Johnson & Johnson faced legal heat as an employee filed a lawsuit alleging violations of the Employee Retirement Income Security Act (ERISA). The lawsuit, dubbed Lewandowski v. Johnson and Johnson, shed light on the mismanagement of workers’ prescription drug benefits, leading to exorbitant costs.
Johnson & Johnson’s pharmacy benefits manager was at the heart of the matter, who was accused of securing generic prescription drugs at significantly inflated prices compared to market rates. For instance, the lawsuit highlighted the case of teriflunomide, a drug for multiple sclerosis. While the market prices ranged from $28 to $77 for a 90-pill prescription, Johnson & Johnson allegedly agreed to a staggering $10,239.69 per prescription under its ERISA plans.
The lawsuit contended that such pricing practices defied prudence, with a 250-fold increase over standard market rates. An analysis suggested that Johnson & Johnson agreed to markups of up to 498% compared to pharmacy acquisition costs. Moreover, beneficiaries were purportedly incentivised to use the PBM’s pharmacy, ostensibly offering lower costs to them but significantly burdening ERISA plans with thousands more in expenses.
Under ERISA, employers bear a duty of prudence, obligating them to act in the best interests of benefit plan participants and beneficiaries. Johnson & Johnson faced scrutiny over whether its actions aligned with this fiduciary responsibility.
In response, a spokesperson for Johnson & Johnson dismissed the allegations, labelling them as meritless and indicating plans to move for the dismissal of the entire complaint. The legal battle underscored the importance of prudent management of employee benefit plans and raised questions about the practices employed by companies in navigating healthcare benefits for their workforce.
