An employee of Johnson & Johnson filed a lawsuit against the company Monday, asserting that it violated the Employee Retirement Income Security Act by mismanaging workers’ prescription drug benefits, resulting in unnecessarily steep costs.
The lawsuit, Lewandowski v. Johnson and Johnson, et. al., drew particular attention to J&J’s pharmacy benefits manager. According to the proposed class action, J&J agreed to pay the PBM significantly higher prices for generic prescription drugs than could be easily obtained elsewhere.
The lawsuit used as an example the generic drug teriflunomide, which is used to treat multiple sclerosis. While a 90-pill prescription could be filled at a variety of common drugstores for prices ranging from around $28 to about $77, the complaint alleged, J&J “agreed to make their ERISA plans and their beneficiaries pay $10,239.69 — not a typo — for each 90-pill teriflunomide prescription.”
“No prudent fiduciary would agree to make its plan and beneficiaries pay a price that is two-hundred-and-fifty times higher than the price available to any individual who just walks into a pharmacy and pays out-of-pocket,” the lawsuit argued.
An alleged analysis of average drug costs cited by the lawsuit found that J&J agreed to a 498% markup for drugs when compared to pharmacy acquisition costs. It also agreed to a plan under which beneficiaries were incentivized to get prescriptions from the PBM’s own pharmacy, which would cost less for beneficiaries but cost the ERISA plans thousands more, the complaint said.
ERISA lays out a “duty of prudence” for employers, requiring them to act in the interest of benefit plan participants and beneficiaries.
A J&J spokesperson denied the allegations in a statement sent to HR Dive. “The allegations and legal theories asserted in the complaint are meritless and, therefore, we will be moving to dismiss the complaint in its entirety,” the spokesperson said.
