FTC Express Scripts Order Completes Drug Benefit Manager Overhaul

The Federal Trade Commission’s Feb.4  consent order with Express Scripts represents the most consequential structural overhaul of the pharmacy benefit manager industry to date.

Policymakers and regulators have spent a decade debating whether the rebate-driven PBM model could be restructured without undermining PBMs’ role in the marketplace. With this settlement—paired with the PBM provisions in the Consolidated Appropriations Act of 2026 and the launch of a government portal to increase patients’ accessibility to cheap prescription drugs—that debate has largely been settled.

The federal framework governing PBM pricing, formulary design, and reimbursement has been fundamentally reset.

The FTC’s investigation of PBMs began in earnest in June 2022 with a Section 6(b) study of the six largest managers.

A July 2024 report found that CVS Caremark, Express Scripts, and Optum RX process roughly 80% of the nation’s 6.6 billion annual prescriptions, and the FTC filed an administrative complaint two months later. A January 2025 report alleged that PBMs generated $7.3 billion in excess revenue by marking up specialty generics at affiliated pharmacies by hundreds to thousands of percent above NADAC.

Core Changes

The proposed consent order imposes alternations across four categories, most effective no later than Jan.1, 2028, with a compliance monitor and mandatory reporting throughout the 10-year term:

Formulary and pricing. Express Scripts committed to not preferring high wholesale acquisition cost drug versions over identical low-cost alternatives—the “rebate wall” practice—and must delink all manufacturer compensation from list prices.

The order requires Express Scripts to offer plan sponsors a standard benefit design where members’ out-of-pocket costs are calculated on net drug cost rather than inflated list prices, applicable to both employer plans and all Cigna fully insured health plans.

Plan sponsor options. Express Scripts must offer all plan sponsors the ability to transition off rebate guarantees and spread pricing entirely. The Patient Assurance Program insulin benefits must extend to all members when the formulary covers a qualifying insulin product, with plan sponsors required to opt out affirmatively rather than opt in.
The company also agreed to provide covered access to the new federal low-cost prescription drug platform, contingent on “relevant legal and regulatory changes.”

Transparency. The settlement brought assurances of drug-level cost reporting to plan sponsors,transparency in coverage compliance data, and disclosure of all broker payments. On the pharmacy side,Express Scripts must transition standard community pharmacy reimbursement to a cost-plus model (which is equal to the actual acquisition cost plus a dispensing fee, in addition to compensation for clinical services).

Reshoring. Express Scripts also agreed to reshore its group purchasing organization, Ascent Health Services, from Switzerland to the US, returning more than $750 billion in purchasing activity to domestic jurisdiction over the order’s duration.

Antitrust Balancing Act

The central policy concern surrounding PBM reform has long been how changes would affect the role of PBMs in the marketplace. The consent order addresses it directly. It preserves the purchasing and bargaining functions PBMs perform while eliminating structural incentives tied to list-price inflation.

In that respect, the settlement reflects calibrated, forward-looking structural correction and durable market realignment.

Some observers have suggested that PBMs warranted additional structural separation or monetary penalties. That perspective understates the breadth of the present changes. By realigning economic incentives at their core—delinking compensation from list prices, mandating cost-based reimbursement models, and imposing decade-long oversight—the settlement addresses the mechanisms that drove the challenged conduct. 

For its part, Express Scripts already announced a rebate-free model transition in October 2025. The new consent order’s most politically distinctive provision—Express Scripts’ agreement to provide covered access to TrumpRx—connects the settlement to the administration’s broader drug pricing architecture.

The portal, built on GoodRx’s pricing Application Programming Interface (API), listed 43 drugs from five manufacturers at launch with discounts of 33% to 93% off list price. Its legal foundation rests on a May 12 executive order, and the Health and Human Services’ inspector general’s Jan. 27 guidance clarifying reduced anti-kickback statute risk for manufacturer direct-to-consumer sales.

What to Watch

Given their significant market shares, whether other PBMs settle with the FTC on comparable or different terms could affect health care markets more broadly. Similarly, a  constitutional challenge, pending in the US Court of Appeals for the Eighth Circuit, could reshape the procedural landscape for all FTC administrative enforcement.

The 30-day public comment period on the consent order (Docket FTC-2024-0048) offers stakeholders a final opportunity to strengthen compliance provisions before the FTC—likely still comprising only Chairman Andrew Ferguson given the recusal of the only other confirmed commissioner—decides whether to finalize the order.

In any event, this settlement agreement may prove more transformative than any single pricing overhaul. The rebate-driven PBM model that defined the past two decades has been structurally altered.

With statutory rebate pass-through requirements, decade-long compliance oversight, cost-plus reimbursement mandates, and enhanced transparency embedded in federal policy, the principal regulatory objectives of PBM reform appear to have been achieved.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Asheesh Agarwal is an attorney who served in senior roles at the Department of Justice and at the Federal Trade Commission, where he was assistant director of the Office of Policy Planning.

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