A federal judge has partially dismissed a lawsuit filed by a former Johnson & Johnson employee alleging that the pharmaceutical giant mismanaged its employees’ prescription drug benefits, thereby violating its fiduciary duties under the Employee Retirement Income Security Act.
The lawsuit accused J&J of overpaying for generic and specialty drugs, resulting in higher costs for employees through increased premiums, deductibles, and out-of-pocket expenses.
The plaintiff claimed that J&J’s health plans paid significantly more for prescription drugs than the prices available at retail pharmacies. For example, the lawsuit said that the plan paid inflated prices for a generic multiple sclerosis medication that cost the plan over $10,000 for a 90-day supply, while the same drug was available for as little as $40 without insurance at retail pharmacies. The plaintiff argued that no prudent fiduciary would agree to such terms.
The lawsuit, filed in February 2024 in a New Jersey federal court, sought damages and an injunction to prevent further breaches of fiduciary duty. The plaintiff also alleged that J&J failed to provide requested plan documents in a timely manner, violating ERISA’s disclosure requirements.
In a Jan. 24 ruling, U.S. District Judge Zahid Quraishi granted in part and denied in part J&J’s motion to dismiss the case. The judge dismissed the alleged breaches of fiduciary duty under ERISA, finding that the plaintiff lacked standing to pursue those claims. The court ruled that her alleged injuries (higher premiums and out-of-pocket costs) were either speculative or not redressable by the court, as she had already reached her annual prescription drug cap, meaning any reimbursement would go to her insurer rather than her.
However, the judge allowed the complaint alleging that J&J failed to provide requested plan documents to move forward. The court found that the plaintiff had plausibly alleged that she made written requests for documents through J&J’s online portal and that the company failed to respond within the required 30-day period under ERISA. Judge Quraishi gave the plaintiff 30 days to file an amended complaint to address the issues identified in the ruling.
The lawsuit is part of a broader trend of legal challenges targeting self-funded employers and their handling of employee health plans.