Hospitals sue CVS Health over 304B drug pricing program

New York, NY — May 21, 2026 — Frier Levitt, a healthcare law firm, announced the filing of three federal lawsuits against CVS Health Corporation, CaremarkPCS Health, Caremark, CVS Specialty and WellPartner.  The plaintiffs include major hospital systems alleging CVS’s improper diversion of funds generated through the federal 340B Drug Pricing Program.

The Complaints allege that CVS Health orchestrated a secret and elaborate scheme to siphon from the hospitals approximately $250 million in savings generated under the federal 340B Drug Pricing Program.  Congress intended these funds to support care for low-income, uninsured, and underserved patients.

The 340B program and its intended beneficiaries

Congress established the federal 340B Drug Pricing Program in 1992 to enable safety-net hospitals and community health centers serving vulnerable populations to purchase outpatient drugs at significantly discounted prices. The savings generated from these discounts – known as “340B Savings” – allow hospitals to stretch scarce federal resources, reach more eligible patients, and provide more comprehensive clinical services to underserved communities.  The program is widely used by hospitals and health systems to fund uncompensated care, specialty services, and patient assistance programs.

Allegations regarding 340B specialty drug claims

According to the Complaints, the hospitals entered into agreements with Caremark, WellPartner, and CVS Specialty requiring all third-party payments for successfully adjudicated 340B specialty drug claims to be passed through to the hospitals, except for CVS Specialty dispensing fees and WellPartner administrative fees.

Because 340B eligibility often cannot be determined at the point of sale, specialty drug claims are initially processed at standard national network reimbursement rates. The Complaints allege that several weeks after the point of sale, when WellPartner flags the claim as 340B-eligible, CaremarkPCS secretly pays CVS Specialty an artificially reduced reimbursement rate.  WellPartner then falsely presented to the Covered Entity Hospitals that artificially reduced amount as the full reimbursement for the 340B specialty drug claim. CVS conceals the earlier claim that reimbursed at higher rates, that would have yielded more Program Revenue to the hospital. CVS retained the “Spread” as pure profit.

Rather than abide by the terms of the hospital contracts, CVS artificially reduced the payments it received at the point of sale on 340B-eligible specialty drugs, retained some of the payor reimbursement (in addition to the fees), and passed on the lower amount to the Hospitals. According to the Complaints, this conduct resulted in approximately $250 million being diverted from the three health systems between 2020 and 2025.

Statement from Counsel

“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,” said Jonathan Levitt, founding partner at Frier Levitt. “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 hospitals are seeking full accountability and recovery of the funds that should have gone to expanding access to care for underserved communities.”