Federal Judge Dismisses Lawsuit Against Wells Fargo Over Prescription Drug Costs in Employee Health Plan

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On March 24, 2025, a federal judge in Minnesota dismissed a class-action lawsuit against Wells Fargo & Co., which accused the bank of mismanaging its employee health plan and causing workers to overpay for prescription drugs. This ruling, made by U.S. District Judge Laura Provinzino, marks a significant victory for Wells Fargo and may discourage similar legal actions targeting large employers over healthcare costs in the future.

Background of the Lawsuit

The lawsuit, filed in July 2024 by four former Wells Fargo employees, claimed that the bank violated the Employee Retirement Income Security Act (ERISA). This law mandates that employers manage employee benefit plans in a prudent and responsible manner. The plaintiffs alleged that Wells Fargo's health plan, partly managed by pharmacy benefit manager (PBM) Express Scripts, paid inflated prices for medications, leading to higher costs for employees in the form of premiums and out-of-pocket expenses.

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Examples cited by the plaintiffs included a generic multiple sclerosis drug, which the bank's health plan paid nearly $10,000 for, though the same drug was available at some pharmacies for only $648. Another example involved a cancer drug, bexarotene, for which the plan paid more than $69,000, while the retail price was about $3,750. The plaintiffs argued that Wells Fargo failed in its fiduciary duty by not negotiating better rates with Express Scripts, allowing the PBM to retain drug manufacturer rebates, and failing to direct employees toward lower-cost alternatives.

The plaintiffs sought monetary damages and statutory penalties on behalf of a potential class of thousands of other plan participants.

Judge's Ruling

Judge Provinzino dismissed the lawsuit without prejudice, meaning the plaintiffs could potentially refile with additional evidence. However, the ruling significantly weakened the plaintiffs' case. The judge concluded that the former employees lacked the legal standing to bring the suit, as they were unable to show "concrete harm." She noted that the connection between Wells Fargo’s administrative fees and the drug prices paid by the plan participants was weak. Additionally, she pointed out that the high-cost drugs mentioned in the case represented only a small portion of the full drug formulary, and that the plaintiffs' benefits remained unaffected by the alleged issues.

In her ruling, Judge Provinzino stated, "While the Plaintiffs’ allegations are detailed, they are too speculative to demonstrate individual harm or establish a clear link to the pricing practices they challenge." However, she also expressed sympathy for the plaintiffs’ concerns regarding rising drug costs, stating, "The Court is not unsympathetic to Plaintiffs’ concerns."

Wells Fargo did not dispute the factual details of the allegations but argued that the plaintiffs’ claims did not meet the necessary legal criteria to proceed. A spokesperson for the bank declined to comment on the ruling or its ongoing relationship with Express Scripts.

Wider Legal Context

This case is part of a growing trend of legal challenges targeting large employers, especially those with self-funded health plans, under ERISA. A similar lawsuit filed against Johnson & Johnson in February 2024 was dismissed in January 2025 on similar grounds. These cases are part of a broader focus on pharmacy benefit managers (PBMs), like Express Scripts, CVS Caremark, and Optum Rx, which play a key role in negotiating drug prices and managing health plan formularies. Critics argue that certain PBM practices, such as keeping drug manufacturer rebates and using spread pricing, contribute to rising drug costs.

In the case of Wells Fargo, the plaintiffs pointed to several concerns, including high markups on "preferred" generic drugs and claims that employees were steered to more expensive mail-order pharmacies. However, without clear evidence of harm, the court ruled that these claims were insufficient to proceed with a class-action lawsuit.

Impact on Employers and Employees

The ruling is likely to discourage similar lawsuits against other large employers, providing relief to companies worried about legal exposure related to healthcare costs. Legal experts suggest that plaintiffs in future cases will need to show more direct and tangible harm, such as specific financial losses or denied benefits, rather than relying on generalized claims of mismanagement.

For employees, this decision underscores the difficulty of holding employers accountable for healthcare costs under ERISA. While this ruling does not absolve PBMs or employers from further scrutiny, it shifts the responsibility to potential legislative or regulatory changes. Efforts are ongoing in Congress and by the Federal Trade Commission to investigate PBM practices and increase transparency in drug pricing, which could address some of the underlying issues raised by the plaintiffs.

What’s Next?

As of March 26, 2025, the plaintiffs have not indicated whether they plan to refile the lawsuit, suggesting they may be reconsidering their approach. The dismissal reinforces the challenges that plaintiffs face in proving fiduciary breaches without concrete, individualized evidence of harm.

Although this legal battle appears to have come to an end, the broader issue of rising prescription drug costs continues to be a contentious issue in the U.S. healthcare system. The focus now shifts to potential regulatory solutions, as both corporate healthcare practices and drug pricing continue to be scrutinized in courts and by lawmakers alike. For now, Wells Fargo and similar employers may find some relief, but the debate over healthcare costs and accountability remains unresolved.