Wells Fargo Sued Over Prescription Drug Costs: What the New ERISA Lawsuits Mean for Workers and Employers

A new lawsuit against Wells Fargo is shining a national spotlight on how large employers manage prescription drug benefits — and why workers may be paying far more for generic medications than they should.

According to a July 30, 2024 Reuters report, former Wells Fargo employees filed a federal class action claiming the bank allowed its pharmacy benefit manager (PBM) to overcharge the company’s health plan for hundreds of common generic drugs. The workers say those inflated prices were ultimately paid by the plan and its participants through higher premiums, higher cost-sharing, and suppressed wages.

The case is part of an emerging wave of lawsuits attempting to expand ERISA fiduciary-duty litigation — traditionally focused on 401(k) excessive-fee cases — into the world of self-funded health plans and pharmacy benefit management.

And while many of these suits are being dismissed on technical grounds, they signal major future risk for employers, insurers, PBMs, and employees across the country.

The Theory Behind These Lawsuits: How PBM Contracts Create Hidden Costs

Most large employers, including Wells Fargo, use PBMs to negotiate drug prices, manage formularies, run specialty pharmacies, and secure manufacturer rebates. Advocates argue that PBMs often operate with little transparency — and may steer plans to higher-cost drugs, retain rebates, or impose inflated “spread pricing.”

The lawsuits — including the headline cases involving Johnson & Johnson (“J&J”) and Wells Fargo — claim employers breached their ERISA fiduciary duties by:

• Failing to monitor PBM contracts or negotiate reasonable terms

• Allowing PBMs to charge excessive administrative fees

• Permitting spread pricing — charging the plan far above the pharmacy’s acquisition cost

• Requiring employees to use PBM-owned specialty/mail pharmacies even when cheaper options exist

• Allowing PBMs to retain manufacturer rebates instead of crediting them to the plan

Under ERISA, fiduciaries must act solely in the interest of plan participants, ensure reasonable compensation, and prudently select and monitor vendors. Plaintiffs argue employers simply “rubber-stamped” PBM contracts for years, enabling massive overcharging.

The Wells Fargo Lawsuit: What the Plaintiffs Claim

Filed in Minnesota federal court, Navarro v. Wells Fargo & Co. alleges:

1. Huge markups on generic prescriptions

The complaint claims that for nearly 300 preferred generic drugs, the PBM charged the plan about 115% more than the pharmacy’s acquisition cost.
For generic specialty drugs, the markups allegedly averaged a staggering 383%.

2. Excessive PBM administrative fees

Plaintiffs say Wells Fargo paid Express Scripts:

• $9 million in 2019, but

• over $25 million in 2022,
  despite a decline in plan enrollment.

3. Mandatory use of Accredo

The suit alleges the plan required members to fill certain prescriptions at Accredo, a specialty pharmacy owned by Express Scripts — even when cheaper pharmacies were available.

4. Real harm to workers

According to plaintiffs, these inflated costs caused:

• Higher premiums and contributions

• Higher out-of-pocket costs

• Suppressed wages, because more employer money went to plan expenses

They seek restitution to the plan, removal of fiduciaries, appointment of an independent fiduciary, and structural reforms.

What Happened in Court?

Case dismissed — but not because the allegations are weak

In March 2025, the court dismissed the lawsuit for lack of Article III standing — the same procedural barrier that recently defeated the J&J case. The court ruled that:

• The connection between PBM fees and individual participants’ premium payments was “speculative,” and

• The plaintiffs did not show a clear, personal financial injury the court could fix.

The court did not reach the merits and dismissed the case without prejudice, meaning plaintiffs may re-plead with different participants or more concrete injury evidence.

How the J&J Case Fits Into the Trend

The J&J lawsuit, Lewandowski v. Johnson & Johnson, alleged similar PBM-related fiduciary breaches. It too was dismissed in January 2025 on standing grounds. The court found:

• The plaintiff hit her out-of-pocket maximum, so even if drugs had been cheaper, her final annual cost would not have changed

• Allegations about higher premiums and contributions were too hypothetical

Again, the case was dismissed procedurally, not because the court rejected the underlying theory.

Comparison Chart: J&J vs. Wells Fargo

Why These Cases Matter — Even Though Plaintiffs Are Losing

Courts are making one point very clear:

You cannot sue over high drug prices unless you can show your personal pocket was directly harmed — and that the court can fix that harm.

But despite repeated dismissals, these lawsuits matter for five big reasons:

1. They spotlight hidden PBM economics

Both cases exposed alleged massive spreads between drug acquisition costs and what plans were actually charged.

2. They’re pushing employers to revisit PBM contracts

Employers are already:

• Running competitive RFPs

• Moving from spread pricing to pass-through pricing

• Demanding rebate transparency

• Reviewing specialty pharmacy carve-outs

3. They preview the next wave of national class actions

This is where 401(k) excessive-fee litigation was in 2005 — early standing fights before explosive growth.

4. Plaintiffs are learning how to fix the standing problem

Future plaintiffs will likely be:

• Participants who did not hit their out-of-pocket maximum

• People who can show receipts proving overcharges

• Members whose premiums rose directly with plan costs

5. Potential exposure is huge

If any of these suits survive standing, damages could reach:

• Tens to hundreds of millions per employer

• Reforms to the entire PBM contracting industry

• Mandatory transparency and independent fiduciaries

What Employers and Plan Fiduciaries Should Do Now

Legal experts recommend proactive risk-mitigation steps, including:

• Conduct independent benchmarking of PBM fees

• Audit specialty pharmacy pricing and “steerage” rules

• Switch to pass-through pricing where possible

• Document monitoring processes and conflict-checks

• Review rebate flows and total PBM compensation

• Consider independent fiduciary oversight for Rx benefits

Even without a successful lawsuit, discovery alone in these cases could cost millions and expose proprietary PBM pricing structures.

Bottom Line

The Wells Fargo lawsuit — like the J&J case before it — shows that courts are not yet ready to let these ERISA pharmacy-benefit claims proceed without airtight evidence of individual injury. But the underlying allegations highlight a real and growing problem: opaque PBM contracts that may be driving up drug costs for employers and workers nationwide.

Even though the cases were dismissed, they mark the beginning of what could become the next major front in ERISA litigation. Employers should review their PBM relationships now — before being forced to do so in court.