The Federal Trade Commission ("FTC") secured a settlement agreement with one of the nation's largest pharmacy benefit managers ("PBMs") and its subsidiaries. Caremark Rx LLC and Zinc Health Services LLC (collectively, "Caremark"), which is part of CVS Health Corporation, agreed to a settlement requiring the PBM to implement significant changes to its business practices. The FTC alleged that Caremark artificially inflated drug list prices by operating a rebate-driven system that encouraged insulin manufacturers to compete for preferred formulary placement based on the size of rebates rather than the net price of their products.
The investigation highlights the concerns of the FTC regarding artificial inflation of the list prices of insulin drugs by using anticompetitive and unfair rebating practices. The FTC alleged that these practices hampered patients' access to lower-priced drugs, ultimately shifting the cost of the inflated list prices to vulnerable patients. The commission further alleged that this practice benefited the PBMs, which were allowed to keep some or all of the inflated rebates as well as fees paid by drug manufacturers that were based on the list price.
The FTC’s settlement is expected to generate up to $8.5 billion in consumer savings over the next 10 years and $4.5 billion in additional savings for patients. The settlement delinks PBM fees from drug list prices, increases transparency and provides retail community pharmacies with the opportunity to shift to a cost-plus reimbursement model.
Under the settlement, Caremark must cease discriminating against low wholesale acquisition cost versions of drugs in its standard formularies. It must also offer plan sponsors a model under which rebates are passed through to members at the point of sale, ensuring that patients' out-of-pocket costs are based on the contracted price net of rebates rather than artificially inflated list prices. The settlement also requires Caremark to offer all plan sponsors the option to transition away from rebate guarantees and spread pricing. Caremark will also create a drug affordability program under the settlement. The settlement also prohibits Caremark from unfairly interfering with pharmacies' ability to work with hub pharmacy service providers, which help improve patients' access to affordable medications and related support services.
(FTC- 14.07.2026)
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