Employees Rx Lawsuits Fail

Employees ultimately lost their Rx pricing lawsuits against their own Employers

The Cases at a Glance

Employers like Johnson & Johnson and Wells Fargo (and their Benefits Committees) are facing lawsuits. Not from the outside, but from their own employees.

Employees are claiming they (the employees) overpaid for prescription drugs through a subpar pharmacy benefits manager (PBM) deal. If true, the narrative is employees were ultimately forced to cough up higher premiums and out-of-pocket costs. 

But guess what? The courts threw out both cases.

Why? The employees lacked Article III standing — which is legal jargon for "you employees have to prove you were actually harmed, otherwise there's no case here."

Some employees say PBM agreements are bad for employees, claiming the plan fiduciaries fail to:

🚨 Negotiate better PBM terms

🚨 Monitor drug pricing (like a market check)

🚨 Explore cost-saving alternatives (like pass-through pricing instead of “spread pricing”)

These employees go on to point out some eyebrow-raising pricing examples:

💊 The actual acquisition cost of a generic HIV drug? $181 for a 90-day supply.

💊 The cash price for the uninsured? About $200.

💊 What the Employer’s health plan paid? $1,629 (a markup of over $1,400 for one prescription)

Employees claimed no responsible fiduciary would agree to such pricing

(and employees suffer because):

✅ Premiums become too high

✅ Out-of-pocket drug costs get inflated

But Employers respond right back, arguing:

🛑 Premium hikes were speculative - there's no proof lower PBM costs would mean lower premiums.

🛑 Out-of-pocket costs weren’t truly excessive — since Employees hit their max out-of-pocket caps anyway.

🛑 "Lost time value of money" isn’t enough to sue — hitting the out-of-pocket max a few months early isn’t material $$$ harm

So unlike what we've seen in the 401(k) space, employees successfully suing their Employers for mismanaging the financial piece, Employees appear unable to establish they were hurt by the Rx piece of their Employer's health benefits Plans.

Given the current climate in Washington DC, appear Employees wishing to pursue these types of prescription drug complaints may face significant headwinds. From a common sense standpoint, it not obvious to us that Employers have any incentive to cut PBM deals that are overly expensive. Where almost all of the money in 401(k) Plans belongs to Employees, the healthcare plans are significantly paid-for by Employers. So with that kind of skin in the game, these Employers actually have aligned interests with Employees when it comes to keeping Rx costs down as low as possible. That's a hurdle that could be hard for any Employee to overcome when suggesting the Employer is at fault for causing their own Employees financial harm in the Rx world.