Prescription benefit manager (“PBM”) Express Scripts, Inc. and its affiliated entities (collectively “ESI”) must adopt “fundamental” business practice changes intended to enhance transparency in its PBM practices under a “landmark settlement” that resolves its exposure to FTC charges that the nation’s three largest PBMs – ESI, Caremark Rx, and OptumRx and their affiliated group purchasing organizations (“GPOs”) – illegally used anticompetitive and unfair rebating practices to artificially inflate prices of and restrict patient access to insulin drugs made in a FTC lawsuit.

In Caremark Rx, Zinc Health Services, et al., In the Matter of (Insulin), the FTC sued the nation’s three largest PBMs, ESI, Caremark Rx, and OptumRx and their affiliated GPOs, for illegally driving up insulin prices and disrupting patient access to insulin by engaging in anticompetitive and unfair rebating practices.

Specifically, the FTC alleges these PBMs use of restrictive formularies that completely excluded certain drugs from coverage coerced pharmaceutical manufacturers to provide PBMs higher rebates to avoid exclusion of their products outright from the PBM formularies required for insurance coverage for tens of millions of patients. Leveraging this threat of exclusion, the FTC charges PBMs began demanding higher and higher rebates from drug manufacturers in exchange for placing those drugs on their restrictive formularies. While the race for higher rebates, in principle, should have reduced drug costs for patients, the FTC says the PBMs’ “insatiable demand for larger rebates” and manufacturers’ desire to preserve their own profits drove manufacturers steadily to increase the list price of their drugs. The FTC claims the resulting dynamic artificially inflated list prices disconnected from the actual cost of the drugs to insurers.

Since patients’ out-of-pocket expenses are directly or indirectly tied to these inflated prices, uninsured patients often pay the full list price, while insured patients with high deductibles or co-insurance also face higher costs based on these inflated list prices. As a result, as rebates and list prices rise in tandem, these groups of patients are burdened with higher out-of-pocket costs for their medications.

The FTC claims this broken system has far-reaching consequences. it causes opaque an drug pricing and reimbursement system, which benefits the PBMs and manufacturers, but deliberately obscures the full scope of harm and financial cost from insurers and patients unknowingly shouldering the burden of inflated list prices.

While the dynamic impacts many prescription drugs, the FTC says insulin is the poster child of this distorted system.

The FTC settlement resolves ESI’s liability exposure from the FTC lawsuit regarding insulin pricing and competition in return for it, making significant changes in its PBM pricing and other practices. Among other things, ESI agrees no longer to prefer drugs with high list prices on its standard formularies when cheaper equivalents exists. ESI also will delink its compensation from the savings it negotiates with drugmakers. ESI also commits to increase transparency, including reporting more data on drug spending and disclosing any kickbacks to brokers that help employers choose PBMs. ESI also agreed to reshore its group purchasing organization Ascent from Switzerland back to the United States.

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. However oversight is tricky given no major GPOs are headquartered in the U.S.

The FTC predicts ESI deal will drive down patients’ out-of-pocket costs for drugs like insulin by up to $7 billion over a decade and bring millions of dollars in new revenue to community pharmacies by requiring Express Scripts to move its pharmacy reimbursement to a cost-plus model. If there’s noting that ESI reportedly .already was transitioning to a cost plus model. 

The FTC lawsuit continues against Caremark Rx, and UnitedHealth owned OptumRx and their affiliated GPOs.

The settlement announcement follows the U.S. Department of Labor e Department of Labor last week issued a proposed rule to improve transparency of fees collected by pharmacy benefit managers. If adopted as proposed, the rule will require PBMs to disclose rebates and other payments from drug manufacturers, compensation received when the price paid by a health plan for a prescription drug exceeds the amount reimbursed to the pharmacy, and payments recouped from pharmacies in connection with prescription drugs dispensed to a health plan. The proposal would also allow plan fiduciaries to audit the accuracy of PBM disclosures and provide additional relief if their PBM fails to meet its obligations under the rule.

The FTC and Labor Department actions are part of a series of federal activities undertaken in response to directives of President Donald Trump to provide greater healthcare transparency and bring down the cost of prescription medications and other healthcare costs. See, e.g. The Great Healthcare Plan; Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information; Delivering Most Favored-Nation Prescription Drug Pricing To American Patients (May 12, 2025).

PBMs, healthcare providers, health plans and their sponsors and their fiduciaries and service providers, pharmaceutical manufacturers and distributors, and consumers should carefully follow these and other developments do you understand there’re evolving responsibilities and opportunities under these changing rules and enforcement positions. receive updates on these another developments, follow this resource or email your contact information to the author.

If you have questions about this or other health care concerns, contact the author. 

For More Information

We hope this update is helpful. For more information about the  or other health or other employee benefits, human resources, or health care developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

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About the Author

Peer recognized as “Top Rated Lawyer” and “LEGAL LEADER™ “Top Rated Lawyer” and “Best Lawyer” for her work in Health Care Law, Labor and Employment Law; ERISA & Employee Benefits,” and “Business and Commercial Law,” Cynthia Marcotte Stamer is an A Martindale-Hubble “AV-Preeminent” (Top 1%) attorneys board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for her more than 35 years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications including leading edge work on PBM, pharmacy and pharmaceutical and other health care, managed care, insurance, and insured and self-insured contracting, design, administration and regulation.. 

Author of numerous highly regarded works on health law and policy, Immediate Past Chair of the ABA International Section Life Sciences Committee and the current Tort Trial and Insurance Practice Section Medicine and Law Committee, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and past Group Chair and current Welfare Benefit Committee Co-Chair of the ABA RPTE Employee Benefits & Other Compensation Group, Ms. Stamer is most widely recognized for her decades of pragmatic, leading edge work, scholarship and thought leadership on health and other privacy and data security and other health industry legal, public policy and operational concerns. 

Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.  As a part of this work, she has continuously and extensively worked with domestic and international health plans, their sponsors, fiduciaries, administrators, and insurers; managed care and insurance organizations; third party administrators and other health benefit service providers; hospitals, health care systems and other health care providers, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; EMR, claims, payroll and other technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, self-insured health and other employee benefit plans, their sponsors, fiduciaries, administrators and service providers, insurers and other payers, health industry advocacy and other service providers and groups and other health and managed care industry clients as well as federal and state legislative, regulatory, investigatory and enforcement bodies and agencies.

She also has extensive experience helping health care systems and organizations, group and individual health care providers, health plans and insurers, health IT, life sciences and other health industry clients prevent, investigate, manage and resolve  sexual assault, abuse, harassment and other organizational, provider and employee misconduct and other performance and behavior; manage Section 1557, Section 504, Civil Rights Act and other discrimination and accommodation, and other regulatory, contractual and other compliance; vendors and suppliers; contracting and other terms of participation, medical billing, reimbursement, claims administration and coordination, Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other payers and other provider-payer relations, contracting, compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; meaningful use, EMR, HIPAA and other technology,  data security and breach and other health IT and data; STARK, ant kickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care;  internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns. to establish, administer and defend workforce and staffing, quality, and other compliance, risk management and operational practices, policies and actions; comply with requirements; investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry actions: regulatory and public policy advocacy; training and discipline; enforcement;  and other strategic and operational concerns.

Author of publications on “Transparent PBM Contracting,” “ACOs, Direct Contracting: Legal & Practical Challenges For Employers, Providers & TPAs,” “The Medicare Advantage Contracting Manual,” “Third Party Administrator (TPA) Contracting Principles and Strategies and a multitude of other highly regarded publications and presentations,  Stamer is widely recognized for her thought leadership on PBM and other managed care and health plan contracting and design, and a multitude of other health care, health plan and other health industry matters.  In addition, Ms. Stamer contributes her time and leadership to numerous policy, professional, civil and other organizations including service as the, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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