“Here it is folks, the case everyone has been waiting for: an employer has been sued for breaches of their fiduciary duty under ERISA by a plan participant for the drug costs in their self-funded health plan.“
“Examples provided are pretty egregious: e.g., a generic drug for Multiple Sclerosis for which a 90 day supply can be purchased between $28 and $78 when paying without insurance cost participants in the J&J plan $10,239!” – Julie Selesnick – Senior Counsel at Berger Montague
A Johnson & Johnson Worker Alleges Company Overpaid for Drugs
John Tozzi and Chris Dolmetsch, Bloomberg News
(Bloomberg) — Johnson & Johnson was sued by an employee who said the company’s health plan wasted workers’ money by paying inflated prices for prescription drugs.
In one instance, the health plan agreed to pay more than $10,000 for a drug to treat multiple sclerosis, a chronic nerve condition, that’s available for as little as $40 at retail pharmacies, according to the suit filed Monday in federal court in Camden, New Jersey.
The complaint alleges that J&J mismanaged the company’s prescription-drug benefits program, costing federally regulated plans and J&J workers millions of dollars due to higher payments for drugs, increased premiums, deductibles, copays and lower wages or limited growth.
J&J employee Ann Lewandowski sued on the grounds that the company breached its fiduciary duties to spend health benefit funds responsibly. The suit seeks class-action status to represent other workers who faced similar costs. A health-care policy and advocacy director for J&J in Wisconsin and Minnesota, Lewandowski is currently on leave due to a dispute regarding an accommodation for a medical condition.
Representatives for J&J didn’t immediately respond to a request for comment. The shares fell 0.5% at 2:14 p.m. in New York.
US employers face rising legal risk over how they manage roughly $1 trillion in annual spending on company-sponsored health plans. While some large companies and unions have sued their health plan providers alleging that they’ve breached fiduciary obligations, the case against J&J may be the first case by an employee making those claims against a prominent company.
Squandered Power
For certain types of drugs with complicated handling or administration needs, called “generic-specialty” medications, the company’s health plan on average paid about six times as much on average as the pharmacy benefit manager paid, the complaint alleges.
Drugmakers and pharmacy benefit managers are frequently at odds in Washington, where each side blames the other for contributing to high prescription costs.
Though J&J is one of the country’s largest drugmakers, the lawsuit argues, it failed to use its buying power when purchasing medications to negotiate the best prices for medicines for workers on its health plan.
“Defendants squandered their bargaining power and, for many drugs, agreed to make the Plans and their beneficiaries pay more than someone would pay if they just walked into a retail pharmacy and filled the same prescription without using insurance,” the lawsuit said.
New Brunswick, New Jersey-based J&J has about 152,700 employees globally, according to data compiled by Bloomberg.
The plaintiff’s firm that filed the case, Fairmark Partners, LLP, called it the first of its kind, saying in an email that it drew on a detailed analysis of drug pricing. Other law firms have publicly advertised that they’re seeking clients for similar cases against big US companies.
The case is Ann Lewandowski vs Johnson & Johnson, 24-cv-00671, in District of New Jersey.
(Updates with additional details starting in seventh paragraph)
A Johnson & Johnson Worker Alleges Company Overpaid for Drugs – BNN Bloomberg
