The Federal Trade Commission has agreed to what it called a “landmark” settlement with Express Scripts, allowing the company to bow out of the agency’s lawsuit against major pharmacy benefit managers for allegedly inflating the cost of U.S. insulin.

In return, Express Scripts, which is owned by Cigna and is one of the largest PBMs in the country, has agreed to make major changes to its drug benefit designs, including no longer preferring drugs with high list prices on its standard formularies when there are cheaper equivalents and delinking its compensation from the savings it negotiates with drugmakers, the FTC announced Wednesday.

Express Scripts has also agreed to increase transparency, including reporting more data on drug spending and disclosing any kickbacks to brokers that help employers choose PBMs.

Notably, the company also agreed to reshore its group purchasing organization Ascent from Switzerland back to the U.S.

The deal should drive down patients’ out-of-pocket costs for drugs like insulin by up to $7 billion over a decade, the FTC said. It should also bring millions of dollars in new revenue to community pharmacies by requiring Express Scripts to move its pharmacy reimbursement to a cost-plus model.

The settlement will dramatically reshape the pharmacy benefits landscape for patients, health plans, pharmacies and other PBMs competing with Express Scripts, experts said. It could hasten the industry’s shift away from rebate models, which market experts say incentivize drugmakers to artificially inflate the list prices of drugs and obfuscate pharmaceutical spending for U.S. employers.

However, Express Scripts was already moving towards many of the reforms, blunting their impact, analysts said. The company is already transitioning its clients onto a rebate-free model, and already offers cost-plus reimbursement to independent pharmacies.

The settlement also includes no monetary penalties, and Express Scripts did not have to admit wrongdoing. As such, it’s unlikely to significantly affect the company, analysts said. It could even help Express Scripts by preventing more drastic reform from a Congress bent on curbing healthcare costs down the line.

“We broadly view these as manageable and, importantly, not larger in scope than the changes [Cigna] was already implementing,” J.P. Morgan analyst Lisa Gill wrote in a note Wednesday. “We are less concerned that this settlement … will have a material incremental impact on Cigna’s financials.”

Reshaping pharmacy benefits

The FTC sued Express Scripts, along with UnitedHealth’s Optum Rx and CVS’ Caremark, in September 2024, arguing the influential drug middlemen’s negotiating practices with drugmakers led them to prefer higher cost drugs, driving up the cost of lifesaving insulin. However, the agency suspended action against Express Scripts in late January to consider the proposed settlement.

The lawsuit against Optum Rx and Caremark is continuing. But the deal could increase pressure on them to consider a settlement, too, especially as the public clamors for cheaper prescription drugs.

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

Under the terms of the agreement, Express Scripts’ standard plan offering to employers will no longer favor drugs with high wholesale acquisition costs if there’s an identical version with a lower wholesale acquisition cost.

Any fees it receives from drugmakers will be delinked from the list prices of medications.

Similarly, Express Scripts’ standard plan offering to employers, and all of Cigna’s fully insured health plans, will base members’ out-of-pocket costs on net drug prices, after any savings that the PBM negotiates with drugmakers.

That should shield consumers from inflated cost-sharing due to artificially high list prices for drugs, the FTC said, and ensure patients, not just plans, benefit from any negotiated rebates.

Express Scripts will also include purchases made on the direct-to-consumer TrumpRx platform in a patient’s deductible and out-of-pocket maximum “once necessary legal and regulatory groundwork is laid,” the FTC said.

TrumpRx was supposed to launch in January. But the Trump administration’s flagship drug purchasing marketplace has had difficulties getting off the ground, amid scrutiny of its legality and potential conflicts of interest, according to PharmaVoice.

Transparency, pharmacy reform

The FTC settlement also includes a number of transparency stipulations.

It requires Express Scripts to disclose any payments it makes to consultants or brokers that help employers choose between pharmacy benefits vendors, to discourage conflicts of interest and steering, the agency said.

Express Scripts will have to disclose additional information about drug costs and spending to its employer clients. It will also have to provide the pharmacy data that employers and other plan sponsors might need to comply with payer transparency requirements from the CMS.

Transparency is one of the most pursued reforms in the PBM space, given PBMs maintain a complex web of hidden fees and opaque business contracts that make it difficult for employers and plans to keep track of their healthcare spending – and whether they’re being taken advantage of.

Late last week, the Department of Labor proposed a rule that would force pharmacy benefit managers to share a broad range of pricing and compensation information with their employer clients – very similar to the terms of the FTC-Express Scripts settlement. And just yesterday, President Donald Trump signed a government funding package that included healthcare reforms like PBM transparency for employers.

Under the settlement, Express Scripts has also agreed to pay community pharmacies based on the actual cost of drugs, plus a fee for dispensing the drug. 

Though the settlement did not include specific rates, pharmacy groups cheered the pivot to a cost-plus model, which they say provide more predictable reimbursement as pharmacies struggle with flatlining payment for dispensing drugs.

The settlement “obliterates the big-PBM industry fiction that they work to lower the cost of drugs for Americans. Obviously, the opposite appears to be true. I hope this is only the beginning of righting the games leading to higher drug prices and harming competition,” said B. Douglas Hoey, the CEO of the National Community Pharmacists Association, in a statement Wednesday.

Perhaps the most unexpected element of the settlement is forcing Ascent back to the U.S. from Switzerland. Ascent’s homecoming will bring $750 billion in economic activity over a decade back to the country – and ensure Ascent is subject to U.S. laws and regulations, the FTC said.

GPOs, which aggregate PBMs’ members to improve their negotiating leverage with drugmakers, have been accused of facilitating shell games that allow PBMs to retain more drug rebates as profit, but oversight is tricky given no major GPOs are headquartered in the U.S.

The settlement “addresses virtually every warped incentive” in the PBM space, Adam Fein, the president of the Drug Channels Institute, wrote in an email blast Wednesday.

But “these reforms are largely within the expected range of outcomes,” according to TD Cowen analyst Charles Rhyee.

“De-linking, banning commercial spread pricing, requiring benefit design to be based on net cost, and increased transparency have all been proposed before,” Rhyee wrote in a note Wednesday. And, Express Scripts has implemented many of the changes already, in the rebate-free model it unveiled in October.

Express Scripts has until 2027 to comply with most of the settlement’s provisions. It has until 2028 to comply with transparency requirements, the cost-plus model shift and for Ascent to return to the U.S.

Express Scripts will also be subject to monitoring for 10 years under the deal.

Just one person, FTC Commissioner Andrew Ferguson, approved the consent agreement. Commissioner Mark Meador recused himself from the vote.

The FTC shrunk to just two commissioners after President Donald Trump fired the two Democrat commissioners last spring and Republican commissioner Melissa Holyoak stepped down in November. The president has yet to nominate any replacements.