FTC Reaches Landmark Settlement with Express Scripts to Cut Drug Costs

The Federal Trade Commission (FTC) has secured a settlement with Express Scripts, Inc. (ESI), a large pharmacy benefit manager (PBM). The agreement mandates significant changes to ESI's business practices.

These changes are projected to reduce patients' out-of-pocket drug costs, including for insulin, by up to $7 billion over 10 years and generate new revenue for community pharmacies.

Allegations Against Express Scripts

The FTC's lawsuit alleged that ESI artificially inflated insulin drug list prices through anticompetitive and unfair rebating practices. This system reportedly impaired patient access to lower list price products, thereby shifting the burden of high insulin costs directly to patients.

The complaint further stated that PBMs, including ESI, created a system where they directly benefited from inflated rebates, with patient out-of-pocket payments often tied to the higher list price.

Key Terms of the Consent Order

Under the proposed consent order, ESI has agreed to implement several crucial modifications to its operations:

• Cease preferring high wholesale acquisition cost (WAC) versions of a drug over identical low WAC versions on its standard formularies.
• Offer plan sponsors an option where members' out-of-pocket expenses are based on the drug's net cost rather than its list price.
• Provide full access to its Patient Assurance Program’s insulin benefits to all members when a plan sponsor adopts an insulin product covered by the program, unless the plan sponsor opts out.
• Offer plan sponsors the ability to transition away from rebate guarantees and spread pricing.
• Delink drug manufacturers' compensation to ESI from list prices in its standard offering.
• Increase transparency for plan sponsors through mandatory, drug-level reporting, data provision for Transparency in Coverage regulations compliance, and disclosure of payments to brokers.
• Transition its standard offering to retail community pharmacies to a transparent model based on actual drug acquisition cost plus a dispensing fee and compensation for non-dispensing services.
• Promote these standard offerings to plan sponsors and retail community pharmacies.
• Relocate its group purchasing organization (GPO), Ascent, from Switzerland to the United States, representing over $750 billion in purchasing activity.

Commission Vote and Public Comment

The Commission voted 1-0 to accept the consent agreement for public comment, with Commissioner Meador recused. The public will have 30 days to submit comments on the proposed agreement.