The University of Kentucky alleges major retailer CVS Health diverted more than $41 million in prescription drug revenue from its Kentucky hospitals, according to a federal lawsuit filed Tuesday.
The university is suing CVS for fraud, racketeering and breach of contract.
UK claims the company secretly diverted the money from hospitals in Lexington and Ashland between October 2020 to October 2025.
Those hospitals operated on federal 340B agreements with CVS. The agreements allow the health care facilities to buy prescription drugs at a discounted price, and in turn, those lower prices reduce medical costs for underserved and un-insured patients.
UK had two 340B agreements in place with CVS, including one covering its UK Chandler, UK Good Samaritan and Golisano Children’s hospitals in Lexington, and another for UK King’s Daughters in Ashland.
However, the university health system alleges CVS was charging the hospitals full price for drugs and secretly taking the profit.
“Defendants’ fraudulent, unlawful, and deceptive scheme was knowingly and intentionally carried out to secretly divert 340B Savings to further their own financial growth and profitability,” UK’s filing reads.
The university further alleges CVS retaliated against the hospital system by ending the contracts in April. That move reportedly follows a request from the university for company documents last year that would've allowed UK to audit the agreements.
“As the Complaint makes clear, CVS engaged in a complex scheme to deprive the University of Kentucky’s pharmacies of $ 41 million,” UK spokesperson Jay Blanton wrote in an emailed statement. “Moreover, UK is not the only victim — similar suits have been filed in Michigan and Kansas. We look forward to recovering this money for the benefit of our patients and Kentucky.”
In those cases, Michigan hospitals allege CVS health diverted $95 million. In Kansas, that figure is $62 million, according to reports.
CVS had not filed its response to the UK suit as of Thursday morning, but a spokesperson said the company remains committed to the program.
"340B remains a critical program that supports sustainable care for under-served populations,” CVS Health spokesperson Phil Blando wrote in an emailed statement to WEKU. “We remain focused on collaborating with health systems to help navigate the dynamic environment and improve stability for their businesses and the patients they support."
In its filing, UK asked a federal court for “three times” the amount it allegedly lost to CVS as part of the scheme, a return of the profits the company made, access to records, plus other damages and legal fees. The university attempted to conduct the audit in order to see if the amount allegedly diverted exceeds $41 million.
