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JPMorgan Chase is facing a lawsuit from employees who claim the company’s prescription drug plan, administered by CVS Health, agreed to pay excessively high prices for medications, driving up costs for workers.
The class action alleges that JPMorgan breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA) by mismanaging its employee benefits plan. It claims the bank’s prescription benefits program resulted in "grossly inflated" drug costs for plan participants.
According to the complaint, JPMorgan’s plan paid over $6,000 for a multiple sclerosis drug that is widely available for around $30 at retail pharmacies such as Rite Aid. The lawsuit names one current and two former employees as plaintiffs.
JPMorgan representatives did not immediately respond to requests for comment. CVS, which is not named as a defendant in the lawsuit, declined to comment.
Growing legal pressure on employer health plans
The case against JPMorgan reflects increasing scrutiny over the role employers play in managing healthcare costs. Similar lawsuits have been filed against Johnson & Johnson and Wells Fargo, highlighting concerns about pharmacy benefit managers (PBMs) and rising prescription drug expenses.
In January, a federal judge dismissed most claims in the case against Johnson & Johnson, although plaintiffs have since filed an amended complaint. The lawsuit against Wells Fargo, filed in federal court in Minnesota, is still pending.
The JPMorgan suit alleges that the bank's plan paid markups averaging more than 200% above pharmacy acquisition costs for hundreds of generic drugs. For instance, it reportedly paid $6,100 for the leukemia drug imatinib, while pharmacies typically acquire the medication for about $70.
Facing past criticism over similar pricing practices, some PBMs defended their pricing models by emphasizing they negotiate based on a basket of drugs to achieve overall savings for clients.
Concerns over abandoned healthcare initiative
JPMorgan is also accused of retreating from a high-profile healthcare venture under pressure from banking clients in the healthcare industry. In 2018, JPMorgan partnered with Amazon and Berkshire Hathaway to create Haven, a joint initiative designed to improve employer healthcare benefits. The project was abandoned in 2021, however, with minimal results.
The plaintiffs claim the withdrawal followed backlash from JPMorgan's healthcare industry clients, from whom the bank derives substantial fees through dealmaking and transactions.
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Michael Lieberman, an attorney with Fairmark Partners representing the plaintiffs, said JPMorgan had "no excuse" for allowing pharmacy benefit managers and pharmaceutical companies to "overcharge its employees."
Both J&J and Wells Fargo have denied wrongdoing in their respective cases and have sought to dismiss the claims against them. The outcome of the legal challenges could have significant implications for employers managing health benefits programs, particularly as scrutiny of PBM practices continues to intensify.
