A federal judge recently dismissed a lawsuit against Wells Fargo filed by a group of former employees who accused the bank of violating its fiduciary responsibilities by allowing its pharmacy benefit manager (PBM), Express Scripts, to overcharge for prescription drugs. The ruling has significant implications for employers and their management of healthcare benefits, especially as it concerns rising drug costs.
The plaintiffs—four ex-Wells Fargo employees—filed the lawsuit in July, alleging that the bank failed to meet its fiduciary duties under the Employee Retirement Income Security Act (ERISA). According to the complaint, Wells Fargo allowed Express Scripts to charge excessive prices for drugs while retaining negotiated rebates from drugmakers rather than passing the savings onto the bank or its employees.
The lawsuit also claimed that the bank’s health plan was mismanaged in other ways, including paying steep administrative fees to Express Scripts. In 2022 alone, Wells Fargo paid over $25 million in administrative fees to Express Scripts—up from $9 million in 2019—even though there was a decrease in plan enrollment, and the services provided by Express Scripts remained unchanged. The plaintiffs argued that these inefficiencies caused the bank’s employees to pay higher costs for their medications, potentially affecting their health outcomes.
One example cited in the complaint involved a prescription for fingolimod, a generic drug used to treat multiple sclerosis. Wells Fargo employees paid nearly $10,000 for a 90-day supply, while the same prescription could have been purchased at retail pharmacies for just $650 to $900.
On Monday, U.S. District Judge Laura Provinzino ruled in favor of Wells Fargo, dismissing the lawsuit. The judge determined that the plaintiffs failed to demonstrate concrete harm, which is required to have standing in such cases. In her decision, Judge Provinzino noted that the plaintiffs’ allegations of mismanagement were speculative and insufficient to show direct harm to individual plan members.
She also pointed out that the connection between Wells Fargo’s administrative fees and the actual costs paid by plan members was “tenuous at best.” Furthermore, the examples of inflated drug costs presented by the plaintiffs represented a small, unrepresentative portion of the many drugs covered under the plan, making the case less compelling.
Though she sympathized with the plaintiffs’ frustrations over high prescription drug prices, Judge Provinzino emphasized that their claims were not strong enough to warrant a lawsuit under ERISA.
This ruling is a significant victory for large employers who self-fund their health plans and have increasingly been scrutinized for rising healthcare costs. The decision could discourage similar lawsuits, which have become more common as employees and consumer advocates raise concerns over escalating drug prices.
Wells Fargo’s legal victory follows a similar dismissal in January 2024 of a lawsuit against Johnson & Johnson, which accused the pharmaceutical giant of failing to manage health plan drug costs. Both cases reflect a broader trend where plaintiffs have struggled to convince the courts that employers have a direct fiduciary responsibility to control drug prices under ERISA.
However, these dismissals do not negate the growing pressure on employers to address the skyrocketing costs of prescription medications. Though the case against Wells Fargo has been dismissed, it was done so without prejudice, meaning the plaintiffs have the option to file an amended lawsuit if they choose. As drug prices continue to rise, employers may face heightened expectations from employees to take a more active role in controlling healthcare costs. While these lawsuits may not succeed in court, they signal a growing demand for accountability in the way health benefits are managed.