Three Health Systems Sue CVS Over $250M 340B Drug Pricing Scheme
Three health systems sued CVS Health for allegedly diverting $250M in 340B savings.
Why it matters: The lawsuit spotlights controversies in the 340B Drug Pricing Program and may reshape pharmacy benefit manager regulation and healthcare legal compliance.
- Three health systems—Mount Sinai, University of Michigan, and University of Kansas—filed lawsuits against CVS on May 18, 2026.
- CVS allegedly engaged in spread pricing through CVS Caremark, diverting $250 million from 340B savings between 2020 and 2025.
- Mount Sinai claims $121 million in losses; University of Michigan alleges $66 million; University of Kansas reports $62 million.
- CVS Health’s stock surged 22% in the past month, closing at $93.26 on May 23, 2026.
On May 18, 2026, major U.S. health systems Mount Sinai Health System, University of Michigan Health System, and University of Kansas Health System filed separate federal lawsuits against CVS Health and its subsidiaries. The lawsuits allege CVS’s pharmacy benefit manager subsidiary, CVS Caremark, engaged in "spread pricing" practices that diverted approximately $250 million in savings from the 340B Drug Pricing Program between 2020 and 2025.
The 340B Drug Pricing Program, established in 1992, enables eligible safety-net providers to purchase outpatient drugs at significantly discounted rates. This program is intended to help hospitals afford care for low-income and uninsured patients. Yet, the hospitals claim CVS manipulated reimbursement payments, reducing the intended benefits of the program.
Specifically, Mount Sinai alleges losses exceeding $121 million, the University of Michigan more than $66 million, and the University of Kansas nearly $62 million. The lawsuits are filed in federal courts located in New York, Michigan, and Kansas respectively.
Jonathan Levitt, founding partner at Frier Levitt, commented: "CVS Health’s mission commits to lowering healthcare costs and improving well-being, but our complaints allege CVS systematically diverted funds Congress designated for the most vulnerable and converted them into corporate profit."
Despite the lawsuits, CVS Health’s stock continues an upward trend, rising 22% in the last month and closing at $93.26 on May 23, 2026. The case underscores ongoing debates about transparency and oversight in the 340B program and could impact how PBMs are regulated and how healthcare companies ensure legal compliance.
By the numbers:
- $250 million — alleged diverted 340B savings between 2020 and 2025
- $121 million — Mount Sinai Health System’s claimed losses
- 22% — CVS Health stock increase over the past month