move to a "Pass-Through" Model
In a pass-through model, the PBM charges you exactly what they pay the pharmacy, plus a flat, transparent admin fee (e.g., $5 per script). There is no spread pricing, and 100% of the rebates are returned to the plan. This is the gold standard for fiduciary protection.
III. Hire an Independent Consultant
Most traditional brokers get paid "behind the scenes" by the carriers or PBMs they recommend. To truly fulfill your fiduciary duty, you need a partner who is transparent about how they are paid. At Bullock & Associates, our owner TJ Bullock and our office staff focus on "making complicated simple" by putting the employer's interests first.
Translation:
The world changed in April 2026. The days of "set it and forget it" health insurance are over. Your employees are paying more than ever for their care, and the courts are now giving them the tools to hold employers accountable for the bill.
But remember: It’s not your plan, it’s how you’re paying for it. You can have the same networks, the same doctors, and the same drugs: just without the $6,000 markups.
If you want to make sure your business isn't the next one in the crosshairs, let’s talk. You can get a quote or start the conversation here. We’ll help you navigate the jargon and get back to running your business.
Making complicated simple.
#UBA #NABIP #employeebenefits #PBM #ERISA #HealthInsurance #FiduciaryDuty
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