Frier Levitt founding partner Jonathan Levitt said three federal lawsuits this week allege CVS Health and its PBM affiliates concealed 250 million dollars in diverted 340B reimbursements from 2020 to 2025, as oversight concerns grow in New Jersey.
“But hospitals expect the PBM and their specialty pharmacy partner to report accurately, and that is exactly what CVS allegedly exploited,” Levitt said in a Frier Levitt news release. “Concealment changes the legal calculus significantly. A breach of contract claim addresses the failure to perform a contractual obligation,” Levitt said. “But when a party doesn’t just fail to perform, when it actively hides information, the conduct moves into a different category. Uncovering the spread between what CVS received and what it reported to the hospitals generally requires a sophisticated review of data and expertise in the drug space,” Levitt said.
The complaints, filed in federal courts in New York, Michigan, and Kansas, name CVS Health Corporation along with affiliated entities CaremarkPCS Health, Caremark, CVS Specialty, and WellPartner. The lawsuits allege the entities flagged 340B specialty drug claims weeks after sale, after insurers had paid CVS at full network rates, then artificially lowered reimbursements passed to the providers and retained the difference as profit.
New Jersey Attorney General Jennifer Davenport joined a bipartisan coalition of 45 state attorneys general in April in submitting a comment letter to the U.S. Department of Labor supporting a proposed federal rule on pharmacy benefit manager transparency. Davenport said New Jersey residents feel the financial pain of rising drug prices.
Three pharmacy benefit managers — CVS Caremark, Express Scripts, and OptumRx — control approximately 80 percent of all U.S. prescription claims, AIR340B reported. The Government Accountability Office has documented limited transparency into PBM pricing arrangements, with profit margins for 340B contract pharmacies running more than three times higher than independent pharmacies dispensing non-340B drugs.
Frier Levitt is a national healthcare law firm based in New York and New Jersey, representing healthcare providers and institutions in regulatory, compliance, and litigation matters involving the 340B program, pharmacy benefit managers, and federal healthcare programs.
