Three health systems filed suit against CVS Health, claiming the pharmacy benefit manager diverted approximately $250 million in pharmaceutical savings between 2020 and 2025 through spread pricing practices that violated the 340B program.
The 340B Drug Pricing Program allows qualified health care entities, including hospitals, to purchase medications at deeply discounted rates directly from manufacturers. Participating providers receive rebates designed to stretch limited budgets and expand patient services. The plaintiffs allege CVS Health, operating as a PBM, intercepted those statutory savings by charging hospitals inflated dispensing fees while reimbursing them at rates below the actual acquisition costs of drugs.
Spread pricing occurs when a PBM collects a higher reimbursement from the plan or provider but pays the pharmacy less, capturing the difference as profit. In the 340B context, hospitals argue this practice transfers savings that Congress intended for patient care into PBM coffers. The $250 million figure represents the cumulative spread across five years of allegedly improper transactions.
This lawsuit reflects mounting pressure on PBMs over their role in drug pricing chains. The 340B program specifically exempts covered entities from standard PBM markups, but enforcement remains contested. Hospitals contend CVS Health violated their contractual obligations and breached fiduciary duties by structuring reimbursements to systematically extract 340B savings.
CVS Health operates as one of the nation's largest integrated pharmacy and health services companies, combining retail pharmacy operations with substantial PBM business through its subsidiary Caremark. The company faces multiple regulatory investigations and litigation concerning PBM pricing practices.
The case raises questions about PBM accountability and compliance with statutory drug pricing programs. If successful, the plaintiffs could establish precedent forcing PBMs to preserve 340B savings for participating institutions rather than redirecting them through opaque fee structures. The