On February 4, 2026, the Federal Trade Commission (FTC) announced a major settlement with Express Scripts, one of the country’s largest pharmacy benefit managers (PBMs). The case centered on how insulin prices became trapped behind what the FTC called a “rebate wall.” The settlement is novel because Express Scripts agreed to substantially shift its business model. Specifically, the settlement requires Express Scripts to offer standard terms that will eliminate spread pricing and rebate retention, among other practices. The financial implications of these reforms are significant and may materially reduce PBM profit margins by billions of dollars moving forward.
The settlement is also likely to have substantial impact on independent, rural, and community pharmacies, which have faced sustained financial pressure for years due to low PBM reimbursement rates that sometimes fail to cover drug acquisition costs. For community pharmacies, the FTC settlement may signal a broader industry shift away from confusing, unpredictable payment practices and toward a more transparent, cost-based reimbursement system.
Why the FTC Took Action Against Express Scripts
As background, the FTC alleged that Express Scripts, and other major PBMs like CVS Caremark and OptumRx, operated a system that incentivized high list prices. PBMs often favored drugs with larger rebates, even when lower-cost alternatives were available. As a result:
- PBMs generated increased revenue
- Patients incurred higher out-of-pocket costs
- Pharmacies faced unpredictable reimbursements and frequent “clawbacks”
For years, pharmacy owners expressed concerns that PBM pricing methodologies lack transparency, making it difficult to understand how reimbursement rates are calculated or why they fluctuate so wildly.
A Shift Toward “Cost-Plus” Reimbursement
One of the most significant outcomes of the settlement is Express Scripts’ agreement to move toward a “cost-plus” reimbursement model. Rather than paying pharmacies based on complicated formulas tied to list prices and rebates, the PBM will reimburse based on:
- The pharmacy’s actual acquisition cost
- A professional dispensing fee
- Additional payment for clinical services
This represents a substantial departure from prior reimbursement methodologies. Under the former system, many community and independent pharmacies operated at a loss on certain prescriptions because reimbursement did not reflect rising drug acquisition costs. A cost-plus model is intended to improve predictability, transparency, and fairness, and to reduce the risk of discriminatory or preferential reimbursement practices that favor PBM-affiliated pharmacies.
If implemented as intended, these changes could bring millions of dollars in new revenue to community pharmacies each year. By recognizing and paying for non-dispensing services (e.g., pharmacist-performed direct patient care services such as patient counseling), the settlement acknowledges the growing role pharmacists play in patient care.
A New Era of Transparency
The settlement also forces Express Scripts to open up parts of its business that have long been hidden from view, including:
- Providing detailed reporting on drug pricing
- Disclosing payments to brokers who influence employer decisions
- Relocating its group purchasing organization, Ascent, from Switzerland back to the U.S.
Another notable requirement mandates that Express Scripts count purchases made through the administration’s “TrumpRx” direct-to-consumer platform toward patients’ deductibles and out-of-pocket maximums. This provision may require PBMs to account for lower-cost alternatives rather than exclude them from plan benefit structures.
What Independent and Community Pharmacies Should Expect
This settlement signals a meaningful regulatory shift in PBM oversight. Express Scripts has until 2027 and 2028 to fully implement the new requirements, meaning the transition will occur over time. However, the broader direction is clear: increased scrutiny of rebate-driven PBM models and movement toward greater pricing transparency, which are all welcome news for community pharmacies.
As these reforms are implemented, pharmacy owners should anticipate:
- New contract terms
- Revised reimbursement schedules
- Increased transparency regarding reimbursement calculations
How Frier Levitt Can Help
It will be critical for pharmacies to ensure that new agreements accurately reflect acquisition costs and fairly compensate clinical services. Frier Levitt will closely review Express Scripts’ updated contract offerings as they become available to assess compliance with both the letter and the intent of the FTC’s order. Contact Frier Levitt to evaluate your PBM contracts, identify reimbursement risks, and position your pharmacy to benefit from these evolving reforms.
Senior Associate
