Union health plan sues Optum Rx for covering costly weight loss drugs including Wegovy

Health plan trustees at a Minneapolis-based construction workers union are suing a subsidiary of UnitedHealth Group for paying more than $4 million for costly weight-loss drugs, depleting union funds even though the medicines were allegedly not covered by the health plan.

Trustees of the Operating Engineers Local 49 Health and Welfare Fund brought the lawsuit in the U.S. District Court of Minnesota this week against Optum Rx, a UnitedHealth Group division in Eden Prairie that’s one of the nation’s largest pharmacy benefit managers (PBMs).

Optum Rx issued a statement Thursday saying it denied the allegations in the lawsuit and would defend against the claims in court.

PBMs are hired by insurance companies and self-insured health plans to manage pharmacy benefits. The companies negotiate prices with drug makers and then decide which drugs are eligible for coverage and how much patients pay for them.

The PBM industry has been under scrutiny for several years because of complex and opaque financial practices that critics believe are inflating drug prices and driving independent pharmacies out of business while making the companies rich.

The new lawsuit, however, alleges a more straightforward sort of wrongdoing.

The union health plan’s trustees contend that Optum Rx allowed prohibited transactions by approving thousands of claims over several years for popular but expensive blockbuster drugs Wegovy and Zepbound. They say the union’s health plan allowed coverage of a medicine called Xenical to treat obesity, but not the newer medicines.

The lawsuit says that since 2018, Optum Rx charged the union health plan $4,381,075 for 3,732 claims for weight loss drugs that were not supposed to be covered.

“Optum Rx received no compensation when it denied claims,” the lawsuit says. “It was in Optum Rx’s interest to approve claims, rather than deny them, as each approved claim increased Optum Rx’s compensation and each denied claim was uncompensated work and a lost opportunity for profit.”

The International Union of Operating Engineers Local 49 represents 15,000 members across Minnesota and the Dakotas in the construction industry, including heavy equipment operators and stationary engineers.

The high cost of Wegovy, Zepbound and other medicines in a class known as GLP-1 has been straining health care budgets across the U.S.

While the immense popularity of the drugs has created near-term financial challenges for health insurers, analysts at BofA Securities noted in a 2023 research report that the growth should boost revenue and earnings for PBMs.

In the complaint filed Wednesday, trustees say the union provided prescription drug benefits to more than 25,000 people covered by the health plan. As the plan’s PBM, Optum Rx received all participant claims for medications, decided which were payable and paid them “out of its own pocket,” the lawsuit says, before billing the union health plan.

“Optum Rx did not disclose to the Trustees the amount it paid to a pharmacy to resolve any particular claim. For each claim OptumRx paid out of its own pocket, Optum Rx subsequently invoiced the Plan a contractually pre-arranged amount (which varied by drug).”

The trustees allege they primarily learned about PBM spending via annual reports, which were not provided in 2021 or 2022. In April 2024, trustees say they received a report from the PBM disclosing that Wegovy was among the drugs for which Optum Rx had charged the union health plan the most in the past year.

“Optum Rx’s invoices to the Plan for improperly approved and paid weight loss drug claims intermingled thousands of properly approved and paid claims with the improper claims without disclosing to the Plan the difference, deceiving the Plan into believing that all invoiced claims were properly approved and paid,” the lawsuit says. “By this deceit, Optum Rx caused the Plan to pay Optum Rx for weight loss drug claims.”

After more than a decade of working together, the union trustees terminated their relationship with Optum Rx at the end of 2024.