The Federal Trade Commission announced Wednesday a settlement agreement with Express Scripts that could reduce prescription drug prices by up to $7 billion over the next decade, targeting business practices the agency says have kept medication costs artificially high for American consumers.
Express Scripts, a pharmacy benefit manager based in St. Louis, agreed to end several practices that the FTC claims manipulated market prices and impaired patients' access to lower-priced medications. The company is the nation's second-largest pharmacy benefit manager, accounting for 23% of total prescriptions and controlling 80% of the prescription drug market alongside competitors CVS Health's Caremark and United Health Group's OptumRx.
"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," Commission Chairman Andrew Ferguson said.
Pharmacy benefit managers serve as middlemen who manage prescription drug plan benefits for insurers by negotiating rebates and discounts with manufacturers and setting drug formularies. These formularies are tiered lists that determine which drugs are available to consumers, at what out-of-pocket costs, and with what restrictions.
The FTC first filed its administrative complaint against Express Scripts in 2024 under the Biden administration, alleging the company and its competitors manipulated market prices by threatening drug manufacturers with exclusion from coverage unless they raised rebates. This practice, according to the complaint, impaired patients' ability to access lower-priced products.
Under the settlement terms, Express Scripts agreed to several key changes to its business practices. The company will stop preferring high wholesale acquisition cost versions of drugs over identical low wholesale acquisition cost versions. This practice previously allowed the company to benefit from higher rebates while patients paid more at the pharmacy counter.
The settlement also requires Express Scripts to provide an offering to its plan sponsors that ensures members' base out-of-pocket expenses are calculated based on the drug's net cost rather than its artificially inflated list price. This change could significantly reduce what patients pay for medications like insulin and other essential drugs.
Additionally, the agreement includes provisions related to the Trump administration's healthcare agenda. Express Scripts must provide coverage to TrumpRx, should the program ever launch, and comply with price transparency laws while disclosing kickbacks to brokers. The settlement also requires reshoring major portions of the company's business operations.
Ferguson was the only commissioner to approve the deal after Commissioner Mark Meador recused himself from the proceedings. The chairman emphasized that the agreement delivers wins for the broader Trump-Vance healthcare agenda while providing immediate relief to consumers and community pharmacies.
The settlement addresses concerns about the concentrated power of pharmacy benefit managers in the prescription drug market. With just three companies controlling 80% of the market, critics have long argued that these middlemen have too much influence over drug pricing and access. The FTC's action represents one of the most significant regulatory interventions in this space in recent years.
Community pharmacies are expected to benefit from the agreement through new revenue opportunities and relief from what the FTC characterized as being "squeezed" by Express Scripts' practices. Independent pharmacies have struggled under the current system, where pharmacy benefit managers often reimburse them at rates below their costs while collecting rebates from drug manufacturers.
The agreement also aims to increase transparency in drug pricing, requiring Express Scripts to disclose previously hidden financial arrangements that may have contributed to higher costs for consumers. This transparency component addresses longstanding concerns about the lack of visibility into how pharmacy benefit managers operate and profit from their intermediary role.
For patients, particularly those dependent on expensive medications like insulin, the settlement could provide substantial financial relief. The FTC estimates that the changes could save consumers billions of dollars over the next decade by reducing both out-of-pocket costs and the overall price inflation that has characterized the prescription drug market.
The settlement comes as prescription drug pricing remains a top concern for American consumers and policymakers across party lines. High medication costs have forced many patients to ration or skip doses of essential medications, creating both health and financial hardships.
While Express Scripts has agreed to these changes, the broader pharmacy benefit manager industry continues to face scrutiny from regulators and lawmakers. The success of this settlement may influence future enforcement actions against other major players in the market and could signal a more aggressive regulatory approach to addressing prescription drug pricing issues.
The implementation of these changes will be closely monitored to ensure compliance and measure the actual impact on drug prices for consumers. The FTC will likely use this case as a template for addressing similar practices across the industry.