Lewandowski v Johnson & Johnson

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

ANN LEWANDOWSKI, on her own behalf
and on behalf of all others similarly situated,
Plaintiff,

v.

JOHNSON AND JOHNSON, THE
PENSION & BENEFITS COMMITTEE OF
JOHNSON AND JOHNSON, PETER
FASOLO, WARREN LUTHER, LISA
BLAIR DAVIS, and DOES 1-20.
Defendants.

Civil Action No. __________

JURY TRIAL DEMANDED

CLASS ACTION COMPLAINT

Plaintiff Ann Lewandowski, individually, and on behalf of all others similarly situated,
brings this action under 29 U.S.C. § 1132 against Defendants Johnson and Johnson; The Pension
& Benefits Committee of Johnson and Johnson; and the members of the Pension & Benefits
Committee of Johnson and Johnson, including Peter Fasolo, Warren Luther, and Lisa Blair Davis,
for breaches of fiduciary duties and other violations under the Employee Retirement Income
Security Act (“ERISA”), 29 U.S.C. §§ 1001-1461, and states as follows:

1.Congress enacted ERISA in the wake of several high-profile scandals involving
employers that mismanaged their employee benefits programs. This mismanagement had inflicted
millions of dollars of harm on employees and their dependents. ERISA was designed to put an
end to this mismanagement and to protect the interests of employee benefit plan participants. It
does so by “establishing standards of conduct, responsibility, and obligation for fiduciaries of
employee benefit plans,” and by providing plan participants with “appropriate remedies, sanctions,
and ready access to the Federal courts” when plan fiduciaries mismanage plan assets. 29 U.S.C.
§ 1001(b). Courts have referred to ERISA’s fiduciary duties as “the highest known to the law.”

2.ERISA subjects anyone with discretionary authority over an employee-benefits
plan to fiduciary duties derived from the law of trusts. Most relevant here, ERISA’s “duty of
prudence” requires fiduciaries to act “with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and with like aims.” 29 U.S.C.
§ 1104(a)(1)(B). Among other things, ERISA’s duty of prudence requires plan fiduciaries to make
a diligent effort to compare alternative service providers in the marketplace, seek the lowest level
of costs for the services to be provided, and continuously monitor plan expenses to ensure that they
remain reasonable under the circumstances.

3.This case principally involves mismanagement of prescription-drug benefits. Over
the past several years, Defendants breached their fiduciary duties and mismanaged Johnson and
Johnson’s prescription-drug benefits program, costing their ERISA plans and their employees
millions of dollars in the form of higher payments for prescription drugs, higher premiums, higher
deductibles, higher coinsurance, higher copays, and lower wages or limited wage growth.
Defendants’ mismanagement is most evident in (but not limited to) the prices it agreed to pay one
of its vendors—its Pharmacy Benefits Manager (“PBM”)—for many generic drugs that are widely
available at drastically lower prices. For example, someone with a 90-pill prescription for the
generic drug teriflunomide (the generic form of Aubagio, used to treat multiple sclerosis) could
fill that prescription, without even using their insurance, at Wegmans for $40.55, ShopRite for
$41.05, Walmart for $76.41, Rite Aid for $77.41, or from Cost Plus Drugs online pharmacy for
$28.40. Defendants, however, agreed to make their ERISA plans and their beneficiaries pay
$10,239.69—not a typo—for each 90-pill teriflunomide prescription. The burden for that massive
overpayment falls on Johnson and Johnson’s ERISA plans, which pay most of the agreed amount
from plan assets, and on beneficiaries of the plans, who generally pay out-of-pocket for a portion
of that inflated price. No prudent fiduciary would agree to make its plan and beneficiaries pay a
price that is two-hundred-and-fifty times higher than the price available to any individual who just
walks into a pharmacy and pays out-of-pocket.