Three major hospital systems — including Mount Sinai Health System, the University of Michigan Health System and the University of Kansas Health System — have filed a lawsuit against CVS Health and affiliated entities, alleging improper diversion of savings tied to the federal 340B Drug Pricing Program. The lawsuits seek roughly $250 million in alleged diverted savings, along with monetary damages, declaratory relief and an injunction to halt the challenged practices going forward.
The 340B program allows eligible safety-net providers to purchase outpatient drugs at significantly reduced prices, with the expectation that savings will be reinvested in care for uninsured and low-income patients. A key feature of the dispute involves how 340B claims are processed and later reconciled. In many cases, drugs are initially reimbursed at standard commercial or plan-negotiated rates at the time they are dispensed. Eligibility for the 340B program is then identified later through claims review and eligibility matching, after which payments may be retroactively adjusted to reflect discounted pricing tied to the program.
Hospitals argue that the timing of these adjustments — and the entities responsible for processing them — can affect how much of the resulting price difference is ultimately returned to covered entities, particularly when pharmacy benefit managers or affiliated intermediaries control the reconciliation process.
In their complaints, the hospitals allege that CVS, through its pharmacy benefit management operations and related subsidiaries, implemented billing and reconciliation practices that reduced the amount of 340B savings ultimately retained by covered entities. The systems argue that post-payment adjustments and internal reallocations allowed CVS-affiliated entities to retain a portion of the spread between insurer payments and 340B acquisition costs.
"CVS Health's mission statement commits the company to lowering the cost of care and improving the health and wellbeing of those it serves," said Jonathan Levitt, founding partner at Frier Levitt, the law firm representing the plaintiffs. "What our Complaints allege is the opposite: that behind the scenes, CVS systematically diverted funds Congress specifically designated to help safety-net hospitals care for the most vulnerable Americans — and pocketed them as corporate profit."
The case arrives amid a broader wave of disputes over how the 340B program is administered and controlled. In a separate but related conflict, Eli Lilly and Company has faced pushback from hospitals over new requirements to submit detailed claims-level data through a third-party platform as a condition of accessing 340B pricing. Hospitals, backed by industry groups, argue the requirements add administrative burden and risk restricting access to discounted drugs, while the company says the policy is intended to strengthen oversight and ensure program integrity.
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