PBM Industry Could Face Major Challenges From ERISA Suits

A lawsuit filed by an employee against Johnson & Johnson could signal that significant changes in the legal obligations of commercial plan sponsors and PBMs around drug pricing are coming, experts say. The suit alleges that J&J violated its fiduciary obligations as a health plan sponsor under the Employee Retirement Income Security Act (ERISA) of 1974 by overpaying the plan’s PBM for employees’ medications.

If it’s successful, the suit could expose plans, plan sponsors and PBMs to significant, ongoing legal risk, experts say. However, they add that the opacity and complexity of drug pricing dynamics mean that the suit’s success is far from certain.

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Peter Johnson

Peter Johnson

Peter has worked as a journalist since 2011 and has covered health care since 2020. At AIS Health, Peter covers trends in finance, business and policy that affect the health insurance and pharma sectors. For Health Plan Weekly, he covers all aspects of the U.S. health insurance sector, including employer-sponsored insurance, Medicaid managed care, Medicare Advantage and the Affordable Care Act individual marketplaces. In Radar on Drug Benefits, Peter covers the operations of (and conflicts between) pharmacy benefit managers and pharmaceutical manufacturers, with a particular focus on pricing dynamics and market access. Before joining AIS Health, Peter covered transportation, public safety and local government for various outlets in Seattle, his hometown and current place of residence. He graduated with a B.A. from Colby College.

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