Frier Levitt partners Jonathan Levitt and Jesse Dresser were quoted in an Inside Health Policy article, “Generic Drug Makers Urged To Fund Suits Against Brands’ PBM Policies,” published on February 12, 2024.
Johnson & Johnson (J&J) faces a lawsuit from an employee alleging failure to secure reasonable drug prices for beneficiaries under its health plan. The employee is suing J&J and the members of its pension and benefits committee for breaches of fiduciary duties under the Employee Retirement Income Security Act (ERISA). This is anticipated to lead to similar suits against other brand drug makers with self-funded insurance plans and could impact how employers contract with Pharmacy Benefit managers (PBMs).
In the article, Jonathan and Jesse weigh in on the class action and disclose what they anticipate will happen for other major companies. Both Jonathan and Jesse predict that there will be more lawsuits of the like coming soon.
Jonathan states that the lawsuit is the first of its kind, and its importance for the relationship between employer plans and their PBMs “cannot be overstated.” He said he anticipates that there will be “flurry of audits” that happen as other large companies with self-funded insurance plans consider whether they could also be lawsuit targets, particularly other drug companies. While it will likely take more than a year for the suit to be considered in a federal court, he said, that ruling will “either close the door or open a floodgate.”
Jonathan added that the lawsuit could create a new standard for how employers handle contracts with their PBMs. Depending on its results, he said, employers may be spurred to examine their contracts much more closely to ensure they don’t violate fiduciary duties. If the suit is successful, Jonathan said, companies will likely not be able to rely on brokers, who also benefit financially from the arrangements, to manage their PBM contracts.
“I think it’s going to require a lot of employers and their benefits groups to really wake up and think about how they’re going about the contract, because just asking the right questions is something that that is well overdue and really needs to be focused on,” Dresser said.
To read the full article and the rest of their insights, visit: https://insidehealthpolicy.com/share/139890
