News that three of the nation’s largest health systems sued CVS Health should shatter any remaining illusions about the state of American healthcare. Mount Sinai, University of Michigan Health, and the University of Kansas Hospital Authority all filed separate, damning federal lawsuits, alleging that CVS and its affiliates ran a sophisticated, coordinated scheme to covertly pocket nearly $250 million in 340B drug savings between 2020 and 2025.
According to the complaints, CVS allowed vulnerable patients and their insurers to pay full price for critical specialty drugs, while simultaneously using its web of affiliated entities to slash reimbursement rates behind closed doors--quietly absorbing the difference as corporate profit.
While these allegations represent a massive wake-up call for healthcare reformers, they deliver a devastating blow to patients. Countless individuals are now forced to reckon with a heartbreaking reality: the pharmacy they trusted with their health was allegedly treating their medications as a corporate cash cow.
The 340B program was never intended to be an investment vehicle for Fortune 500 giants. Created by Congress in 1992, its mission was simple: allow qualifying safety-net hospitals and clinics to purchase outpatient drugs at steep discounts so they could stretch scarce federal resources to better serve low-income, uninsured, and vulnerable patients.
But today, 340B has morphed into a multi-billion-dollar labyrinth where patients are routinely left holding the bill.
At Patients Come First, we learn about the real-world fallout of this broken system every day. Take the harrowing experience of Virginia King. When Virginia was diagnosed with metastatic breast cancer, she knew the road ahead would be grueling, but she took comfort in knowing she had insurance. The specialty drug stopping the cancer from destroying her spine carried a steep list price of roughly $2,700.
Yet, because she received treatment at a hospital participating in the 340B program, her insurance company was billed an astronomical $22,000 for that very same drug. The result? Virginia was hit with a crushing out-of-pocket bill exceeding $2,500—an amount greater than her entire bi-weekly paycheck.
This is the ultimate irony of the modern 340B program: a mechanism designed to lower the cost of care is instead driving up list prices, inflating cost-sharing percentages, and pushing patients to the brink of financial ruin.
How did a well-intentioned program go so far off the rails? The answer lies in a complete lack of meaningful federal oversight and a total absence of transparency.
The program’s explosive growth has turned it into the second-largest federal drug program behind Medicare. According to data tracking the program’s trajectory, 340B reached a staggering $66 billion in discounted purchases in 2023—and by 2026, that footprint has only expanded. Yet, despite tens of billions of dollars changing hands, there is still no federal statutory requirement that hospitals pass these steep discounts directly to the patients standing at the pharmacy counter.
The Congressional Budget Office (CBO) has explicitly sounded the alarm on these warped incentives. The CBO noted that the current structure of 340B actively incentivizes providers to prescribe higher-cost drugs over cheaper alternatives and accelerates aggressive consolidation between large hospital conglomerates and independent clinics. This consolidation doesn’t expand care; it drives up overall healthcare spending across the entire U.S. economy.
The CVS lawsuits put a human face on these systemic failures. The complaints explicitly allege that patients paid full, un-discounted copays on 340B-eligible specialty medications, receiving absolutely zero financial relief, while corporate entities quietly divided the spoils.
Without swift, structural intervention, 340b will completely cease to be a patient-aid program and exist solely as a margin-booster for pharmacy benefit managers (PBMs) and hospital networks. The alleged CVS scheme thrived in the shadows. To fix it, we must flood the system with light.
That is why the Health Resources Services Administration’s (HRSA) proposed 340B Rebate Model Pilot Program is so urgently needed.
The rebate model offers a common-sense modernization of the program. By establishing a transparent, standardized reporting process, the pilot ensures that discounted medicines are accurately tracked, verified, and distributed, all while preserving vital access for true safety-net providers. Rather than allowing the 340B space to be governed by fragmented state laws, constant litigation, and backroom financial maneuvering, this pilot program provides a uniform framework of accountability.
Capitol Hill is finally starting to pay attention. Various congressional committees have recently held crucial hearings investigating the root causes of skyrocketing healthcare costs. Lawmakers are rightly questioning unchecked contract pharmacy expansion, horizontal consolidation, and—most importantly--whether patients are actually benefiting from the billions of dollars in program discounts, as Congress originally intended.
The CVS lawsuits must accelerate that legislative urgency. If these allegations are proven true in a court of law, this wasn't a clerical error or a misunderstanding of a complex regulatory “gray area.” It would be truly devastating to learn that it was a calculated, multi-year diversion of funds meant for the sickest among us.
Vulnerable patients and genuine safety-net clinics rely heavily on a functional 340B program. But saving the program requires us to honestly admit that the current system is profoundly broken.
As the debate over healthcare affordability continues, lawmakers must look past the intense corporate lobbying and focus entirely on reforms that mandate transparency, enforce strict oversight, and legally guarantee that 340B savings directly lower costs for patients. Implementing the HRSA rebate pilot program is an indispensable first step==but it must be the floor of reform efforts, not the ceiling.
News reports like the one about Virginia King should outrage us. The allegation that a corporate powerhouse spent half a decade covertly siphoning away millions of dollars intended to ease patients’ financial burdens should shock the conscience of the nation. And Congress acts to fix 340B, Virginia’s nightmare will continue to be a probable reality for Americans unlucky enough to be swept into the program.
Kasia Mulligan is the National Spokesperson for Patients Come First.
