ERISA Lawsuits Over Employer Health Plan Drug Pricing

Employees Sue Over Prescription Drug Prices in Employer Health Plans

Federal courts are hearing a new wave of health plan lawsuits under the Employee Retirement Income Security Act (ERISA). Instead of challenging a single denied claim, employees allege that their employer’s self-funded health plan overpaid for prescription drugs through its pharmacy benefit manager (PBM) and that those higher costs were passed on to workers in the form of elevated coinsurance and, in some theories, higher premiums.

ERISA requires plan fiduciaries to act prudently and solely in the interest of participants. The same duties that have long applied to 401(k) plans also cover employer-sponsored health plans. These newer complaints focus on how employers select and monitor the PBMs that administer drug benefits.

A classic benefit-denial case is individual and treatment-specific. An ERISA fiduciary or prohibited-transaction claim challenges how the plan was structured and supervised. It is typically brought on behalf of the plan and its participants and seeks to restore losses to the plan rather than simply reverse one denial.

What the Lawsuits Allege

Most employers do not purchase medications directly. They hire a PBM to build the formulary, negotiate with manufacturers and pharmacies, and process claims. The three largest PBMs process the majority of U.S. prescription claims.

Plaintiffs claim that some employers, acting as plan fiduciaries, approved PBM contracts without adequately testing whether the resulting prices and compensation were reasonable. Common allegations include:

• Spread pricing — the PBM charges the plan more than it reimburses the pharmacy and retains the difference.
• Steering of specialty drugs to PBM-affiliated pharmacies at higher prices.
• Failure to pursue lower-cost alternatives such as pass-through pricing or independent audits.

In the JPMorgan Chase case, plaintiffs alleged the plan paid more than $6,000 for a 30-tablet supply of a generic multiple-sclerosis drug that retail pharmacies sold for far less. These remain allegations. Defendants contest them, and the claims are unproven.

Employees argue the pricing reaches them directly. Because coinsurance is typically a percentage of the plan’s allowed amount, an inflated plan price raises the amount the worker pays at the pharmacy counter. Some complaints also contend the overpayments contribute to higher premiums, though courts have treated that theory more skeptically.

A Supreme Court Ruling Changed the Pleading Standard

In Cunningham v. Cornell University, decided in 2025, the Supreme Court held that a plaintiff alleging a prohibited transaction under ERISA section 406 needs to plead only the statutory elements. Exemptions, such as the one for reasonable service contracts, are affirmative defenses the fiduciary must raise and prove. In PBM cases, employers may now have to defend their contracts with evidence instead of ending the case at the outset.

Regulators are also active. In January 2026, the Department of Labor proposed a rule that would require PBMs to give fiduciaries of self-insured group health plans detailed compensation disclosures. The proposal could change after public comment.

Signs a Plan May Be Overpaying

Plans do not send overpayment notices, but workers can watch for patterns:

• A generic drug that costs far more through the plan than the cash price at a discount pharmacy
• A specialty drug routed to a PBM-affiliated mail-order pharmacy at a higher price than other pharmacies charge
• Coinsurance that bears no obvious relation to the drug's actual cost
• A required brand-name drug when a cheaper clinical equivalent exists and no clear medical reason applies

These cases rely on patterns across many employees and drugs. A fiduciary claim challenges how the plan was built and supervised and seeks to restore losses to the plan.

Talk to The Lyon Firm

The Lyon Firm brings more than 20 years of complex class action experience and a reported $550 million in recovered value for clients and class members. Our attorneys can review your concerns and tell you whether a claim is realistic. Consultations are free and confidential. Call (513) 381-2333 or contact The Lyon Firm online today.