Three health systems have filed federal lawsuits against CVS Health, alleging the company and several affiliates improperly diverted about $250 million in savings generated through the 340B drug pricing program.
The health systems include New York City-based Mount Sinai Health System, Ann Arbor-based Michigan Medicine and the University of Kansas Health System in Kansas City.
The lawsuits were filed against CVS Health, CaremarkPCS Health, Caremark, CVS Specialty and WellPartner, according to a May 21 news release from healthcare law firm Frier Levitt. The complaints allege CVS Health engaged in a scheme to retain savings tied to 340B specialty drug claims that should have been passed through to the hospitals. The alleged conduct occurred between 2020 and 2025 and diverted approximately $250 million in 340B funds from the three health systems combined, according to the lawsuits.
The 340B program allows safety-net hospitals and community health centers to buy outpatient drugs at discounted prices. Hospitals use the savings to support uncompensated care, specialty services and programs for low-income, uninsured and underserved patients.
According to the complaints, the health systems had agreements with Caremark, WellPartner and CVS Specialty that required third-party payments for successfully adjudicated 340B specialty drug claims to be passed through to their hospitals, except for dispensing and administrative fees.
The health systems allege that because 340B eligibility often cannot be determined at the point of sale, specialty drug claims were initially processed at standard national network reimbursement rates. Weeks later, when WellPartner identified a claim as 340B-eligible, CaremarkPCS allegedly paid CVS Specialty an artificially reduced reimbursement rate and WellPartner presented that lower amount to the hospitals as the full reimbursement.
The lawsuits allege CVS retained the difference between the higher initial reimbursement and the reduced amount passed to the hospitals as profit.
“CVS Health’s mission statement commits the company to lowering the cost of care and improving the health and well-being of those it serves,” Jonathan Levitt, founding partner at Frier Levitt, said. “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 health systems are seeking to recover the funds they claim should have gone to expanding access to care for underserved communities.
KU Health System said it attempted to resolve the dispute before filing suit.
“The University of Kansas Health System tried to resolve differences with CVS, but CVS refused to permit a contractually required audit and terminated our 340B agreement,” Dan Peters, senior vice president, general counsel for health system, said in a statement shared with Becker’s. “The 340B program allows hospitals to help serve patients in need. We will work to ensure patients continue to benefit from the program.”
CVS said in a statement to Becker’s: “We do not comment on matters that are subject to ongoing litigation and remain focused on serving our customers and executing our business priorities.”
Becker’s has also reached out to Michigan Medicine and Mount Sinai for comment and will update this story as more information becomes available.
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