What Johnson & Johnson’s Lawsuit Against SaveOnSP Means for Drug Manufacturers and Plan Sponsors

On January 25, 2023, the Court in Johnson & Johnson v. SaveOnSP[1] dismissed SaveOnSP’s motion to dismiss, allowing Johnson & Johnson’s (“JNJ”) claims to proceed. As we reported here, JNJ filed a lawsuit against SaveOnSP alleging that JNJ paid $100M more in copay assistance due to SaveOnSP’s misconduct. SaveOnSP filed a motion to dismiss the complaint, but JNJ filed its opposition to the motion. SaveOnSP also met with opposition from Aimed Alliance and Pharmaceutical Research and Manufacturers of America which filed amicus curiae in support of JNJ.

The Court’s recent order is a significant development, especially as several manufacturers following the JNJ’s lawsuit have updated the terms and conditions of their copay assistance programs to restrict (or exclusively carving out) copay maximizer such as SaveOnSP from their programs. JNJ alleges that SaveOnSP inflated patients’ copays by reclassifying drugs to avoid copay limits and annual out-of-pocket limits mandated by the US Affordable Care Act (“ACA”) to coerce patients into enrolling in the SaveOnSP program and bill the artificially inflated copays to JNJ’s copay assistance program. JNJ’s complaint also alleges that SaveOnSP worked in partnership with major PBM Express Scripts (“ESI”) and ESI’s specialty pharmacy Accredo Health Group to operate the program and, in turn, maximize its profits at the expense of both patients and JNJ.

As discussed in our previous article, copay maximizers that operate like SaveOnSP harm patients, providers, manufacturers, and plan sponsors. Patients will face higher costs for other healthcare services despite having responsibility for monthly premiums for their health benefits with the expectation that they will be receiving funded coverage for their medications. The dollars extracted by copay maximizers from copay assistance programs will not count towards the patients’ deductible or out-of-pocket expenses. Providers are harmed because the drugs that are subject to copay maximizer programs are often (if not always) restricted to be filled at PBM-owned pharmacies such as Accredo. Manufacturers and the funds they set aside for patient assistance programs are being drained by copay maximizers. More troubling, copay maximizers and affiliated PBMs often engage in “double-dipping” by extracting drug rebates in addition to excess discounts through copay assistance programs. Plan Sponsors, including self-funded employers, are also impacted by copay maximizers. The fees imposed by copay maximizers on Plan Sponsors’ so-called “savings” (i.e., inflated copays and the amounts extracted by copay maximizers from copay assistance programs) may be higher than the net cost of the drugs.

This lawsuit highlights the ongoing scrutiny of PBMs and their business practices. PBMs are facing increased criticism for their role in rising drug prices and the lack of transparency in their pricing and reimbursement practices. The outcome of this lawsuit will be closely watched by the industry as it could have a significant impact on the pharmacy benefits landscape and how PBMs operate.

How Frier Levitt Can Help

Frier Levitt represents manufacturers and plan sponsors with price reporting obligation compliance, including requirements set forth under the Consolidated Appropriations Act, as well as negotiating and drafting rebate agreements with PBMs and evaluating co-pay assistance program requirements and compliance. If you have questions about your organization’s reporting obligations or are looking to develop compliant copay assistance programs, contact us to speak with an attorney.

[1] Johnson & Johnson Health Care Systems, Inc. v. SaveOnSP, LLC., 2:22-cv-02632-JMV-CLW, pending in the United States District Court for the District of New Jersey.