CVS Caremark reaches settlement with FTC over insulin suit

 CVS Health’s Caremark has reached a settlement with the Federal Trade Commission requiring notable changes to the pharmacy benefit manager’s business practices, including that Caremark prefer the lowest-cost drugs on its standard formularies and pass through savings negotiated with drugmakers to clients.

The settlement announced by the FTC on Tuesday puts to bed regulators’ allegations that Caremark preferred more expensive versions of insulin in order to increase its rebates, driving up prices for the lifesaving diabetes drug. The FTC lodged the suit against Caremark, along with fellow PBM giants Express Scripts and Optum Rx, in 2024.

Express Scripts settled with the FTC in February while Optum Rx is still finalizing an agreement with the antitrust agency.

The terms of CVS’ settlement are very similar to those secured with Express Scripts. The deal prevents the drug middleman from discriminating against cheaper drugs in its standard formularies for commercial clients, and requires it to provide a standard offering to plan sponsors that doesn’t include rebates.

It requires Caremark to include any purchases a patient makes through TrumpRx, President Donald Trump’s online drug marketplace, towards the deductible in certain health plans, once regulatory changes make that possible. The settlement also includes a number of transparency provisions.

However, the CVS deal includes a new wrinkle meant to assuage concerns that the healthcare behemoth leverages its market power to prevent independent pharmacies from working with rival pharmacy hubs, third-party companies that provide a range of digital pharmacy services.

The settlement prevents CVS from foreclosing hub service providers, and will create a monitor to ensure its compliance, according to the FTC.

In a statement, FTC Chairman Andrew Ferguson said the deal will “billions in real savings to consumers feeling the pinch from excessive prescription drug prices.” Ferguson was the sole member to approve the settlement after Commissioner Mark Meador recused himself from the vote.

Specifically, the FTC estimates the settlement will save consumers up to $8.5 billion over the next decade, and another $4.5 billion from passing through rebates at the point of sale alone.

Drug supply chain experts have applauded the deals, which have the potential to reshape how pharmacy benefits are delivered in the U.S. Together, Caremark, Express Scripts and Optum Rx control about 80% of all prescriptions in the country, so reforms to their business practices have an outsized impact on U.S. patients, experts say.

Of particular benefit is the settlements’ potential to accelerate the industry’s shift away from rebate models, which critics argue incentivize drugmakers to artificially inflate the list prices of drugs and obfuscate pharmaceutical spending for U.S. employers.

Despite the expected benefits, the settlements aren’t expected to eat into the PBMs’ profits. The CVS settlement, like Express Scripts’, does not include monetary penalties. Moreover, Caremark, Express Scripts and Optum Rx have been voluntarily moving towards rebate-free models in reaction to the legislative and regulatory animus against them.

All three companies have also taken steps to patch up their relationships with independent pharmacies, amid worries that PBM business practices are driving unaffiliated pharmacies out of business.

The settlements might even benefit the companies by preventing more drastic regulatory or legislative action down the line, according to analysts.

In a statement on its website, CVS noted the settlement “eliminates the need for ongoing litigation and investigations and allows CVS Caremark to remain focused on delivering more value for American consumers and employers, lowering prescription drug costs, increasing transparency, and helping customers deliver affordable health care to the people they serve.”

“Today’s agreement advances and reinforces the changes we have already put in place and ensures affordability for families and patients across the country,” Caremark President Ed DeVaney said.

https://www.healthcaredive.com/news/cvs-caremark-ftc-settlement-insulin-suit/825224/