By: Marcus J. Hopkins, Health Policy Lead Consultant, ADAP Advocacy
Mount Sinai Health Systems (New York, NY), the University of Kansas Hospital Authority (Kansas City, KS), and the University of Michigan Hospitals and Health Centers (Ann Arbor, MI) are suing CVS Health for failing to properly reimburse them for drugs purchased and dispensed under the massive 340B Drug Pricing Program, claiming under-reimbursement to the tune of nearly $250 million over a period of five years (Hut, 2026).
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| Source: Forbes | Getty |
The suits, filed in three separate courts, argue that CVS, which serves as a contract pharmacy for all three health systems, accuses CVS Health and its subsidiaries of retaining illegally large shares of 340B revenues generated and failing to remit them to the covered entities that generated the sales. The plaintiffs are seeking triple damages under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act and seek injunctions enjoining CVS from continuing the business practices in question (Halleman, 2026).
In addition to the three initial suits, Henry Ford Health (Detroit, MI) sued CVS on July 16, alleging 340B revenue diversions amounting to more than $29 million, requesting the courts force CVS to disgorge any profits retained from the alleged diversion scheme and reinstate the pharmacy services CVS terminated with the health system in April—a termination that Henry Ford argues was in retaliation for its attempt to audit their arrangement with CVS (Jeffries, 2026a).
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| Source: Henry Ford Health |
And then, a fifth hospital, Froedtert Memorial Lutheran Hospital (Milwaukee, WI), sued CVS Health on August 20th, alleging diversions amounting to $18 million between 2020 and 2025. When Froedtert attempted to audit CVS on March 2nd, 2026, CVS refused the request and terminated the hospital’s pharmacy services. This suit alleges breach of contract, fraud, violations of the Wisconsin Deceptive Trade Practice Act, and civil RICO violations, and it also seeks triple damages, reinstatement of the pharmacy services agreement, and disgorgement of profits derived from the scheme (Jeffries, 2026b).
CVS Health has been in the spotlight in 2026, after a particularly damaging congressional hearing in which Representative Alexandria Ocasio-Cortez (D-NY-14) all but accused CVS Health CEO David Joyner of operating an illegal monopoly.
During the January 22nd, 2026, hearing, Ocasio-Cortez highlighted what former CVS Health CEO Karen Lynch referred to as its “captive strategy,” in which CVS provides services to patients through its health insurance company, Aetna, and its primary care clinic, Oak Street Health, fills prescriptions through CVS, operates a Pharmacy Benefit Manager (PBM), CVS Caremark, and develops biosimilar medications through its Dublin, Ireland-based drug manufacturer, Cordavis (Hopkins, 2026).
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| Source: Rep. Alexandria Ocasio-Cortez |
In response, CEO David Joyner stated, “No, I wouldn't agree that it's market concentration. I would suggest it's a model that works really well for the consumer.”
These suits against CVS Health bring to the fore one of the primary complaints against PBMs and contract pharmacy arrangements: if CVS (or any contract pharmacy or PBM) is surreptitiously or illegally hoarding 340B revenues, those are funds not being used to benefit patients. Maybe an amicus brief might be in order here?
To be certain, ADAP Advocacy has consistently called out many hospital systems for failing to properly use 340B revenues to benefit patients. In this case, five large health systems are going up against an equally large, and arguably more publicly bruised, company.
And we’re anxiously awaiting the outcomes...
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Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association; rather, they provide a neutral platform for the author to promote open, honest discussion of public health-related issues and updates.
References:
[1] Halleman, S. (2026, May 22). Hospitals sue CVS for allegedly siphoning $250M in 340B funds. Newton, MA: Healthcare Dive. News. https://www.healthcaredive.com/news/hospitals-file-340b-lawsuit-cvs-health/820959/
[2] Hopkins, M. J. (2026, January 29). Congress Shines Spotlight on Health Insurance Companies' Squeeze on Patients. Washington, DC: ADAP Advocacy: ADAP Blog. https://adapadvocacyassociation.blogspot.com/2026/01/congress-shines-spotlight-on-health.html
[3] Hut, N. (2026, May 27). 340B lawsuits against CVS allege $250M in underpaid hospital reimbursement. Downers Grove, IL: Healthcare Financial Management Association. https://www.hfma.org/payment-reimbursement-and-managed-care/cvs-340b-lawsuits-hospital-reimbursement/
[4] Jeffires, E. (2026a, July 22). Henry Ford Health sues CVS, alleges 340B pricing scheme. Chicago, IL: Becker’s Hospital Review: Legal & Regulatory Issues. https://www.beckershospitalreview.com/legal-regulatory-issues/henry-ford-health-sues-cvs-alleges-340b-pricing-scheme/
[5] Jeffries, E. (2026b, August 31). Milwaukee hospital sues CVS over $18M in alleged 340B diversion. Chicago, IL: Becker’s Hospital Review: Legal & Regulatory Issues. https://www.beckershospitalreview.com/pharmacy/milwaukee-hospital-sues-cvs-over-18m-in-alleged-340b-diversion/
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