Express Scripts Settles PBM FTC Action and Must Make Fundamental Changes to PBM Model

On February 4, 2026, Express Scripts agreed to a settlement with the Federal Trade Commission (FTC) in the agency’s administrative case against the nation’s three largest pharmacy benefit managers (PBMs). Under the terms of the settlement, Express Script agreed to make certain changes to its pharmaceutical product formulary practices. The FTC estimates the settlement with Express Scripts, one of the three PBMs, will deliver up to $7 billion in patient savings on out-of-pocket pharmaceutical product costs over 10 years.

The FTC Administrative Action

In September 2024, the FTC brought an administrative action against the nation’s three largest PBMs — Express Scripts, Caremark Rx, and OptumRx — and their affiliated group purchasing organizations (GPOs) for allegedly engaging in anticompetitive and unfair rebating practices in violation of Section 5 of the FTC Act. Together, these three PBMs administer approximately 80% of all prescriptions in the United States.

The FTC alleged that the PBMs’ practices “artificially inflated the list price of insulin drugs, impaired patients’ access to lower list price products, and shifted the cost of high insulin list prices to vulnerable patients.” According to the complaint, the PBMs did so by leveraging their ability to exclude certain products from restrictive formularies, demanding higher rebates from pharmaceutical manufacturers in exchange for placing products on their formularies. The FTC alleged that these increased rebates caused insulin’s list prices, set by the pharmaceutical manufacturers, to “skyrocket.” For example, the average list price for Humalog increased more than 1,200% from 1999 to 2017. The complaint alleged that patients, in turn, faced higher out-of-pocket costs for their medications as a result of these inflated list prices. The administrative case has been slower to progress and was placed on hold for a period because of a lack of commissioners to consider the case.

In September 2025, the PBMs moved to dismiss the case, arguing that pharmaceutical manufacturers, not PBMs, set list prices for pharmaceuticals. They further argued that their role in negotiations is to encourage pharmaceutical manufacturers to compete for health plans’ business through discounts and rebates, which can in turn drive down costs for members. The PBMs also argued that the FTC had exceeded its constitutional authority in bringing, and hearing, the administrative case. The motion to dismiss remains pending.

Key Settlement Terms for Express Scripts

On February 4, 2026, the FTC reached a settlement and proposed order with Express Scripts that commits Express Scripts to making significant changes to pharmaceutical pricing practices for all pharmaceutical products (drug products and biologics), not only the insulin products at issue in the complaint. The settlement order requires multiple changes to be made by January 1, 2028, or as soon as “commercially feasible,” including the following:

• When a pharmaceutical manufacturer markets both a high-wholesale-acquisition-cost (high-WAC) version and a low-WAC version of a pharmaceutical product, Express Scripts cannot offer any standard formulary covering the high-WAC version of the pharmaceutical product if the low-WAC version is omitted, placed on a less favorable tier, or subjected to additional restrictions.
• Member out-of-pocket costs or co-pays for each covered pharmaceutical product must be no higher than the net cost of that product, and cannot be based on the list price or any other benchmark higher than the net unit cost.
• Members must be provided full access to programs that reduce or limit members’ out-of-pocket costs.
• Members will receive the benefit of any negotiated rebates for a pharmaceutical product at the point of sale without any fees charged for application of that rebate.
• Express Scripts may not employ “spread pricing” such that there is a difference between the amount the plan sponsor pays to Express Scripts and the amount Express Scripts pays to a pharmacy for a given pharmaceutical product.
• Retail pharmacies must be compensated based on the retail pharmacy’s actual cost to acquire a pharmaceutical product plus a dispensing fee for that product.
• Compensation received by Express Scripts from pharmaceutical manufacturers cannot be based on the list price of any pharmaceutical product.
• Express Scripts must provide plan sponsors with automated reporting, including annual reports disclosing costs for each pharmaceutical product and pharmacy claim-level reporting, data necessary for compliance with Transparency in Coverage regulations, and full disclosure of any compensation paid or facilitated to consultants or brokers.
• Members will receive the benefit of direct-to-consumer pricing through the TrumpRx platform.
• All activities, employees, functions, and assets used by Express Scripts’ rebate GPO, Ascent Health Services, for rebate negotiating and contracting must be moved from Switzerland to the United States.

The settlement also requires Express Scripts to operate under a compliance monitor for three years to observe and report on Express Scripts’ compliance with the settlement order. Express Scripts also agrees to cooperate with the ongoing administrative action, including by providing witnesses for deposition and trial. If approved by the FTC commissioners, the order will remain in effect for 10 years.

Looking Ahead

The FTC’s administrative case remains pending against the remaining PBMs, Caremark and Optum. CVS Health has indicated it is “engaging in good faith negotiations with the FTC staff” on a possible settlement, stating that it will continue to work toward making prescription pharmaceutical products more affordable. If the two additional PBMs were to settle on terms that differ from the Express Script settlement terms, this could potentially further complicate the market landscape with inconsistent pricing and practice requirements among competitors.

Notably, the settlement contains a number of carve-outs that may limit its scope in practice. The settlement gives Express Scripts the flexibility to respond to specific client requests by offering customized services that do not comply with the agreement’s requirements for a “standard offering.” Under the agreement, plan sponsors may adopt a customized plan after being served with a notice of the standard offering and acknowledging receipt in writing. Furthermore, the requirements for offering a low-WAC version of a pharmaceutical product when a high-WAC version is available are limited to a standard formulary. Depending on how frequently plan sponsors opt for customized structures, and how the settlement’s exceptions are interpreted in practice, the expected shifts in market conduct may prove far narrower than they appear.

On the pharmacy side, the obligations to compensate based on actual acquisition cost are limited to retail community pharmacies. The settlement does not address mail-order pharmacies, which are typically used for long-term maintenance medications, specialty medications such as injections, temperature-sensitive products, and high-cost medications. Express Scripts, Caremark, and Optum each have their own affiliated specialty pharmacy. The settlement also does not impact the PBMs’ ability to steer patients to their own affiliated pharmacies. As the FTC noted in a July 2024 Interim Staff Report, such steering practices have allowed affiliated pharmacies to retain levels of dispensing revenue far above estimated pharmaceutical product acquisition costs.

These developments are unfolding against the backdrop of broader federal legislative activity, including changes embedded in the recent appropriations bill, which may further influence PBM practices, pricing transparency expectations, and plan design incentives. The bill requires PBMs providing services to group health plans to disclose and pass through 100% of rebates, fees, and other remuneration from pharmaceutical manufacturers to plan clients. It also requires that, beginning January 1, 2028, PBMs servicing Medicare Part D plans “delink” their compensation from pharmaceutical product list prices and rebates that create incentives to prefer high-cost products, and instead receive flat fees for bona fide services provided.

In addition, the Department of Health and Human Services recently reintroduced a new proposed rebate pilot program to the White House Office of Management and Budget that seeks to alter how hospitals participating in the federal 340B drug discount program receive payments. The proposed program will likely require hospitals to pay full price for drugs and seek rebates later. The 340B program has been subject to criticisms of fraud and misuse.

Although the Express Scripts settlement marks an important shift in how at least one major PBM must structure its pharmaceutical pricing and reimbursement, its ultimate impact will hinge on the interplay of these carve-outs, client behavior, and parallel legislative reforms. Although similar settlements by the remaining two PBMs could amplify the effects of the settlement, the cumulative structural changes may be more incremental than sweeping once these limiting factors are accounted for. That said, the settlement marks a notable step toward potentially addressing long-standing concerns regarding alleged lack of transparency in PBM rebating and contracting strategies and the disconnect between pharmaceutical product list prices and net prices paid by health plans.

The Goodwin team will provide continued coverage and updates as the FTC case against the remaining two PBMs develops. For additional information about Goodwin’s drug pricing regulatory expertise, please visit the Goodwin Center for Market Access and Pricing.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.