The University of Kansas Hospital Authority is suing CVS and its subsidiaries, alleging the mega pharmacy company fraudulently diverted nearly $62 million in prescription drug savings.
A lawsuit alleges money from the federal 340B program was pocketed by CVS between 2020 and 2025.
“Defendants’ fraudulent scheme was knowingly and intentionally carried out to secretly steal 340B Savings to further their own financial growth and profitability,” the lawsuit filed Monday reads.
The lawsuit also claims CVS terminated its contract with KU, “in retaliation for uncovering the fraudulent scheme” when the hospital asked for an audit of its records.
The 340B Drug Pricing Program requires drug manufacturers to sell outpatient prescription drugs to certain healthcare providers at steep discounts. The federal grantees include healthcare systems that serve low-income patients, like federally qualified health centers and non-profit hospitals.
The healthcare systems that participate in 340B make revenue by ultimately selling the drugs to buyers like insurance companies at full price. The health system is then supposed to use revenue from that exchange to improve and expand healthcare for people who are low-income or uninsured. The Commonwealth Fund, a non-profit research organization, breaks down the 340B program in more detail.
The University of Kansas Hospital Authority contracted with CVS Health Corporation and its pharmacy benefit manager company, CaremarkPCS, to process 340B drug claims and fill the prescriptions. The lawsuit says CVS and its subsidiaries violated the Racketeer Influenced and Corrupt Organizations Act, often called RICO.
Pharmacy benefit managers are middlemen that determine which drugs are paid for by insurance plans, negotiate prices with manufacturers and process claims. CVS is a giant in the PBM and pharmacy world. The company is vertically integrated. It owns a PBM, specialty and mail-order pharmacies and the large health insurance company, Aetna.
The suit said CVS's “fraudulent and deceptive practices” harmed KU by “taking millions of dollars that were supposed to flow to Plaintiff to fund the provision of charitable and free medical care to the uninsured and under-insured.”
It alleges that although the hospital paid CVS a dispensing fee, CVS and its subsidiaries "secretly and drastically” lowered the 340B savings it owed KU.
In an email to the Kansas News Service, a spokesperson for CVS declined to comment.
"We do not comment on matters that are subject to ongoing litigation and remain focused on serving our customers and executing our business priorities," the email said.
Bek Shackelford-Nwanganga reports on health care disparities and access for the Kansas News Service. You can email her at r.shackelford@kcur.org.
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