Express Scripts, FTC Settle Landmark Insulin Lawsuit

The FTC's landmark settlement forces Express Scripts to overhaul its PBM practices, including stopping the preference of expensive drugs over cheaper insulin on formularies.

The U.S. Federal Trade Commission has announced Express Scripts settlement, the pharmacy benefit manager PBM practices,  owned by Cigna, resolving a major lawsuit alleging the PBM's practices unfairly inflated insulin costs. The agreement, finalized Wednesday, mandates sweeping, structural changes to how the nation's largest PBM operates its drug formularies.

The FTC's core allegation was that Express Scripts structured its standard formularies to prefer higher-priced insulin and other drugs over cheaper, therapeutically equivalent alternatives. This practice, the agency argued, drove up costs for patients and plan sponsors while maximizing the PBM's own revenue through rebates and fees.

Under the settlement's terms, Express Scripts is now prohibited from placing more expensive drugs on preferred formulary tiers when cheaper, clinically equivalent options are available. The PBM must also eliminate "rebate traps" and other contract clauses that lock plans into paying for higher-cost medications. A key enforcement provision includes the appointment of an independent, third-party monitor for the next ten years to ensure compliance.

"This settlement changes the rules of the game for the entire PBM industry," said an FTC official. "It directly attacks the perverse incentives that have kept list prices especially for life-saving drugs like insulin artificially high for years."

The case stems from the FTC's broader investigation into PBM business practices and their impact on drug pricing. While Express Scripts did not admit to wrongdoing, the company agreed to the operational overhaul and a $1.5 billion financial penalty. In a statement, the PBM said it is "committed to enhancing transparency and delivering savings" and will implement the required changes.

Healthcare advocates hailed the agreement as a potential turning point for drug affordability. Industry analysts predict the mandated changes will pressure other major PBMs to proactively adjust their formulary management practices, potentially lowering out-of-pocket costs for millions of Americans with diabetes and other chronic conditions.