The 340B Drug Pricing Program remains an active legal battleground, with drugmakers and covered entities fighting in courts nationwide over contract pharmacy access, patient eligibility and reimbursement practices. Here are five updates from the last two weeks that hospital and health system leaders should know.
1. Judge allows hospital, health center groups to intervene in AbbVie 340B suit
A Washington, D.C., federal district judge granted motions from 340B Health, the National Association of Community Health Centers and Ryan White Clinics for 340B Access to intervene in AbbVie’s lawsuit challenging HHS’ definition of “patient” under the 340B statute. The Aug. 24 order allows the groups to defend the government’s long-standing interpretation of the term, which AbbVie argues should instead align with the definition reflected in its own 340B audit requests. The court found the hospital and health center groups have a legitimate stake in the outcome, since a ruling for AbbVie could expose them to costly future audits, and that the government’s defense alone may not adequately protect their interests.
2. Michigan hospital fights to keep 340B suit alive against CVS, Caremark
University of Michigan Hospitals and Health Centers filed an Aug. 26 opposition to CVS Health, CaremarkPCS Health, Caremark and Wellpartner’s motion to dismiss its lawsuit over an alleged 340B pricing scheme. The health system argues CaremarkPCS and CVS Specialty reversed already-adjudicated 340B claims and repriced them below fair market value, with Wellpartner concealing the practice through falsified remittance reports — allegations it says support breach of contract, fraud, tortious interference, unjust enrichment, RICO and Michigan Consumer Protection Act claims against all four defendants, including non-signatories CVS Health and CaremarkPCS under an alter-ego theory. The health system claims more than $66 million in losses and says CVS terminated its contract pharmacy agreements in retaliation after it sought to audit the claims data.
3. Milwaukee hospital sues CVS over $18M in alleged 340B diversion
Milwaukee-based Froedtert Memorial Lutheran Hospital sued CVS Health Aug. 20, alleging the company and its subsidiaries diverted about $18 million in 340B drug pricing savings from the hospital between 2020 and 2025. The complaint, filed in federal court in the Eastern District of Wisconsin, names CVS Health, CaremarkPCS Health, Caremark (doing business as CVS Specialty) and WellPartner as defendants, alleging the same reimbursement scheme described in other hospitals’ suits against CVS: claims adjudicated at standard rates, then quietly repriced lower once flagged as 340B-eligible, with CVS pocketing the difference — about 62% of the savings at issue, according to Froedtert. The hospital also alleges CVS refused an audit request and terminated its pharmacy services agreements in retaliation. Froedtert is the fourth health system to bring this claim against CVS, following New York City-based Mount Sinai Health System, Ann Arbor-based Michigan Medicine and the Kansas City-based University of Kansas Health System in May and Detroit-based Henry Ford Health in July.
4. AstraZeneca joins fight against Illinois’ 340B contract pharmacy law
AstraZeneca joined AbbVie and Novartis Aug. 14 in suing to block Illinois’ new law barring drugmakers from restricting which contract pharmacies covered entities can use and from collecting certain 340B compliance data. The company argues the law is preempted by federal law and violates the Constitution’s supremacy clause — the same argument AstraZeneca has made in roughly 20 other states, with rulings on these laws splitting depending on the court.
5. Judge rules against AstraZeneca in Mississippi 340B pricing law fight
A federal judge in the Southern District of Mississippi ruled against AstraZeneca in its challenge to Mississippi’s Defending Affordable Prescription Drug Costs Act, granting summary judgment to state Attorney General Lynn Fitch and dismissing the drugmaker’s claims with prejudice. The Aug. 21 ruling found AstraZeneca failed to show the state law — which bars drugmakers from placing discount restrictions on certain contract pharmacies — is preempted by the federal 340B program. The decision follows a similar defeat for AbbVie over the same Mississippi law, and marks a second loss for AstraZeneca in its own case; the court had already denied the company’s bid to block the law earlier in the litigation.
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.
