FTC: Express Scripts settlement signals major shift in insulin pricing, PBM oversight, pharmacy transparency

The Federal Trade Commission (FTC) announced a sweeping settlement with Express Scripts Inc. that federal regulators say will fundamentally change how prescription drugs — particularly insulin — are priced and paid for in the United States.

The agreement resolves an FTC lawsuit accusing Express Scripts Inc., one of the nation’s largest pharmacy benefit managers, and its affiliated entities of using anticompetitive and unfair rebating practices that artificially inflated the list prices of insulin drugs, ultimately shifting higher costs onto patients whose out-of-pocket expenses are tied to those prices. Under the settlement, Express Scripts has agreed to a series of reforms that the FTC estimates could lower patients’ out-of-pocket insulin costs by as much as $7 billion over the next decade, while also delivering millions of dollars in new revenue annually to community pharmacies.

Meaningful relief is coming

FTC Chairman Andrew N. Ferguson framed the settlement as a key component of the health care agenda under President Donald J. Trump and Vice President J.D. Vance. The administration will focus on lowering drug costs and increasing transparency in a sector long criticized for opaque pricing practices.

“The FTC’s settlement with ESI will end its business practices that have kept drug prices high, ultimately providing meaningful financial relief to American patients who depend on ESI to access life-sustaining prescription drugs as well as community pharmacies who will see new revenues each year and relief from being squeezed,” Ferguson said in a news release. “It also delivers significant wins for the broader Trump-Vance health care agenda, including reshoring major portions of ESI’s business, ensuring regulatory compliance with price transparency laws, requiring disclosures of kickbacks to brokers, and paving the way for Americans to participate fully in TrumpRx.”

‘A clear path forward’

Following the FTC announcement, Express Scripts published its own statement and summary of the rule changes the company will face.

“Our priority is simple: lowering drug costs for Americans,” the Express Scripts statement said.

“This settlement enables us to keep moving forward, and we appreciate the administration’s reinforcement of our commitment to pharmacy benefits that put Americans first,” the Express Scripts statement said. “As enforced by the settlement, our new, transparent pharmacy benefits model ensures our members get their medicines at the lowest price — whether it’s the Express Scripts negotiated cost, their copay, or a cash discount price.

“We’re proud to announce that TrumpRx pricing will also be covered for our members so purchases through TrumpRx will count toward their deductible,” the company statement said. “This is a meaningful step toward affordability for millions of families, and toward advancing the goal we share with the administration of full transparency into prescription drug costs. Today’s settlement charts a clear path forward for pharmacy benefits in America.”

The FTC said its lawsuit against Express Scripts is part of a broader FTC enforcement action that also targets Caremark Rx and OptumRx, the country’s other dominant pharmacy benefit managers (PBMs). According to the FTC’s complaint, the three companies helped create a system that pushed drug manufacturers to compete for preferred placement on insurance formularies by offering larger rebates off inflated list prices, rather than by lowering the drugs’ net prices.

That system, the FTC alleges, benefited PBMs, which often retain a portion of those rebates, while harming patients whose copayments or coinsurance are calculated as a percentage of the list price. The complaint states that insulin manufacturers, among others, responded to the incentive structure by raising list prices in order to offer larger rebates, leaving vulnerable patients exposed to higher costs at the pharmacy counter.

Changing the rules

Under the proposed consent order, Express Scripts has agreed to stop preferring higher-priced versions of drugs over identical lower-priced alternatives on its standard formularies. The company will also provide a standard option to plan sponsors that bases patients’ out-of-pocket costs on a drug’s net price, rather than on its list price.

In another provision with implications for patients with diabetes, Express Scripts will be required to provide full access to its Patient Assurance Program’s insulin benefits for all members when a plan sponsor adopts a formulary that includes an insulin product covered by the program, unless the sponsor explicitly opts out in writing.

Beyond pricing and pharmacy reimbursement, the agreement includes a series of transparency and structural reforms. Express Scripts will be required to increase reporting to plan sponsors, including mandatory drug-level data that allows compliance with federal Transparency in Coverage regulations. The company must also disclose payments made to brokers who represent plan sponsors, a practice that has drawn scrutiny for potential conflicts of interest.

The PBM has also agreed to offer plan sponsors the option to move away from rebate guarantees and spread pricing, two practices that critics say obscure the true cost of drugs and PBM compensation. In addition, Express Scripts will delink its compensation from drug manufacturers from list prices as part of its standard offering.

As part of the settlement, Express Scripts will promote these standard offerings to both plan sponsors and retail community pharmacies, an effort the FTC says is intended to encourage broader adoption of the new pricing and reimbursement models.

The agreement also requires Express Scripts to reshore its group purchasing organization, Ascent, from Switzerland to the United States. According to the FTC, the move will bring more than $750 billion in purchasing activity back to the U.S. over the duration of the consent order, aligning with administration priorities related to domestic investment and regulatory oversight.

The FTC’s vote to accept the consent agreement for public comment was 1-0, with Commissioner Mark R. Meador recused from the decision. The proposed settlement will be open for public comment for 30 days, after which the commission will determine whether to finalize the order. Once issued on a final basis, a consent order carries the force of law with respect to future actions by the company.