Johnson & Johnson.

Current and former employees are suing JPMorgan, alleging that it allows inflated drug prices through its partnership with its pharmacy benefit manager, CVS Caremark. The lawsuit, filed late last week in U.S. District Court for the Southern District of New York, seeks to recover any overpaid costs and ensure that the plan complies with ERISA in the future.

Plaintiffs claim that the bank’s failure to properly oversee its PBM contract resulted in unnecessarily high prescription drug costs, thereby violating the best interests of employees under ERISA. As an example, lawsuit cites the plan’s purchase of the multiple sclerosis drug teriflunomide, which allegedly was purchased for $6,229, compared to about $30 at retail pharmacies.

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“No prudent fiduciary would agree or allow for its plan and participants/beneficiaries pay a price that is more than 200 times higher than the price available to any individual who just walks into a pharmacy and pays out-of-pocket, and 560 times higher than the price available with just a few clicks online,” the lawsuit said.

Plaintiffs argue that JPMorgan could have saved millions of dollars by choosing better pricing options or a more transparent “pass-through” PBM model. Instead, they claim that JPMorgan’s failure to explore alternatives led to excessive costs for employees and their families through higher drug costs and overall premiums.

JPMorgan is just the latest company in recent years to be sued by employees over claims of mismanaging health and pharmaceutical benefits, and violating their fiduciary duties, Becker’s Payer Issues noted:

  • Health care logistics company Owens & Minor filed a lawsuit against Anthem Blue Cross and Blue Shield of Virginia, accusing the insurer of failing to uphold its fiduciary duties under ERISA through mismanagement of its employee health plan. 
  • A Kraft Heinz Co. employee benefits group representing employees, retirees and their dependents sued Aetna for allegedly breaching its fiduciary duties and using its role as third-party claims administrator “to enrich itself to Kraft Heinz’s detriment.”
  • A Johnson & Johnson employee sued the pharmaceutical giant for allegedly mismanaging workers’ prescription drug benefits and violating its fiduciary duties under ERISA, although a federal judge partially dismissed the lawsuit in January.
The JP Morgan lawsuit is the first time that human resource executives and board directors have been named as defendants, according to Steve Ditto, a senior health executive, compliance advisor and patient advocate.
“Fiduciary responsibility for health plans isn’t optional,” he said in a LinkedIn post. “The risks are real, but so are the rewards. JP Morgan could have saved $60 million by fulfilling their fiduciary duties.”

Ditto recommended taking these five steps:

  • Fiduciary committee: Establish with board resolution and charter.
  • Delegation: Ensure fiduciary duties are delegated by the board.
  • Education: Inform and train fiduciaries on their duties and risks.
  • Mitigation: Review contracts and claims for risks and savings.
  • Protection: Obtain insurance, because fiduciaries are personally liable.

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Alan Goforth

Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.