Lexington, Ky.-based University of Kentucky and its affiliated corporation, Ashland Hospital Corporation, which operates Ashland, Ky.-based UK King’s Daughters Medical Center, sued CVS Health on Oct. 27, alleging the company and its affiliates diverted more than $41 million in 340B savings from the health system, according to a complaint filed in the U.S. District Court for the Eastern District of Kentucky.
The defendants are CVS Health, pharmacy benefit manager CaremarkPCS Health, Caremark d/b/a CVS Specialty and 340B third-party administrator WellPartner. The health system alleges they conspired to reduce the amount of 340B revenue passed back to it under its contract pharmacy agreements. According to the complaint, claims for 340B-eligible specialty drugs are first adjudicated at CaremarkPCS’ standard network reimbursement rate, then reversed and reprocessed at an “artificially lower” rate once WellPartner flags them as 340B-eligible. CaremarkPCS allegedly keeps the difference, which the complaint calls the “Spread,” on top of the dispensing fee the agreements allow.
The health system estimates that the practice cost it about $41.1 million from 2020 through October 2025, rising from $3.2 million in 2020 to $10.7 million in 2024. The University of Kentucky owns six hospitals, and the complaint says it operates two covered entities in the 340B program, one tied to its Lexington hospitals and one to UK King’s Daughters in Ashland.
The complaint also alleges that CVS refused a contractual audit. The health system says it sent a demand letter Oct. 31, 2025, asking for data including reconciliation reports and communications between CVS Specialty and WellPartner, and that CVS did not meaningfully respond and instead gave notice April 22 that it was terminating the agreements, which the health system calls retaliation.
The university is bringing seven counts: breach of contract, fraud, civil racketeering under the RICO statute, breach of the implied covenant of good faith, unjust enrichment, tortious interference and breach of contract tied to the denied audit. It is seeking declaratory relief, injunctions against future violations and the termination, treble damages under RICO, punitive damages for fraud, disgorgement of the Spread and accountings and a jury trial.
In a statement to Becker’s, a CVS Health spokesperson said, “340B remains a critical program that supports sustainable care for under-served populations. 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.”
The suit adds to a series of 340B actions against CVS. New York City-based Mount Sinai Health System, Ann Arbor, Mich.-based Michigan Medicine and Kansas City, Kan.-based University of Kansas Health System sued in May over roughly $250 million in alleged diversion, Detroit-based Henry Ford Health sued in July over more than $29 million, and Milwaukee-based Froedtert Memorial Lutheran Hospital sued in August over about $18 million.
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