A federal judge has dismissed the primary claims in a lawsuit that alleged Johnson & Johnson mismanaged its employees’ prescription drug benefits, finding that the plaintiffs failed to demonstrate they suffered concrete harm.
On Nov. 26, the federal court in New Jersey granted J&J’s motion to dismiss a second amended complaint, ruling that the plaintiffs lacked standing to pursue their breach of fiduciary duty claims under ERISA. The dismissal was without prejudice, and the plaintiffs were given 30 days to file a third amended complaint.
The lawsuit, originally filed in February 2024, accuses J&J and its Pension & Benefits Committee of breaching fiduciary duties by mismanaging prescription drug benefits, costing health plan participants millions of dollars through higher drug payments, premiums, deductibles and out-of-pocket costs. The complaint cited examples of generic drugs for which the plans paid substantially more than retail pharmacy prices available to uninsured individuals.
The second amended complaint, filed in March 2025, added new allegations tying the alleged prescription drug overspending to increased employee premiums and out-of-pocket costs.
In the Nov. 26 ruling, the judge concluded that the connection between what plan participants paid in premiums and out-of-pocket costs and the administrative fees the plans paid to their pharmacy benefit manager was “speculative.” The judge noted that J&J has sole discretion to set participant contribution rates, and that premium amounts may be affected by many factors unrelated to drug benefits, including market trends, administrative expenses, and non-drug medical costs.
The court also wrote that even if the plaintiffs prevailed and received all requested relief, J&J could still increase participants’ contribution amounts without violating ERISA.
The motion to dismiss did not challenge count three of the complaint, in which the plaintiffs allege J&J failed to provide certain plan documents upon request.
