US hospitals are suing CVS Health for nearly $300m, alleging it diverted savings from the 340B drug discount programme meant to support care for low-income patients.
At least five hospital systems have now filed suits. The latest, from Milwaukee’s Froedtert Memorial Lutheran Hospital, alleges more than $18m in losses since 2020.
The dispute at a glance
- Defendant: CVS Health, which operates as an insurer, pharmacy benefit manager (PBM) and pharmacy
- Claimants: At least five hospital systems, with suits filed since May
- Total sought: Nearly $300m, according to Modern Healthcare
- Latest suit: Froedtert, alleging more than $18m in damages since 2020
- CVS response: CVS says it “plans to vigorously defend itself” against the Froedtert suit
What is 340B?
The 340B programme requires drugmakers to sell medicines at steep discounts to eligible hospitals and clinics that serve large numbers of low-income or uninsured patients. Hospitals can use the savings to support their services. Many work with outside “contract pharmacies”, including large chains and specialty pharmacies, to dispense these drugs.
What the hospitals allege
The hospitals claim CVS’s reimbursement practices diverted 340B savings that should have gone to them. Their lawyers say the issue may extend beyond hospitals to any covered entity using a CVS specialty pharmacy as a contract pharmacy. CVS disputes the claims.
Why it matters
- 340B is under pressure from all sides. Drugmakers, PBMs, hospitals and regulators are fighting over how the programme’s savings are shared.
- Vertical integration is in focus. CVS’s combined role as insurer, PBM and pharmacy is central to the hospitals’ complaints.
- More suits may follow. If the cases survive CVS’s motions to dismiss, other covered entities could bring similar claims.
What it means for hospital pharmacies
Hospitals using contract pharmacies should review how 340B claims are reimbursed and reconciled, and whether their agreements give them enough visibility. The outcome of these cases could shape how contract pharmacy arrangements are written across the industry.
The bottom line
The CVS lawsuits put a spotlight on who really benefits from 340B savings. Watch for rulings on CVS’s motions to dismiss as the first test of the hospitals’ claims.
Frequently Asked Questions
Why are hospitals suing CVS? They allege CVS diverted savings from the 340B drug discount programme through its reimbursement practices.
How much are they seeking? Nearly $300m in total, according to Modern Healthcare.
How many hospitals have sued? At least five hospital systems, including Froedtert Memorial Lutheran Hospital in Milwaukee.
What does CVS say? CVS says it plans to vigorously defend itself.
Sources
| Source | Used for |
|---|---|
| KFF Health News morning briefing (citing Modern Healthcare) | Total sought, number of systems and CVS statement |
| Frier Levitt | Number of hospital suits, Froedtert claim and allegations |
| Drug Topics | Earlier coverage of the hospital lawsuits |
Additional Resources
| Resource | What you’ll find |
|---|---|
| Health Resources and Services Administration (HRSA) – 340B Program | Official programme rules and guidance |
| 340B Health | Hospital perspective on the 340B programme |
| American Hospital Association (AHA) | Hospital advocacy and 340B resources |
| CVS Health investor relations | Company statements and filings |
Data note: Only one of the hospital claimants (Froedtert) was named in available reporting, so the others are not identified.