In FTC Settlement, Cigna Agrees to Change Some PB...

[

](https://substackcdn.com/image/fetch/$s_!HzDF!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F2a6f49a8-42c8-4dab-8391-94fe33956385_1152x648.gif)

Cigna has agreed to settle a major federal lawsuit filed against its subsidiary Express Scripts, which alleged it inflated the cost of insulin prices through secretive and nontransparent deals with drug manufacturers.

The Federal Trade Commission (FTC) filed lawsuits against the country’s three largest pharmacy benefit managers in 2024, also roping in CVS Caremark and UnitedHealth’s PBM Optum Rx. Cigna was the first of the three to settle and agreed to several demands by the feds.

HEALTH CARE un-covered is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.

Chief among those demands was that Cigna must offer the lower-cost version of drugs instead the one that provided the most profit.

The FTC has maintained its goal is to lower pharmacy drug prices for patients, insurers and small pharmacies.

Andrew Ferguson, the head of the FTC, heralded the settlement as a win for consumers.

“For years, out-of-pocket costs for patients were driven by artificially high list prices and convoluted rebate games,” Ferguson posted on the social media platform X. “That ends with this settlement. Now, out-of-pocket costs for American patients will now be set by net drug prices.”

Ferguson said the FTC’s analysis shows that patients will save as much as $7 billion in savings on insulin alone in the next 10 years under the terms of the settlement.

While the FTC was boasting about the regulatory reforms, Cigna’s investors didn’t seem worried about any headwings upending its profits. The stock was trading up more than 3 percent in the hours after the news.

“Our priority is simple: lowering drug costs for Americans. This settlement enables us to keep moving forward, and we appreciate the Administration’s reinforcement of our commitment to pharmacy benefits that put Americans first,” Express Scripts said in a statement.

The settlement comes as pharmacy benefit managers (PMBs) are coming under heavier scrutiny by the federal government for their practices as middlemen in the drug supply chain.

Thanks for reading HEALTH CARE un-covered! This post is public so feel free to share it.

The three largest PBMs, Express Scripts, CVS Caremark and Optum Rx, control more than 80 percent of all prescriptions filled in the United States. Critics, pharmacists, drug manufacturers and elected officials have all accused the PBMs of creating an opaque system that allows them to manipulate the costs Americans pay for drugs.

Negotiations between the FTC and the other PBMs are ongoing but the hope among health care reform advocates is that the settlement with Express Scripts is a watershed moment for PBM reforms.

“The (FTC) just did something extraordinary” Chris Deacon, an attorney, author, health care reform advocate and former director for the New Jersey treasury department, said in response to the settlement. “It forced a structural rewrite of how the PBM operates and, in doing so, appears to expose what has always been a business choice rather than a business necessity for PBMs.”

Key provisions in settlement are:

Lower drug costs for patients

Stop choosing expensive versions of drugs over cheaper, identical ones just because they look better on a balance sheet.
Calculate what a person pays at the pharmacy based on the real cost of the drug, not a fake “list price” that has been marked up.
Make sure more people can use the “Patient Assurance Program” to keep insulin costs low and predictable.

Transparency for employee health care plans

Give employers the option to move away from “spread pricing” (where the middleman pockets the difference between what they pay and what they charge).
Provide clear, line-by-line reports showing exactly where the money is going, including what they are paying brokers.
Stop tying the middleman’s pay to the high list prices set by drug manufacturers.

Help local pharmacies

Switch to a “cost-plus” model for community pharmacies. This means paying them based on what the drug actually cost them to buy, plus a fair fee for their services.

Structural changes

Move their massive purchasing organization (Ascent) from Switzerland back to the United States, which keeps hundreds of billions of dollars in economic activity within the country.
Add “TrumpRx” to their offerings if and when the law allows for it.

There will be a 30-day public comment period on the settlement package before it moves toward final settlement. Those who wish to weigh-in on the settlement can do so at Regulations.gov.

Luke Sullivan has been an investigative reporter for 22 years. Part of The Columbus Dispatch Side Effects investigative team that exposed pharmacy benefit managers. Ohio State graduate. Girl Dad.