Caremark Settles PBM FTC Action Regarding Reimbursement Practices, Second Major PBM to Settle

On July 14, 2026, CVS Health subsidiaries Caremark Rx LLC and Zinc Health Services LLC (collectively, “Caremark”) agreed to a settlement with the Federal Trade Commission (FTC), resolving the administrative claims against Caremark in the agency’s ongoing case targeting the nation’s three largest pharmacy benefit managers (PBMs). The Caremark settlement follows the FTC’s February 2026 settlement with Express Scripts in the same case. For more information on the Express Scripts settlement, read Goodwin's prior alert, “Express Scripts Settles PBM FTC Action and Must Make Fundamental Changes to PBM Model.”

Under the terms of the settlement, Caremark must make significant changes to its business practices, including changes to its pharmaceutical product formulary practices, rebate transparency, and pharmacy network contracting. The FTC estimates the settlement will deliver $8.5 billion in consumer savings over the next 10 years and unlock up to $4.5 billion in additional savings through point-of-sale rebates over the same period.

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. 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 leveraged their ability to exclude certain products from restrictive formularies, demanding higher rebates from pharmaceutical manufacturers in exchange for formulary placement, which, in turn, caused insulin list prices to increase significantly. In September 2025, each of the PBMs moved to dismiss the case, arguing that the role of the PBM is to encourage pharmaceutical manufacturers to compete for health plans’ business through discounts and rebates, driving down costs for members, not setting list prices for pharmaceuticals.

On February 4, 2026, the FTC reached a settlement with Express Scripts that committed Express Scripts to making significant changes to pharmaceutical pricing practices for all pharmaceutical products, not only the insulin products at issue in the complaint. For a detailed analysis of the Express Scripts settlement terms, see Goodwin’s prior alert. The FTC subsequently withdrew the administrative case against Caremark from adjudication in March 2026 to facilitate settlement negotiations, and the FTC announced the finalized settlement on July 14, 2026.

Key Settlement Terms for Caremark

The terms of the Caremark settlement are broadly similar to those secured in the Express Scripts settlement, with certain additional provisions addressing Caremark’s vertically integrated pharmacy operations. The settlement requires Caremark to implement the changes listed below, which generally follow the items and terms of the Express Scripts settlement. One notable exception is for Network Pharmacy Contracting, which addresses concerns specific to CVS Health’s vertically integrated pharmacy operations.

• Network Pharmacy Contracting. The settlement prohibits Caremark from blocking or unfairly restricting competing pharmacy hub service providers from doing business with independent pharmacies in its networks. Hub pharmacy services help coordinate patient access and drug affordability, and the FTC expressed concern that Caremark had interfered with access to these services, pointing to a January 2026 report from House Judiciary subcommittee staffers.
• High-WAC, Low-WAC. When a pharmaceutical manufacturer markets both a high-wholesale-acquisition-cost (high-WAC) version and a low-WAC version of a pharmaceutical product, Caremark cannot discriminate against the lower-cost version on its standard formularies for commercial clients. Caremark must prioritize the lowest-priced version of a pharmaceutical product on its standard formularies.
• Rebate Pass-through and Out-of-Pocket Costs. Member out-of-pocket costs must be based on a drug’s net cost rather than its inflated list price. Caremark is required to pass along all savings resulting from rebates and group purchasing to its clients and must provide plan sponsors with a standard offering that does not include rebates.
• Point-of-Sale Rebates. Caremark must enable members to receive the benefit of any rebates or discounts applicable to any drug product directly at the point of sale and may not charge a fee for providing or administering such point-of-sale rebate program, other than its actual cost to pre-fund any rebate, if applicable.
• Access to Cost-Reduction Programs. Caremark must provide members with full access to pharmacy benefit management programs that reduce out-of-pocket costs, including the Copay Certainty Program (to be launched no later than January 1, 2028) and a Preferred Drug List with first-dollar coverage for insulin and other preventative drugs. The limitation to “preventive” drugs in the Caremark settlement is notably slightly narrower than the ESI settlement’s “other drugs” language.
• Spread Pricing. Caremark may not employ “spread pricing” such that there is a difference between the amount the plan sponsor pays to Caremark and the amount Caremark pays to a pharmacy for a given pharmaceutical product.
• Retail Community Pharmacy Compensation. Retail community pharmacies must be compensated based on their actual cost of acquiring prescription drugs plus a dispensing fee, provided the pharmacy supplies the data necessary to validate its acquisition costs. Caremark must also make additional payments for non-dispensing services performed by retail community pharmacies.
• Manufacturer Compensation. Compensation received by Caremark from pharmaceutical manufacturers, including any administrative fees, data fees, or other fees, may not be based, directly or indirectly, on the list price of any pharmaceutical product or any related benchmark.
• Insulin Cost Cap. Where a formulary includes an insulin product covered by Caremark’s Copay Certainty Program, Caremark will cap out-of-pocket costs for insulin at $25 per month.
• Transparency and Fee-Based Compensation. Caremark must enhance its reporting on drug pricing and member payments, shift to a fee-based compensation structure, and provide plan sponsors with greater visibility into pharmaceutical product pricing and reimbursement.
• TrumpRx and Deductibles. Caremark must include any purchases a patient makes through the TrumpRx platform, President Trump's online drug marketplace, toward the deductible in certain health plans once regulatory changes make it possible to process these payments through insurance. Unlike the ESI settlement, the Caremark settlement contains an express carveout for sincerely held religious or moral beliefs.
• Domestication of GPO Services. Like Express Scripts, Caremark must domesticate any international GPO services and maintain such activities in the US.

As with the ESI settlement, the Caremark settlement establishes an independent compliance monitor to oversee Caremark’s adherence to the settlement terms for a period of three years. In both cases, the monitor has authority to receive complaints from non-parties regarding compliance with the settlement, conduct inquiries on behalf of the FTC, and must report at least annually to the FTC regarding compliance by ESI and Caremark, respectively. Accordingly, potential noncompliance with the settlement may result in further consequences, including additional investigation by the FTC.

Looking Ahead

The public will have 30 days to submit comments on the proposed settlement with Caremark. The FTC’s administrative case now remains pending only against OptumRx. In June 2026, the FTC withdrew the matter from adjudication with respect to the OptumRx respondents for the purpose of considering a proposed consent agreement, signaling that a settlement with the final remaining PBM is likely forthcoming. Industry observers expect OptumRx to agree to stipulations similar to those outlined in the Express Scripts and Caremark settlements, including prioritizing lower-cost insulin and passing rebates through to plan sponsors.

As with the Express Scripts settlement, the Caremark settlement contains carve-outs that may limit its scope in practice. CVS Health has indicated that many of the measures included in the settlement align with the company’s existing affordability and transparency initiatives, including offering point-of-sale rebates, capping copays, and using other pricing models designed to reduce out-of-pocket costs. The decision to eliminate rebates may vary based on the client and how individual employers choose to structure their own pharmacy benefit. Depending on how frequently plan sponsors opt for customized structures and how the settlement’s exceptions are interpreted in practice, the settlements may ultimately have only a limited impact on market conduct. Notably, the settlement does not include monetary penalties.

The Caremark settlement, together with the Express Scripts settlement, may hasten a broader industry transition from rebate-driven compensation models toward fee-based structures. This shift could address arguments that rebate arrangements encourage pharmaceutical manufacturers to maintain elevated list prices and reduce transparency around drug spending borne by US employers. PBMs, for their part, may find that the settlements provide a degree of regulatory certainty that could forestall more drastic legislative or regulatory action at the federal or state level. At the same time, industry consolidation around a new payment structure is not certain, and manufacturers, payors, PBMs, and other players may see increased variation and complexity in pricing and contracting structures.

Manufacturers should also be aware that states have continued to pursue their own enforcement actions and legislative initiatives targeting PBM practices, including state lawsuits and laws restricting PBM ownership of retail pharmacies, prohibiting spread pricing, and limiting reimbursement designs around insulin pricing, among others. PBMs are currently challenging some of these state lawsuits and laws in federal court.

These developments are unfolding against the backdrop of broader federal PBM reform, like the Consolidated Appropriations Act of 2026, which requires PBMs providing services to group health plans to disclose and pass through 100% of rebates, fees, and other renumerations from pharmaceutical manufacturers to plan clients. Beginning January 1, 2028, PBMs servicing Medicare Part D plans must also “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.

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The Goodwin Healthcare team will provide continued coverage and updates as the FTC case against OptumRx develops and as the Caremark and Express Scripts settlements are implemented. For more information on the issues discussed in this alert, please see the Goodwin Center for Market Access and Pricing page.

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