DOL Overtime Pay Rule Reversal – What it Means Workers?

Feb 22, 2025 | KLF Blog

The overtime pay rule reversal in November 2024 means many workers who would have become eligible for overtime pay under a new Department of Labor (“DOL”) rule are no longer covered. The DOL had planned to raise the salary threshold for overtime eligibility, expanding overtime protections to more salaried employees. However, a court decision overturned this rule, keeping the threshold at its lower 2019 level and limiting workers’ access to overtime pay.

What Happened with the Overtime Pay Rule Reversal?

The DOL’s 2024 Overtime Rule was set to raise the salary threshold to $43,888 in July 2024 and $58,656 in January 2025, making more salaried workers eligible for overtime pay. However, on November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated this rule, meaning it’s no longer in effect. Now, the threshold is back to $35,568 annually from the 2019 rule.

This reversal is significant because it affects how many workers qualify for overtime. If you earn less than $35,568, you’re automatically entitled to overtime for hours over 40 per week. But if you earn more, your eligibility depends on your job duties.

How Does The Overtime Pay Rule Reversal Affect You?

If you earn above $35,568, your employer might classify you as exempt from overtime, but this isn’t automatic. You must meet specific job duties, such as managing others or making key decisions, to be exempt. For example, if you’re a salaried worker earning $40,000 and your job is mostly routine, you might still be entitled to overtime pay.

The overtime pay rule reversal could possibly lead to misclassification, where employers wrongly label workers as exempt, denying them overtime.

What Can You Do if You are Wrongfully Denied Overtime?

If you think you’re being denied overtime pay, consider taking these steps:

  • Track Your Hours: Document any overtime you work without extra pay and any related communications.
  • Check Your Status: Assess whether your job involves executive, administrative, or professional duties. If not, you might be non-exempt.
  • Consult a Legal Expert About Filing a Claim: Class action lawsuits can help if many workers face similar violations. Contact a law firm which specializes in wage and hour litigation for a legal consultation and, importantly, to ensure compliance with FLSA’s statute of limitations (typically two years, extendable to three for willful violations).

The DOL’s 2024 Overtime Rule: Context & Legal Challenge

On April 26, 2024, the DOL published a final rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.”

This rule aimed to update the Fair Labor Standards Act (FLSA) by increasing the salary threshold for overtime exemptions. The phased implementation included:

  • Effective July 1, 2024, raising the threshold to $43,888 annually ($844 per week).
  • Effective January 1, 2025, further increasing it to $58,656 annually ($1,128 per week).
  • Additionally, the highly compensated employee threshold was set to rise to $132,964 on July 1, 2024, and $151,164 on January 1, 2025, with automatic updates every three years starting July 1, 2027.

It was estimated to extend overtime protections to millions of workers, particularly those earning between the previous threshold of $35,568 and the proposed new levels.

See also: Final Rule: Restoring and Extending Overtime Protections and DOL April 23, 2024 News Release.

Court Decision and Overtime Pay Rule Reversal

On November 15, 2024, U.S. District Judge Sean Jordan, Eastern District of Texas, blocked the Biden Administration rule expanding the ability for overtime pay for millions more salaried workers in the United States by ruling that the Department of Labor could not prioritize employee wages over job duties when determining eligibility. Judge Blocks Biden administration’s rule to expand overtime pay for millions.

This decision meant that the rule, including the July 1, 2024 increase, was effectively nullified retroactively.

As a result, the DOL reverted to enforcing the 2019 rule’s thresholds:

  • Minimum salary level: $684 per week, equivalent to $35,568 annually.
  • Highly compensated employee threshold: $107,432 annually.

Lawsuits regarding the 2024 final rule are currently pending in two other federal district courts, and the United States has filed a notice of appeal from the November 15 decision.

Implications for Workers: Are You Affected?

The overtime pay rule reversal has significant implications for workers, particularly those earning between $35,568 and $43,888, who would have been automatically eligible for overtime pay under the 2024 rule’s first phase.

Now, their exemption status depends on meeting certain requirements of the FLSA’s job duties test for executive, administrative, or professional employees, including:

  • Executive Exemption: Managing the enterprise or a department, directing employees, and have the authority to hire and fire other employees.
  • Administrative Exemption: Performing office or non-manual work directly related to management or general business operations, with discretion and independent judgment.
  • Professional Exemption: Work requiring advanced knowledge, typically in a field of science or learning, and involving consistent exercise of discretion.

For example, a store manager earning $40,000 who primarily handles routine tasks like stocking shelves might not meet these criteria and should be non-exempt, entitled to overtime pay.

Employers, however, might misclassify such workers as exempt, especially in the confusion following the rule reversal, leading to potential wage theft.

Misclassification Risks and Wage Theft

The lower salary threshold increases the risk of misclassification, where employers label workers as exempt without meeting the job duties test.

Signs of potential misclassification include:

  • Working over 40 hours weekly without additional compensation.
  • Performing routine tasks without managerial or decision-making authority.
  • Employers not tracking hours worked, assuming salaried status exempts overtime requirements.

Class Action Lawsuits as a Remedy

Workers can file class actio lawsuits under the FLSA to recover unpaid minimum wages and overtime. Successful cases have resulted in significant settlements:

    Have You Been Wrongfully Denied Overtime Pay?

    The overtime pay rule reversal has created uncertainty, potentially leaving workers vulnerable to misclassification and wage theft. Your rights, however, under the FLSA remain protected. If you believe you’ve been wrongly denied overtime pay by your employer, Kehoe Law Firm is here to help.

    Our experienced class action attorneys are dedicated to protecting workers’ rights. For a free, no-obligation evaluation of potential legal claims, send us a message or contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected]. 

    KLF’s class action legal services are provided on a contingency-fee basis, meaning clients are not responsible for any fees or litigation expenses. 

    About Kehoe Law Firm, P.C.

    Kehoe Law Firm, P.C. is a plaintiff-side class action firm, fiercely committed to safeguarding investors and consumers from corporate fraud and misconduct. Nationally recognized, our attorneys have taken the reins as Lead or Co-Lead Counsel in high-profile cases, securing over $10 billion in recoveries for institutional and individual investors and consumers. Through relentless class action litigation, we tackle securities fraud, fiduciary breaches, unfair mergers and acquisitions, and antitrust violations head-on. Beyond that, we champion whistleblowers and fight against data breaches, consumer scams, employment law abuses, retirement plan mismanagement, and deceptive business practices. With a no-nonsense, results-focused approach, we chase down meaningful outcomes—delivering justice and substantial recoveries for those we represent.

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      2001 Market Street
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      Seat Belt Buckle Anchor Bolt – Focus of Recall – 240,510 Ford Explorer & Lincoln Aviator SUVs Potentially Affected

      Feb 22, 2025 | KLF Blog

      Kehoe Law Firm, P.C. is notifying consumers that Ford Motor Company (“Ford”) is recalling certain 2020-2021 Ford Explorer and Lincoln Aviator vehicles.

      The seat belt buckle anchor bolts at one or more seating positions may be improperly secured. Additionally, vehicles may have an improperly secured seat belt retractor anchor bolt and/or seat belt anchor bolt at the second-row center seating position, if equipped.

      A loose seat belt or seat belt buckle may not properly restrain an occupant during a crash, increasing the risk of injury.

      240,510 2020-2021 Ford Explorer and Lincoln Aviator SUVs Potentially Impacted by the Recall

      216,563 Ford Explorer and 23,947 Lincoln Aviator SUVs are the subject of the recall. The recalled vehicles may have an improperly secured seatbelt buckle anchor bolt at one or more seating positions. Vehicles may also have an improperly secured seatbelt retractor anchor bolt and/or seatbelt anchor bolt at the second-row center seating position if equipped.

      Ford is not aware of any reports of accident or injury related to this condition.

      Remedy for Ford Explorer and Lincoln Aviator Vehicle Owners and Lessees Affected by the Recall

      Dealers will inspect seat belt buckle anchor bolts in all seating positions. Additionally, dealers will inspect the seat belt retractor anchor bolt and seat belt anchor bolt at the second-row center seating position, if equipped. If loose anchor bolts are found, the affected seat components will be replaced. Repairs will be performed free of charge.

      Additional Information About the Vehicle Recall 

      More information about the recall can be obtained by clicking the following:

      NHTSA’s Safety Recall Report – 25V-093

      NHTSA Recall Acknowledgement

      Manufacturer Notice to Dealers

      How Do I Know if My Vehicle Has Been Recalled?

      To determine if your vehicle is subject to the recall, please click Check for Recalls to search vehicles, car seats, tires and other equipment for safety recalls, investigations, complaints and manufacturer communication.

      Questions or Concerns About A Vehicle Defect or Safety Recall?

      Vehicle owners and lessess affected by automotive defects or safety recalls are encouraged to contact Kehoe Law Firm, P.C. by sending us a message below or contacting Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected], for a free, no-obligation evaluation of potential legal claims.

      Our class action legal services are on a contingency-fee basis, meaning clients are not responsible for any fees or litigation expenses.

      About Kehoe Law Firm, P.C. 

      Kehoe Law Firm, P.C. is a nationally recognized, plaintiff-side class action firm dedicated to protecting investors and consumers from fraud and corporate misconduct. Our attorneys have served as Lead or Co-Lead Counsel in cases recovering over $10 billion on behalf of institutional and individual investors and consumers.

      Through class action litigation, we hold corporations accountable for securities fraud, breaches of fiduciary duty, unfair or inadequate mergers and acquisitions, and antitrust violations. We also represent whistleblowers and prosecute data breach, consumer protection, and employment law violations, as well as cases involving retirement plan mismanagement and deceptive business practices. With a results-driven approach, we pursue impactful litigation to achieve meaningful results and recoveries for those we represent.

      Protecting Workers from Antitrust Violations

      Feb 19, 2025 | KLF Blog

      Antitrust laws don’t just regulate big corporations—they play a critical role in protecting workers from antitrust violations.

      The U.S. Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) enforce these laws to ensure fair competition in labor markets. Understanding your rights is essential to recognizing illegal employer practices and taking action.

      These laws safeguard competition for labor, just as they protect competition for goods and services. They ensure that workers have the freedom to pursue the best opportunities for themselves and their families.

      Revised Antitrust Guidelines for Business Activities Affecting Workers

      The DOJ and FTC have issued updated “Antitrust Guidelines for Business Activities Affecting Workers” to combat exploitative business practices that harm workers. The revised guidelines outline how authorities assess violations of laws such as the Sherman Act, Clayton Act, and Federal Trade Commission Act.

      Key Areas of Focus Include:

      Wage-Fixing Agreements: Employers colluding to set wages at artificially low levels.

      No-Poach Agreements: Agreements between companies not to recruit, solicit, or hire workers, or to fix wages or terms of employment, may violate the antitrust laws and may expose companies and executives to criminal liability.

      Franchise No-Poach Agreements: Agreements in the franchise context not to poach, hire, or solicit employees of the franchisor or franchisees may violate the antitrust laws.

      Non-Compete Clauses: Restrictions preventing employees from leaving for better opportunities. Non-compete clauses can play a significant role in antitrust considerations, because they restrict workers’ ability to pursue better employment opportunities or start a competing business; they also decrease competition for workers.

      Non-Disclosure Agreements (“NDAs”): Overbroad NDAs that unfairly limit job mobility, accepting other employment, or starting a business. NDAs can be anticompetitive if they:

      • Cover an excessively wide range of information, such as any information “usable in” or “related to” an industry, thereby restricting a worker’s ability to use their skills and knowledge in future employment and, moreover, limiting their job mobility and competition in the labor market. ​
      • Are worded in a way that suggests workers could face lawsuits or adverse employment consequences for reporting potential violations of law to state or federal authorities, or for cooperating with government investigations.​ This can prevent workers from reporting illegal activities, thereby undermining regulatory enforcement and competition.

      Training Repayment Agreement Provisions (“TRAPs”): Requiring workers to repay excessive training costs, which can be anticompetitive if they function to prevent workers from moving to other jobs or starting their own business.

      Non-Solicitation Agreements: Restrictions preventing former employees from soliciting former clients or customers can be anticompetitive, if they are so broad that they function to prevent a worker from seeking or accepting another job or starting a business.

      Exit Fees and Liquidated Damages: Provisions requiring workers to pay a financial penalty for leaving their employer can be anticompetitive, such as if they prevent workers from working for another firm or starting a business.

      Sharing Competitively Sensitive Information: Employers exchanging wage and employment terms with competitors to suppress wages.

      Why Protecting Workers from Antitrust Violations Matters 

      When employers collude to restrict competition in the labor market, workers suffer. These illegal practices lead to:

      • Lower wages
      • Fewer job opportunities
      • Reduced bargaining power
      • Worsened working conditions

      Take Action and Protect Yourself From Antitrust Violations – Know Your Rights 

      The antitrust laws prohibit harmful, anticompetitive practices to promote fair competition and better job opportunities.

      If you believe your employer has been engaging in unlawful wage-fixing, no-poach agreements or other prohibited conduct, send us a message or contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected], for a free, no-obligation evaluation of potential legal claims. 

      About Kehoe Law Firm, P.C.

      Kehoe Law Firm, P.C. is a nationally recognized, plaintiff-side class action firm dedicated to protecting investors and consumers from fraud and corporate misconduct. Our attorneys have served as Lead or Co-Lead Counsel in cases recovering over $10 billion on behalf of institutional and individual investors and consumers.

      Through class action litigation, we hold corporations accountable for securities fraud, breaches of fiduciary duty, unfair or inadequate mergers and acquisitions, and antitrust violations. We also represent whistleblowers and prosecute data breach, consumer protection, and employment law violations, as well as cases involving retirement plan mismanagement and deceptive business practices. With a results-driven approach, we pursue impactful litigation to achieve meaningful results and recoveries for those we represent.

        Our class action legal services are provided on a contingency-fee basis, meaning clients are not responsible for any fees or litigation expenses. 

        SEND US A MESSAGE

        Contact Us

        ADDRESS

        Kehoe Law Firm, P.C.
        2001 Market Street
        Suite 2500
        Philadelphia, PA 19103

        PHONE

        Tel: 215-792-6676

        EMAIL

        [email protected]

        Protect Your 401(k) Retirement Plan Savings from Fiduciary Violations

        Feb 18, 2025 | KLF Blog

        A 401(k) retirement plan is one of the most important financial benefits for employees, helping to secure long-term financial stability. However, breaches of fiduciary duty, such as mismanagement and corporate misconduct, can threaten your hard-earned savings.

        Understanding your rights under the Employee Retirement Income Security Act (“ERISA”) is essential to protecting your 401(k) retirement plan funds and holding plan fiduciaries accountable.

        ERISA Protections and Your 401(k)

        ERISA provides essential protections for 401(k) retirement plan participants, including:

        • Right to Information – You are entitled to key plan documents, such as the Summary Plan Description (“SPD”), annual reports, and account statements.
        • Fiduciary Duties – Plan administrators must act solely in the best interest of participants, avoiding conflicts of interest.
        • Protection from Mismanagement – Employers and fiduciaries must manage investments responsibly, control fees, and ensure transparency.
        • Right to Legal Recourse – If fiduciary duties are breached, participants may have the right to seek legal action to recover financial losses.

        What Is a Fiduciary Breach?

        Fiduciary breaches occur when plan administrators fail to act in the best interest of participants or engage in misconduct, such as:

        • Excessive Fees – Charging unreasonably high fees, reducing retirement savings over time.
        • Poor Investment Management – Offering high-risk, underperforming, or conflicted investment options.
        • Failure to Monitor the Plan – Neglecting oversight of third-party administrators or failing to correct mismanagement.
        • Delayed Contributions – Employers failing to deposit employee contributions on time, which may impact investment growth.

        Steps to Take if You Suspect Fiduciary Breaches or Mismanagement

        If you believe your 401(k) retirement plan is being mismanaged, consider taking these steps to protect your rights:

        1. Review Plan Documents – Check your SPD, account statements, and fee disclosures for inconsistencies.
        2. Report to the Plan Administrator – Raise concerns with your employer or plan fiduciary.
        3. File a Complaint – Report violations to the Department of Labor’s Employee Benefits Security Administration (EBSA).
        4. Seek Legal Assistance – If you have suffered financial losses, you may have a legal claim.

        How Kehoe Law Firm, P.C. Can Help

        Kehoe Law Firm, P.C. is dedicated to protecting employees from 401(k) retirement plan fiduciary mismanagement. If you suspect a breach of fiduciary duties, our experienced attorneys can evaluate your case. Don’t let fiduciary mismanagement put your retirement savings at risk.

        For a free, no-obligation legal consultation, send us a message or contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected]. 

        About Kehoe Law Firm, P.C.

        Kehoe Law Firm, P.C. is a nationally recognized, plaintiff-side class action firm dedicated to protecting investors and consumers from fraud and corporate misconduct. Our attorneys have served as Lead or Co-Lead Counsel in cases recovering over $10 billion on behalf of institutional and individual investors and consumers.

        Through class action litigation, we hold corporations accountable for securities fraud, breaches of fiduciary duty, unfair or inadequate mergers and acquisitions, and antitrust violations. We also represent whistleblowers and prosecute data breach, consumer protection, and employment law violations, as well as cases involving retirement plan mismanagement and deceptive business practices. With a results-driven approach, we pursue impactful litigation to achieve meaningful results and recoveries for those we represent.

          Our class action legal services are provided on a contingency-fee basis, meaning clients are not responsible for any fees or litigation expenses. 

          SEND US A MESSAGE

          Contact Us

          ADDRESS

          Kehoe Law Firm, P.C.
          2001 Market Street
          Suite 2500
          Philadelphia, PA 19103

          PHONE

          Tel: 215-792-6676

          EMAIL

          [email protected]

          2024 Securities Class Action Trends – Key Insights from NERA’s Latest Year in Review

          Feb 16, 2025 | KLF Blog

          Securities class action trends are dynamic, and the latest report from NERA Economic Consulting, “Recent Trends in Securities Class Action Litigation: 2024 Full-Year Review,” provides a comprehensive look at the evolving landscape of securities litigation.

          With more than three decades of data and analysis behind them, the experts at NERA offer fresh insights into the state of securities class actions in 2024, including changes in filing, dismissal, and settlement trends.

          Securities Class Action Trends Show A Stable Filing Environment

          In 2024, the number of new federal securities class action suits filed remained consistent with the previous year, with 229 cases, mirroring the 229 filings recorded in 2023. This signals that, despite fluctuating market conditions, the filing rate for securities class actions has held steady in recent years.

          One notable trend from the report is the concentration of filings within two key sectors: technology and healthcare.

          These industries combined accounted for more than half of all securities class actions filed in 2024. This reflects the continued prominence of these sectors in the broader market. Additionally, the report highlights a significant geographical concentration, with 61% of cases filed within the Second and Ninth Circuits, which encompass key financial markets such as New York and California.

          New Allegations Shaping Securities Class Action Trends in 2024

          The nature of the claims brought forward in 2024’s securities class actions reveals some noteworthy shifts. Of the 229 cases filed, 41% involved allegations related to missed earnings guidance, while only 8% centered around merger-integration issues. This continues the trend of earnings guidance-related cases dominating the landscape.

          Perhaps the most striking developments in 2024 were the significant increases in AI- and COVID-related claims. AI-related securities cases more than doubled, with 13 new lawsuits filed in 2024 compared to just a few in the previous year.

          Similarly, COVID-related claims saw a 46% jump from 2023, with 19 cases filed. These numbers indicate that evolving market trends, particularly the explosive growth of AI and the lingering effects of the COVID-19 pandemic, are making their mark on the securities class action space.

          On the other hand, the once-bustling arenas of cryptocurrency and SPAC (Special Purpose Acquisition Company) litigation have continued their decline. Only eight crypto-related cases and nine SPAC-related suits were filed in 2024, underscoring the fading intensity of legal action in these areas after their peak years.

          A Resurgence in Case Resolutions

          After a six-year decline, resolutions of securities class actions saw a 17% increase in 2024, with a total of 217 cases resolved. The breakdown of resolutions included 124 dismissals and 93 settlements. Notably, the rise in dismissals was the primary driver behind this increase, particularly cases involving Rule 10b-5, Section 11, and Section 12 claims.

          This shift towards dismissals could signal a more challenging litigation environment for plaintiffs, as courts become more selective in the cases they allow to move forward. However, settlements continue to play a significant role in resolving these cases, with aggregate settlements totaling $3.8 billion in 2024. The largest 10 settlements accounted for about 60% of this total, further emphasizing the concentration of financial resolution in a small number of high-profile cases.

          Investor Losses and Legal Fees

          2024 also saw a sharp rise in investor losses, with the median investor loss reaching $1.76 billion—the highest recorded in the last decade. This reflects the ongoing volatility in the markets and the high stakes involved in these lawsuits.

          In parallel, plaintiffs’ attorneys’ fees and expenses also saw a notable increase, totaling $1.06 billion in 2024, nearly $90 million more than in 2023. The growth in legal fees is a direct result of the complexity and scale of the cases being litigated, particularly those involving large-scale corporate disputes and high investor losses.

          The Future of Securities Class Action Trends – Looking Ahead

          NERA’s 2024 Full-Year Review provides a snapshot of the current state of securities class action litigation, offering valuable insights into the evolving trends in the industry.

          As technology, healthcare, and other emerging sectors continue to dominate the market, we can expect the nature of securities litigation to evolve alongside these changes. The rise of AI-related and COVID-related claims will likely be a continuing theme, while sectors like cryptocurrency and SPACs might see less activity going forward.

          For professionals in the field of securities litigation, these findings highlight the importance of staying ahead of the curve in terms of strategy and understanding the dynamics that drive filings and resolutions.

          This KLF blog post is designed to present the key points from the NERA report in a way that’s digestible and engaging for readers.

          Please click here to see the full NERA report. 

          Questions About Securities Class Actions?

          Investors and shareholders who have questions about class action lawsuits are encouraged to send us a message or contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], [email protected].

          About Kehoe Law Firm, P.C. 

          Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff–side class action law firm dedicated to protecting investors from securities fraud, breaches of fiduciary duties, and corporate misconduct.  Combined, the partners at Kehoe Law Firm, P.C. have served as Lead Counsel or Co-Lead Counsel in cases that have recovered more than $10 billion on behalf of institutional and individual investors.

          Kehoe Law Firm’s legal services are provided on a contingency-fee basis, meaning clients are not responsible for any fees or litigation expenses.

          SEND US A MESSAGE

          Contact Us

          ADDRESS

          Kehoe Law Firm, P.C.
          2001 Market Street
          Suite 2500
          Philadelphia, PA 19103

          PHONE

          Tel: 215-792-6676

          EMAIL

          [email protected]

          GoodRx, PBMs Face New Antitrust Price-Fixing Class Action

          Feb 11, 2025 | KLF Blog

          GoodRx and PBMs Face Legal and Regulatory Scrutiny –

          Independent pharmacies have recently filed lawsuits in several different federal courts, alleging that GoodRx, in collaboration with several pharmacy benefit managers (“PBMs”),including CVS Caremark, Express Scripts, MedImpact, and Navitus, engaged in practices to suppress reimbursement rates and increase fees for independent pharmacies.

          On February 7, 2025, Kehoe Law Firm, P.C. filed such a class action lawsuit on behalf of C&M Pharmacy Inc., d/b/a Parvin’s Pharmacy & Katz Pharmacy, in United States District Court, Central District of California.

          Please click C&M Pharmacy, d/b/a Parvin’s Pharmacy & Katz Pharmacy v. GoodRx, Caremark, et al. to view the antitrust class action complaint.

          The lawsuits claim that through GoodRx’s “Integrated Savings Program” (“ISP”), these entities conspired to artificially lower generic drug reimbursement rates and impose higher transaction fees, thereby maximizing their profits at the expense of smaller pharmacies.  The ISP allegedly utilizes GoodRx’s pricing algorithm and real-time data from PBMs to determine the prices of generic drug transactions. This system is said to enrich GoodRx and the PBMs while financially harming independent pharmacies.

          The lawsuits allege that such practices violate antitrust laws by fixing prices and creating unfair competition, ultimately threatening the viability of independent pharmacies.  As a result, independent pharmacies are reimbursed at the lowest rate as determined by the GoodRx algorithm, which often results in lower payments than the rates originally negotiated with the PBMs.

          In a related context, the Federal Trade Commission (“FTC”) has been investigating the role of PBMs in the pharmaceutical supply chain. An interim report published in July 2024 highlighted concerns that PBMs, through vertical integration and market concentration, have significant control over prescription drug accessibility and affordability.

          The FTC report found that the six largest PBMs manage nearly 95% of all U.S. prescriptions, enabling them to profit at the expense of patients and independent pharmacists. The FTC’s inquiry aims to shed light on PBM practices, including charging fees and clawbacks to unaffiliated pharmacies, steering patients toward PBM-owned pharmacies, and employing opaque reimbursement methods that disadvantage independent pharmacies.

          PBMs and Their Alleged Manipulation of Drug Pricing

          PBMs allegedly manipulate prescription drug pricing in several ways:

          • Dictating Reimbursement Rates: PBMs force independent pharmacies to accept unreasonably low reimbursement rates for dispensing prescriptions, often lower than the pharmacy’s acquisition costs.
          • Charging Retroactive Fees: PBMs impose Direct and Indirect Remuneration (“DIR”) fees and other retroactive fees on pharmacies, which can significantly reduce the pharmacies’ margins. These fees are often tied to performance metrics and can be substantial.
          • Clawbacks: PBMs sometimes instruct pharmacies to collect higher copays from patients than the actual cost of the drug and then claw back the difference, keeping the excess amount.
          • Specialty Drug Pricing: PBMs mark up the prices of specialty generic drugs by significant amounts and reimburse their affiliated pharmacies at higher rates than unaffiliated pharmacies.
          • Vertical Integration: Many PBMs are part of vertically integrated conglomerates that include their own mail-order, specialty, and retail pharmacies. This integration allows them to steer patients to their own pharmacies and manipulate pricing to benefit their affiliated entities.
          • Opaque Contracts: PBMs offer complex, opaque, and ever-changing contracts to independent pharmacies, often on a take-it-or-leave-it basis, preventing pharmacies from negotiating better terms.
          • Exploiting Market Power: PBMs control access to a large share of the market for prescription drug claims, giving them significant leverage over independent pharmacies. They use this power to dictate terms and underpay those pharmacies.
          • Data Sharing and Algorithmic Pricing: In the case of the GoodRx Integrated Savings Program, PBMs share real-time pricing data with GoodRx, allowing them to algorithmically select the lowest reimbursement rate from competitors, further suppressing payments to pharmacies.

          In July 2024, the House Committee on Oversight and Accountability released a report scrutinizing the practices of the three largest PBMs—CVS Caremark, Express Scripts, and OptumRx.

          The report concluded that these PBMs have monopolized the pharmaceutical marketplace by deploying deliberate, anticompetitive pricing tactics that are raising prescription drug prices, undermining community pharmacies, and harming patients across the United States.

          The National Community Pharmacists Association (“NCPA”), representing independent pharmacists, has been vocal about the detrimental effects of PBM practices. In a statement submitted to the House Oversight Committee, the NCPA highlighted how PBMs prioritize their interests, often at the expense of patients, employers, taxpayers, and community pharmacies. The association emphasized the urgent need for Congress to enact robust PBM reform legislation to address these issues.

          These developments underscore the growing concern among lawmakers and industry stakeholders regarding PBM practices and their impact on independent pharmacies and patient care.

          Questions About the Antitrust Class Action Lawsuit Against GoodRx, Caremark, Express Scripts, MedImpact Healthcare and Navitus Health Solutions?

          To learn more about the lawsuit or discuss potential legal claims, please send us a message or contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], [email protected], for a free, no-obligation legal evaluation.

          About Kehoe Law Firm, P.C.

          Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff-side class action law firm specializing in securities fraud, breaches of fiduciary duties, and corporate misconduct. Collectively, the firm’s partners have served as Lead Counsel or Co-Lead Counsel in high-profile cases that have recovered more than $10 billion for both institutional and individual investors.

          Kehoe Law Firm’s legal services are provided on a contingency-fee basis, meaning clients are not responsible for any fees or litigation expenses.

          SEND US A MESSAGE

          Contact Us

          ADDRESS

          Kehoe Law Firm, P.C.
          2001 Market Street
          Suite 2500
          Philadelphia, PA 19103

          PHONE

          Tel: 215-792-6676

          EMAIL

          [email protected]