The University of Kentucky alleges that major retailer CVS Health diverted more than $41 million in prescription drug revenue from its Kentucky hospitals, according to a federal lawsuit filed Oct. 27.
The university is reportedly suing CVS for fraud, racketeering, and breach of contract.
UK claims CVS secretly diverted money tied to federal 340B agreements at hospitals in Lexington and Ashland between October 2020 and October 2025. These agreements allow health care facilities to purchase prescription drugs at discounted prices and use the savings to reduce medical costs for underserved and uninsured patients.
It is reported that UK had two 340B agreements with CVS: one covering UK Chandler, UK Good Samaritan, and Golisano Children’s hospitals in Lexington, and another covering UK King’s Daughters in Ashland. The university health system alleges that CVS charged the hospitals full price for the drugs and secretly kept the profit.
In its filing, UK alleged that the defendants knowingly and intentionally carried out a fraudulent, unlawful, and deceptive scheme to secretly divert 340B savings for their own financial growth and profitability.
UK also alleges that CVS retaliated against the hospital system by terminating the contracts in April. The university then requested company documents so it could audit the agreements.
UK spokesperson Jay Banton says similar lawsuits have been filed in Michigan and Kansas.
As of Oct. 29, CVS had not filed a response to UK’s lawsuit.
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