Overview
Cohen Milstein and Fairmark Partners represent participants in the JPMorgan Chase Health Care Insurance Program for Active Employees and its component Medical Plan (Health Plan) in a proposed class action lawsuit against JPMorgan Chase (JPMorgan) for systematically mismanaging its prescription-drug benefits program in violation of the Employee Retirement Income Security Act (ERISA).
The plaintiffs claim that JPMorgan breached its fiduciary duties by agreeing to pay its pharmacy benefit manager, CVS Caremark (Caremark), grossly inflated prescription drug prices, costing the Health Plan and its participants millions of dollars through higher payments for prescription drugs, higher premiums, higher out-of-pocket costs, higher deductibles, higher coinsurance, higher copays, and suppressed wages.
Plaintiffs further allege that JPMorgan knew that Caremark and other large PBMs charge inflated prices for prescription drugs, but contracted with Caremark (instead of a less expensive vendor) anyway and failed to take action to lower costs because it did not want to jeopardize its lucrative investment banking business in the health care space.
Case Background
JPMorgan Chase, a Fortune 500 financial services company with approximately $240 billion in FY 2023 revenue, oversees the JPMorgan Health Plan. Plaintiffs claim that JPMorgan bears fault for accepting and allowing the overcharges to Health Plan participants through its PBM vendor, Caremark, which sets the prices for the prescription drugs administered through the Health Plan.
The stark disparity in prices is illustrated by the multiple sclerosis drug Teriflunomide (generic form of Aubagio). A 30-unit prescription for Teriflunomide can be filled without insurance at Rite Aid for $32.96, Wegmans for $34.71, ShopRite for $29.24, or from Cost Plus Drugs online pharmacy for $11.05. However, the complaint alleges that JPMorgan permitted the Caremark to charge the Health Plan and its participants $6,229 for each 30-unit Teriflunomide prescription.
This mismanagement, plaintiffs claim, extends across the entire prescription-drug plan. For all 366 generic drugs on the Health Plan’s formulary for which drug acquisition cost data is publicly available, plaintiffs allege that the Health Plan and its participants pay an average markup of over 211% above what it costs pharmacies to acquire those same drugs. In some cases, the alleged markups were over 5,000% or even over 10,000%.
The proposed class action seeks to stop JPMorgan from mismanaging its prescription drug program and to recover excess payments on behalf of the Health Plan and the participants and beneficiaries of the Plan.
Case name: Stern v. JPMorgan Chase & Co.., Case No. 1:25-cv-02097, U.S. District, Southern District of New York