Cigna Settles FTC Insulin Case, Agrees to Revamp Drug Pricing

• Express Scripts must restrict practices like pocketing rebate payments from drugmakers based on list prices, with compliance monitored for three years
• The FTC estimates the 10-year agreement could save patients as much as $7 billion in drug costs
• The settlement requires Express Scripts to work with local pharmacies, disclose drug costs to employers annually, and move its Swiss rebate aggregator to the U.S.

Summary

Key Development: Cigna Corp's Express Scripts has settled FTC antitrust claims regarding insulin pricing practices, agreeing to a 10-year settlement that mandates significant changes to drug pricing operations. The case against competitors UnitedHealth's Optum and CVS Health's CVS Caremark remains ongoing.

Financial Impact: The FTC estimates the agreement could save patients up to $7 billion over a decade. The settlement includes a three-year compliance monitorship to ensure enforcement.

Major Restrictions:

• Express Scripts must limit practices involving rebate payments from drugmakers based on list prices—a practice critics argue inflates costs
• Required to work with local pharmacies and provide annual drug cost disclosures to employers
• Must relocate Ascent Health Services, its Switzerland-based rebate aggregator, to the United States
• Obligated to count TrumpRX platform purchases against copays and deductibles in standard employer plans

Market Context: This settlement aligns with the Trump administration's focus on reducing drug costs. Pharmacy benefit managers (PBMs)—which determine insurance drug coverage—have faced a decade of regulatory scrutiny over pricing practices. The FTC has accused major PBMs of steering patients toward higher-priced drugs to maximize profits and excluding lower-cost insulin products from coverage lists.

Industry Implications: While Express Scripts previously announced pricing reforms, this settlement legally binds the company under FTC enforcement. Major PBMs (CVS, UnitedHealth, Cigna) have recently introduced pricing models emphasizing transparency, shifting revenue models from hidden drugmaker reimbursements to administrative fees. The settlement sets a precedent that may impact ongoing cases and industry-wide practices.