Four ERISA plan participants, who participated in four different ERISA plans, commenced an ERISA class action against four of the nation’s largest pharmacy benefit managers (PBMs), alleging that the PBMs breached their fiduciary duties by failing to ensure that the plaintiffs and other plan participants received the benefit of discounts that the PBMs had negotiated with Mylan Pharmaceuticals, a company that markets and sells EpiPens.  As a result of the alleged breaches, the plan participants argued that they were forced to pay excessive prices for EpiPens through their respective plans.

In a blow to the plaintiffs’ case, a federal judge in Minnesota recently denied their motion for class certification of four nationwide classes—one class for each PBM.  In so ruling, the court concluded that class certification was not appropriate because plaintiffs could not satisfy Rule 23’s commonality requirement.  The court determined that it would need to examine the terms of each plan to determine (i) whether each PBM was a fiduciary, (ii) if a PBM was a fiduciary, whether the PBM breached its fiduciary duty, and (iii) how to measure any losses.  The court explained that many plans required the PBMs to pass along 100% of any discount to the plan and it was therefore each plan’s decision to pass on such discounts to the plan participants.  The court also explained that each PBM’s contract with Mylan Pharmaceuticals differed markedly, both in terms of the services provided and whether a PBM passed through a percentage or the entire amount of the Mylan discounts, which would in turn determine the amount of profits that would be subject to forfeiture.

The case is In re: EpiPen ERISA Litig., No. 17-1884 (PAM/HB) (D. Minn. Aug. 5, 2020).

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Photo of Russell Hirschhorn Russell Hirschhorn

Russell L. Hirschhorn, co-head of the ERISA Litigation Group, represents plan fiduciaries, trustees, sponsors and service providers on the full range of ERISA and state law benefit and fiduciary issues. From single plaintiff litigation and arbitration to complex class action litigation, he provides…

Russell L. Hirschhorn, co-head of the ERISA Litigation Group, represents plan fiduciaries, trustees, sponsors and service providers on the full range of ERISA and state law benefit and fiduciary issues. From single plaintiff litigation and arbitration to complex class action litigation, he provides practical guidance, develops unique litigation defense strategies and, when appropriate, mediates successful resolutions.

Russell represents clients across a wide array of publicly-held, multi-national companies and privately owned companies across a multitude of industries including, banking, finance and investments, pharmaceuticals, retail products and construction, to name just a few. In addition, he also counsels benefit plan clients on a host of compliance and federal and state government agency enforcement matters, including complex and lengthy investigations and audits by the U.S. Departments of Justice and Labor.

Russell is management co-chair of the American Bar Association Employee Benefits Committee as well as management co-chair of the Trial Institutes Committee of the American Bar Association’s Labor and Employment Law. He also writes on cutting-edge ERISA litigation issues, serving as a contributing author and a past chapter editor to Employee Benefits Law (BNA Third Edition).

Deeply dedicated to pro bono work, Russell was a principal drafter of several amicus briefs for the Innocence Project, a legal non-profit committed to exonerating wrongly convicted people. Russell has been recognized on several occasions for his commitment to pro bono work including by President George W. Bush in receiving the U.S. President’s Volunteer Service Award.