JPMorgan Employee Lawsuit Says Bank Overpaid for Prescription Drugs

(Bloomberg) — JPMorgan Chase & Co. was sued by employees who say the company’s prescription drug plan, run by CVS Health Corp., agreed to pay exorbitant prices for medications, driving up expenses for workers.

The would-be class action is the latest lawsuit accusing a large employer of mismanaging health benefits. In one example, JPMorgan’s plan paid more than $6,000 for a multiple sclerosis drug that’s available for about $30 at retail pharmacies such as Rite Aid, according to a copy of the lawsuit reviewed by Bloomberg News. The language of the complaint couldn’t be immediately confirmed in court records. The plaintiffs include one current and two former employees of the bank.

JPMorgan representatives didn’t immediately respond to requests for comment. A spokesperson for CVS, which isn’t a party to the lawsuit, declined to comment.

Similar cases have been filed against Johnson & Johnson and Wells Fargo & Co. In January, a federal judge dismissed most of the claims against J&J. The lawsuits show intensifying scrutiny over the role employers play in rising US health-care costs and put the profits of pharmacy benefit managers like CVS in the spotlight.

The lawsuit alleges that JPMorgan breached its fiduciary duties under the Employee Retirement Income Security Act, the law that governs large employers’ benefit plans. The plaintiffs argue that “systematic mismanagement of JPMorgan’s prescription-drug benefits program” led to “grossly inflated” drug costs for people on the plan.

The cases against J&J, Wells Fargo and now JPMorgan try to replicate a playbook plaintiffs’ attorneys successfully used to reap millions in settlements with employers over retirement plans. That wave of litigation started in the 2000s and accused companies of imprudently paying high fees to 401(k) providers.

Plaintiffs’ lawyers are making similar arguments that companies knowingly made bad deals with the companies they hire to run prescription plans, squandering money that’s supposed to benefit workers. Attorneys from Fairmark Partners LLP and Cohen Milstein Sellers & Toll PLLC are litigating the cases.

“As one of the most powerful corporations in the world, JPMorgan has no excuse for allowing PBMs and Big Pharma to overcharge its employees,” attorney Michael Lieberman of Fairmark Partners said in an emailed statement to Bloomberg.

Both J&J and Wells Fargo have disputed the allegations and sought to dismiss the suits against them. After the court rejected most of the claims in the case against J&J, attorneys for the plaintiff filed an amended complaint March 10. The case against Wells Fargo, filed in federal court in Minnesota, is pending.

The lawsuit against JPMorgan lists instances where the company’s plan from CVS Health had far higher prices than what patients would pay if they didn’t use insurance.

Across hundreds of generic drugs, the plan paid an average markup of more than 200% above the pharmacies’ cost to acquire those drugs, according to the complaint. For one oral leukemia drug, imatinib, the plan agreed to pay roughly $6,100 for a prescription, when pharmacies’ acquisition costs are about $70, according to the lawsuit. 

Facing questions over similar markups in the past, some pharmacy benefit managers have said they negotiate prices based on a basket of drugs and deliver overall savings for their clients.

The lawsuit also accuses JPMorgan of abandoning a high-profile joint venture to revamp its health benefits because of backlash from banking clients in the health-care industry. The bank launched the project, called Haven, with Amazon.com Inc. and Berkshire Hathaway Inc. in 2018. It was seen as a threat to incumbent health-care giants and sent share prices tumbling.

But the companies abandoned Haven in 2021 with little to show for it. The lawsuit claims the retreat followed pushback from banking clients in the health-care industry, where JPMorgan collects lucrative fees from dealmaking and other transactions.

The case is Seth Stern et al v. JPMorgan Chase & Co. et al, 25-cv-02097, filed in the Southern District of New York.

–With assistance from Chris Dolmetsch.

(Updates with additional information starting in fifth paragraph.)

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