Mount Sinai Health System, the University of Michigan Health System, and the University of Kansas Health System have sued CVS Health and affiliated entities for alleged violations of the federal 340B Drug Pricing Program. These three major hospital systems are seeking an estimated $250 million in savings they accuse CVS of improperly diverting, plus damages, declaratory relief, and an injunction against further diversion of savings.
Under the 340B program, eligible healthcare providers can buy certain prescription drugs at significantly reduced prices. The theory behind the program is that the providers will use the savings to provide healthcare for uninsured and low-income patients.
In many cases, providers initially receive reimbursement for the drugs at standard commercial or plan-negotiated rates when they purchase them. However, those payments may be retroactively adjusted to the 340B discounted pricing after a later claims and eligibility review.
As a result of this process, the hospital systems argue that the timing of the delayed adjustments, as well as the entities processing them, directly affect how much they ultimately realize in savings. In particular, the hospital systems claim that when pharmacy benefit managers (PBMs) and affiliated intermediaries are involved, they control the reconciliation process.
According to their complaint, the hospital systems charge CVS with reducing the amount of 340B savings they retain due to the actions of their PBMs and related subsidiaries. The hospital systems claim that these entities use post-payment adjustment and reconciliation processes to keep a portion of and profit from savings that the providers rightfully should receive.
This case is emblematic of an increase in disputes over the administration and control of the 340B program. For instance, some hospitals have pushed back against Eli Lilly and Company over its use of a third-party platform to submit claims data to access 340B discount pricing. They argue that these requirements increase their administrative burden and may result in restricted access to discounted drugs. In response, Eli Lilly claims that its policy is necessary to increase oversight and program integrity.
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