Hospitals accuse CVS of siphoning hundreds of millions in drug savings
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Three major hospital systems on Monday filed lawsuits accusing CVS Health and its subsidiaries of running a secret scheme that allegedly siphoned hundreds of millions of dollars away from hospitals serving vulnerable and uninsured patients.
The lawsuits – filed by Mount Sinai in New York, University of Michigan Health and Sparrow Hospital, and the University of Kansas Hospital Authority – claim CVS manipulated reimbursements tied to the federal 340B Drug Pricing Program and kept the difference as profit, according to complaints obtained by FOX Business.
The hospitals allege insurers and patients paid full price for specialty drugs, but CVS later reduced payments to hospitals through affiliated companies, including CaremarkPCS, CVS Specialty, Caremark LLC and WellPartner.
The lawsuits estimate massive financial losses. Mount Sinai claims more than $121 million in losses since 2020. University of Michigan and Sparrow allege more than $66 million in losses. University of Kansas Hospital Authority alleges nearly $62 million in losses.
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The lawsuits claim CVS manipulated reimbursements tied to the federal 340B Drug Pricing Program and kept the difference as profit. (Zak Bennett/Bloomberg via Getty Images)
At the center of the cases is the federal 340B Drug Pricing Program, which allows qualifying hospitals to buy expensive medications at discounted prices and use the savings to help fund community health services.
“Hospitals use 340B savings to provide, for example, free care for uninsured patients, offer free vaccines, provide services in mental health clinics, and implement medication management and community health programs,” the American Hospital Association states on its website.
A spokesperson for CVS told FOX Business in an email: “We do not comment on matters that are subject to ongoing litigation and remain focused on serving our customers and executing our business priorities.”
The University of Michigan complaint claims CVS and its subsidiaries “diverted (and continue to divert) 340B revenue for themselves by implementing a secret pricing scheme for 340B drugs, which required cooperation among its affiliated entities within the 340B drug supply chain.”
“CaremarkPCS charged the plan/payor the original higher amount, and the 340B eligible patient the original higher copay just so that defendants retain 340B profits,” the Mount Sinai complaint alleges.
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The complaints point to examples involving high-cost specialty drugs, including Stelara, which is used to treat chronic inflammatory conditions like plaque psoriasis, according to Stelara’s website.
The Michigan lawsuit cites one example in which a Stelara prescription allegedly generated more than $24,000 for the University of Michigan’s specialty…
Read More: Hospitals accuse CVS of siphoning hundreds of millions in drug savings