Mount Sinai has hauled CVS Health into federal court in Manhattan, claiming the pharmacy giant quietly skimmed more than $121 million from a drug discount program that is supposed to help low income New Yorkers. In a lawsuit filed Thursday, the health system says CVS and its third party administrators ran a secret pricing and administration scheme, then cut off Mount Sinai’s pharmacy access after the hospital network pushed for an audit. Mount Sinai is asking for damages and broader court ordered relief.
According to the New York Post, the complaint alleges CVS "orchestrated a secret pricing scheme to pocket savings from the federal 340B drug discount program" and refused to share the data Mount Sinai needed to confirm that those savings were reaching patients. The suit says the alleged skimming went on for years and claims CVS later terminated its pharmacy agreement after Mount Sinai pressed for an audit.
Mount Sinai's court claims
The lawsuit portrays CVS and its affiliates as running a coordinated system that steered 340B savings away from the safety net care the program was designed to support. Mount Sinai says CVS would not turn over contracts and claims data that were necessary for a proper audit, then pulled the plug on the pharmacy relationship, which the filing describes as retaliation for Mount Sinai’s attempts to look under the hood. Lucia Lee, a spokesperson for the plaintiffs, told the New York Post the suits were brought to stop "funds being wrongly skimmed by for-profit intermediaries."
Part of a growing wave of suits
Mount Sinai is not the only health system accusing CVS of playing too loose with 340B proceeds. As Bloomberg Law reported, the University of Michigan and other providers have filed similar suits, arguing that contract pharmacy deals and third party administrators diverted 340B savings to CVS and its affiliates. What started as an inside baseball policy fight over 340B has quickly turned into a litigation pileup that regulators are watching closely.
How 340B is supposed to work
The 340B program, created by Congress in 1992, requires drug manufacturers that participate in Medicare and Medicaid to sell outpatient medications at steep discounts to eligible hospitals and clinics so those providers can stretch federal dollars for underserved patients, according to the Health Resources and Services Administration. Covered entities can use the margin from those discounts to lower patients’ out of pocket costs or to fund services for vulnerable communities. Program officials say that as 340B has grown more complex, keeping tabs on who captures the savings has become tougher. HRSA manages registration and integrity tools for the program and sits at the center of many of the current policy fights and court battles.
Legal stakes and what to watch
Mount Sinai’s complaint includes allegations that could be interpreted as civil racketeering and asks for both money damages and injunctions that would block certain contracting practices if the claims are proven. If courts side with the hospitals in this and similar cases, the rulings could reshape how health systems partner with national pharmacy chains and how third party administrators operate inside the 340B ecosystem. The litigation adds to a growing stack of lawsuits and regulatory probes that Bloomberg Law has been tracking, and the outcomes will likely turn on contract language and claims level data that hospitals say have been difficult to pry loose.
For New Yorkers who rely on Mount Sinai’s safety net services, the core issue is whether federal drug discounts meant to expand access to care were instead funneled into corporate profit. The case is now before a federal judge in Manhattan and is expected to unfold over months or longer as both sides trade filings, documents and, eventually, their versions of what really happened to that $121 million.
