FTC settles with Express Scripts on agreement to change PBM practices

WASHINGTON – The Federal Trade Commission (FTC) has secured a landmark settlement with one of the nation’s largest pharmacy benefit managers (PBMs), Express Scripts, Inc., and its affiliated entities (collectively ESI).  

According to the FTC, the settlement: 

• Requires ESI to adopt fundamental changes to its business practices that increase transparency; 

• Will drive down patient out-of-pocket costs for drugs like insulin by up to $7 billion over 10 years; 

• Will bring millions of dollars in new revenue to community pharmacies each year; and 

• Will advance the Trump Administration’s key health care priorities. 

“The FTC’s settlement with Express Scripts is a clear testament to the Trump-Vance FTC’s focus on lowering health care costs for American patients,” said FTC Chairman Andrew N. Ferguson. “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.” 

The FTC’s settlement resolves the commission’s lawsuit against ESI, which charged the company with artificially inflating the list price of insulin drugs by using anticompetitive and unfair rebating practices, and impairing patient access to lower list price products, ultimately shifting the cost of high insulin list prices to vulnerable patients. 

The FTC’s enforcement action against ESI, as well as Caremark Rx and OptumRx, alleges that the PBMs created a system that artificially drove up the list prices of drugs by preferencing rebates. The complaint alleges that this system pushed insulin manufacturers, among others, to compete for preferred formulary coverage based on the size of rebates off the list price rather than net price, which ultimately benefitted the PBMs, including ESI, which keep a portion of the inflated rebates.   

The National Community Pharmacists Association (NCPA) has sought for years to rein in PBM practices that squash competition, reduce patient access, and drive up prices. 

“This settlement will help lower consumers’ copays that have been tied to artificially inflated prices that feed Cigna’s insatiable appetite for more and more rebates and GPO fees,” said NCPA CEO B. Douglas Hoey. “The settlement also 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.”  

• Related: Momentum grows in PBM pushback