On February 4, 2026, the Federal Trade Commission (“FTC”) announced a landmark settlement with Express Scripts, Inc. (“ESI”), resolving an administrative complaint that centered on the “rebate wall” surrounding insulin pricing. While the headlines focus on the life-saving impact for diabetic patients, the implications of this settlement reach far beyond a single class of medication and represent a fundamental dismantling of the PBM business model as we know it. For those who own and operate community pharmacies, this development signals the potential end of the opaque “spread pricing” era, and the beginning of a more predictable, cost-based reimbursement model.

At the heart of the FTC’s complaint was the allegation that ESI (alongside other major PBMs like CVS Caremark and OptumRx) created a system that incentivized high list prices. By preferencing drugs with significant rebates over those with lower net costs, the PBMs allegedly inflated their own margins while increasing the out-of-pocket burden on patients. For the community pharmacy owner, this system has long been a source of frustration, characterized by unpredictable reimbursements, “clawbacks,” and the feeling of being squeezed by middlemen who provide little transparency into how drug prices are actually determined.

The Shift to Cost-Plus Reimbursement

Perhaps the most significant victory for community pharmacies in this settlement is ESI’s commitment to transition its standard offering to a “cost-plus” model. Under this new framework, reimbursement for community pharmacies will be based on the actual acquisition cost of the drug, supplemented by a professional dispensing fee and additional compensation for non-dispensing clinical services. This is a fundamental departure from the traditional model where pharmacies often found themselves underwater on certain prescriptions due to reimbursement rates that failed to track with the rising costs of inventory.

By moving toward a model based on actual acquisition costs, the settlement aims to provide pharmacies with a more sustainable and transparent revenue stream. The FTC estimates that this shift, along with other structural changes, could bring millions of dollars in new revenue to community pharmacies annually. Further, the inclusion of compensation for “non-dispensing services” acknowledges the evolving role of the pharmacist as a clinical provider, which is a point of advocacy our firm has long supported.

Beyond Insulin: The Bigger Picture for All Drugs

While insulin served as the poster child for the FTC’s enforcement action, the settlement terms are designed to reshape how ESI handles its entire formulary. ESI has agreed to stop the practice of preferencing high-cost drugs over identical, lower-cost versions in its standard offerings. More importantly, the settlement requires ESI to “delink” its compensation from the list price of medications. When a PBM’s profit is no longer tied to a percentage of a drug’s sticker price, the incentive to drive that price upward naturally vanishes. This delinking, combined with the requirement to offer plan sponsors a way to transition off rebate guarantees, suggests a future where pharmacy reimbursement is based on the value and actual cost of the medication rather than the obscurity of back-end negotiations. For your pharmacy, this means the reimbursement you see for a wide array of brand-name and specialty medications should become more reflective of market realities and less dependent on the PBM’s internal rebate strategies.

Transparency and Regulatory Compliance

Transparency is a recurring theme throughout the settlement’s provisions. ESI is now required to provide drug-level reporting and disclose payments made to brokers who represent plan sponsors. This move aims to eliminate the “kickbacks” that have historically influenced how employers choose PBM services. Additionally, ESI will be forced to reshore its group purchasing organization (“GPO”), Ascent, from Switzerland back to the United States. Moving $750 billion in purchasing activity back to U.S. soil ensures that these operations are subject to domestic oversight and legal standards, providing a clearer view into the shell games often played with drug rebates.

The settlement also anticipates the integration of the administration’s “TrumpRx” platform, which is a direct-to-consumer marketplace. ESI has agreed to count purchases made through this platform toward a patient’s deductible and out-of-pocket maximums. This integration effectively forces ESI to recognize and compete with lower-cost, direct-to-consumer alternatives, further eroding their monopolistic control over patient choice.

Navigating the New Landscape

We view this settlement as a clear signal that the regulatory tide has turned against predatory PBM practices. For community pharmacy owners, the path forward involves closely monitoring how ESI (and eventually its competitors, who remain under FTC scrutiny) implements these “cost-plus” and “net-cost” offerings. Please understand that this transition will not happen overnight; ESI has been granted until 2027 and 2028 to fully implement various aspects of the order. However, the legal precedent is now set: the “race for rebates” is being replaced with a mandate for transparency.

As these changes take effect, your contracts and reimbursement schedules will likely undergo significant revisions. Ensuring that these new agreements accurately reflect the “actual acquisition cost” and provide fair compensation for your clinical expertise will be paramount. As such, our firm will be closely reviewing ESI’s “standard offerings” as they are released to ensure they comply with the spirit of the FTC’s order.

In the meantime, if you have questions about how this settlement affects your current pharmacy contracts or your long-term business strategy, please feel free to contact us at 212-668-0200, or via email at info@mdrxlaw.com.