340B Hospital Lawsuit: The Pot Calling The Kettle Black
Three health systems – Mount Sinai in New York, Michigan Medicine, and University of Kansas City Health — have filed federal lawsuits against CVS Health. The hospitals allege that CVS and sister companies diverted about $250 million from 2020 and 2025 in savings generated through the 340B drug pricing program.
The 340B program requires brand drug makers to offer discounted prices to hospitals and safety net providers. Oftentimes, various healthcare entities are part of the adjudication and documentation process. The complaint alleges that CVS health companies used a series of intercompany service transactions to divert the funds and retain them when they should have been given to the hospitals.
I have argued that vertically integrated companies use all sorts of inter-company transfers to retain dollars within the family. So, I don’t doubt that what is alleged is possible. At the same time, the lawsuit is ironic. Substantial evidence exists concluding that hospitals benefit from the discounts but do not pass enough of the savings through as lower costs to needy consumers. In fact, 340B hospitals are found to have higher overall prices than those who are 340B qualified. So, the suit is a bit of the pot calling the kettle black.
Additional articles: https://www.fiercehealthcare.com/payers/hospitals-allege-contracted-cvs-health-subsidiaries-pocketed-their-340b-savings and https://www.modernhealthcare.com/providers/mh-cvs-340b-lawsuit-mount-sinai-michigan/
#drugpricing #340b #hospitals #cvshealth
https://www.beckerspayer.com/legal/health-systems-sue-cvs-over-alleged-250m-340b-scheme/
— Marc S. Ryan
