The 340B drug pricing program has been reshaped in the past year by a run of court decisions and new suits: a federal judge in Maine blocked the government’s rebate pilot and HHS then scrapped it, a D.C. judge told manufacturers they cannot switch to rebates on their own, appeals courts have kept upholding state laws that protect contract pharmacy discounts, and three major health systems have accused CVS Health of siphoning roughly $250 million in 340B savings. Here is where the significant 340B lawsuit news stands as of mid-2026, and what each ruling actually decided.
The Federal Rebate Pilot Was Blocked, Then Scrapped
The most consequential ruling of the past year came out of Maine. In August 2025, HRSA published a Federal Register notice launching a 340B Rebate Model Pilot Program covering 10 drugs. Instead of the traditional upfront discount at purchase, covered entities would have paid full price and then received rebates after third-party platforms chosen by manufacturers verified each claim. Participation was voluntary for manufacturers but mandatory for hospitals whose drugs fell within the pilot.1American Hospital Association. AHA Letter to HRSA Re: 340B Rebate Model Pilot Program
The American Hospital Association estimated compliance costs above $400 million a year and filed suit on December 1, 2025, in the U.S. District Court for the District of Maine, joined by the Maine Hospital Association and four safety-net systems. On December 29, 2025, Chief Judge Lance Walker issued a nationwide preliminary injunction. He found HRSA’s rollout was likely arbitrary and capricious under the Administrative Procedure Act, calling the administrative record “anemic” and “tatty.” The agency, he ruled, had failed to consider three decades of industry reliance on upfront discounts, failed to analyze the costs the switch would impose, and tried to backfill the record after the fact with a litigation declaration from the director of the Office of Pharmacy Affairs.2U.S. District Court, District of Maine. American Hospital Association et al. v. Kennedy et al., Order on Motion for Preliminary Injunction
The government sought an emergency stay from the First Circuit. On January 7, 2026, a unanimous panel of Judges Gelpí, Montecalvo, and Rikelman denied it, finding no strong showing of likely success and no irreparable injury from keeping the status quo.3U.S. Court of Appeals for the First Circuit. American Hospital Association et al. v. Kennedy et al., Order on Motion for Stay
HHS then walked away. On February 5, 2026, the agency moved to vacate the pilot entirely, concluding the “full administrative record would not change the outcome.” On February 10, 2026, the district court formally vacated the pilot notices and all nine approved manufacturer applications and remanded the matter to the agency. HRSA has since issued a Request for Information about whether rebates could be used to “effectuate the ceiling price,” with the comment period closing April 20, 2026. If the agency tries again, HHS has committed to a fresh public notice, another comment round, and an effective date at least 90 days after any manufacturer applications are approved.4HRSA. 340B Model Pilot Program5American Hospital Association. HHS Says It Will Scrap Current 340B Rebate Model Program
Manufacturers Cannot Switch to Rebates on Their Own
Running alongside the pilot fight, several manufacturers tried to move to rebate models unilaterally and lost in the U.S. District Court for the District of Columbia.
Johnson & Johnson announced in summer 2024 that it would apply a rebate model to Stelara and Xarelto purchases by disproportionate share hospitals. HRSA rejected the proposal in September 2024 and threatened to terminate J&J’s Pharmaceutical Pricing Agreement, which would have pulled every J&J product from Medicaid and Medicare Part B. J&J shelved the plan and sued HRSA in November 2024.6Mintz. Unpacking Johnson and Johnsons Lawsuit Over 340B Rebate On June 27, 2025, the court rejected the company’s argument, holding that the statute gives HRSA authority to approve or deny alternative arrangements.7Essential Hospitals. Judge Rejects J&J 340B Rebate Lawsuit, Mandates HHS Preapproval
Eli Lilly, Bristol Myers Squibb, Novartis, and Sanofi filed similar suits, and Kalderos, a drug-industry technology vendor, revived a 2021 case with an amended complaint in November 2024. On May 15, 2025, Judge Dabney Friedrich consolidated the manufacturer cases and denied summary judgment to Eli Lilly, Bristol Myers Squibb, Novartis, and Kalderos, upholding HRSA’s preapproval authority. Sanofi got a partial win: the court found HRSA had failed to adequately explain its rejection of Sanofi’s specific credit model and remanded that piece to the agency. The core principle held. Manufacturers cannot swap upfront discounts for rebates without HRSA sign-off.8Healthcare Dive. 340B Rebate DC Court Decision on Lilly, Sanofi, Novartis, and Bristol
340B Health and two of its member hospitals, UMass Memorial Medical Center and Genesis HealthCare System, moved to intervene as defendants in the J&J, Bristol Myers Squibb, Eli Lilly, Novartis, and Sanofi cases in early February 2025, arguing that rebate models would force hospitals to float full drug prices for tens of millions of dollars while waiting on reimbursement.9Healthcare Dive. Hospitals Move to Intervene in 340B J&J Lawsuit Against HRSA
State Contract Pharmacy Laws Keep Surviving Challenges
A parallel battle has played out over contract pharmacies, the outside pharmacies that dispense 340B drugs on behalf of covered entities. Starting around 2020, major manufacturers began restricting or conditioning 340B pricing at contract pharmacies, and they won the federal fights. The Third Circuit in Sanofi-Aventis U.S. LLC v. HHS and the D.C. Circuit in Novartis Pharmaceuticals Corp. v. Johnson both held that the statute does not require manufacturers to deliver discounted drugs to unlimited contract pharmacies, vacating HRSA’s violation letters to AstraZeneca, Novo Nordisk, and Sanofi and enjoining the agency from enforcing its interpretation.10HRSA. 340B Program Integrity
States responded with their own laws. Arkansas, Kansas, Louisiana, Maryland, Minnesota, Mississippi, Missouri, Tennessee, New Mexico, and West Virginia have enacted contract pharmacy protection statutes, and PhRMA and manufacturers have challenged several as preempted by federal law or barred by the Commerce and Contracts Clauses. Most of those challenges have failed.
In March 2024, the Eighth Circuit upheld Arkansas’s Act 1103 in PhRMA v. McClain, finding the federal statute is “silent about delivery” and that pharmacy regulation is a traditional state concern.11U.S. Court of Appeals for the Eighth Circuit. PhRMA v. McClain, No. 22-3675 The Supreme Court denied certiorari on December 9, 2024.12Frier Levitt. United States Supreme Court Denies Review of Arkansas 340B Contract Pharmacy Discrimination Law
The Fifth Circuit followed suit in Mississippi. In September 2025, AbbVie, Inc. v. Fitch held that the state law was not a taking and was not preempted. In April 2026, PhRMA v. Fitch again rejected PhRMA’s bid to block the statute.13American Hospital Association. Mississippi 340B Law Upheld by Appeals Court in Two Cases14Frier Levitt. Fifth Circuit Rules Against Pharmaceutical Manufacturers in Mississippi 340B Litigation
PhRMA’s challenge to New Mexico’s law is on appeal as of mid-2026. In Tennessee, the U.S. Department of Justice filed a brief supporting PhRMA’s challenge. Suits in Kansas, Minnesota, and Missouri are in early stages.15340B Report. State Contract Pharmacy Lawsuit Roundup: PhRMA Appeal in New Mexico, DOJ Brief in Tennessee
The result is what a Congressional Research Service report called a “curious regulatory environment”: federal courts have told HRSA it cannot force manufacturers to honor 340B pricing at contract pharmacies, while state statutes doing the same thing keep getting upheld. That circuit-level tension is often what draws Supreme Court review, though the Court passed on its first chance in the Arkansas case.16Congressional Research Service. 340B Drug Discount Program Litigation
Hospitals Sue CVS Health Over an Alleged $250 Million Scheme
The newest front opened in May 2026. Mount Sinai Health System, the University of Michigan’s Michigan Medicine, and the University of Kansas Health System each filed separate federal suits alleging CVS Health and its subsidiaries ran a “secret pricing scheme” that siphoned about $250 million in 340B savings between 2020 and 2025.17Healthcare Dive. Hospitals File 340B Lawsuit Against CVS Health
According to the complaints, the mechanism ran through CVS’s vertically integrated structure. When a specialty drug was dispensed, the claim was initially reimbursed at standard network rates because 340B eligibility often cannot be confirmed at the point of sale. CVS’s third-party administrator, WellPartner, would later flag the claim as 340B-eligible, and CVS’s pharmacy benefit manager would retroactively lower the reimbursement paid to the hospital. WellPartner then allegedly presented that reduced amount to the hospital as the full reimbursement while CVS kept the difference. When hospitals tried to audit the arrangements, the complaints allege, CVS obstructed the process and in some cases terminated the hospitals from contract pharmacy agreements.18HFMA. CVS 340B Lawsuits and Hospital Reimbursement
The claimed losses: $121 million for Mount Sinai, $66 million for Michigan Medicine, and $61 million for the University of Kansas. The hospitals are pursuing federal RICO claims and seeking triple damages. Mount Sinai’s case was filed in the U.S. District Court for the Southern District of New York. CVS has declined to comment, citing the active litigation.17Healthcare Dive. Hospitals File 340B Lawsuit Against CVS Health
What Could Change Next
The Trump administration’s fiscal year 2026 budget proposal would move 340B oversight from HRSA to the Centers for Medicare and Medicaid Services, giving CMS the same $12 million HRSA currently receives. The administration says the change would allow for “streamlined processes” and use of in-house drug-pricing expertise. It requires congressional approval, and hospitals are expected to resist: CMS has previously cut reimbursement for 340B drugs under Medicare and has signaled openness to rebate-based models, which is exactly what hospitals spent 2025 and 2026 fighting in court.19Healthcare Dive. HHS 2026 Budget: NIH Cuts and Healthcare
On the rebate question, HRSA is reviewing comments from its April 2026 Request for Information and could still try to launch a redesigned pilot. On contract pharmacies, the split between federal and state rulings is unresolved and the Supreme Court has already turned down one invitation. And under Astra USA, Inc. v. Santa Clara County, covered entities still cannot sue manufacturers directly for overcharging; only HRSA can enforce the statute’s pricing requirements, which limits how much of the underlying dispute hospitals can litigate on their own.16Congressional Research Service. 340B Drug Discount Program Litigation