Earlier today, the Federal Trade Commission (FTC) announced an extraordinary settlement with Express Scripts that fundamentally reshapes its pharmacy benefit management (PBM) business—and by extension, the entire drug channel.
The settlement addresses virtually every warped incentive that we have been covering on Drug Channels for the past 20 years. I summarize them below, but it’s worth reading the full document (links below) to appreciate just how completely the FTC has dismantled the existing PBM business model.
One small caveat: Plan sponsors could provide a loophole for business-as-usual. (See Section XI.)
But as I predicted in the Drug Channels Outlook 2026 webinar, we are entering the Net Pricing Drug Channel (NPDC) era.
William Gibson once said: “The future is already here–it’s just not evenly distributed.” That future just arrived for one of the biggest PBMs. Get ready.
Here are the FTC documents, which are definitely worth your time:
Here’s a concise summary of the key changes ahead for Express Scripts:
- Its standard formulary can no longer favor high WAC drugs over low WAC alternatives
- Patient out-of-pocket costs will be based on net price, not list price
- Plans and beneficiaries have access to direct-to-consumer pricing via TrumpRx
- Point-of-sale rebates must be passed to patients
- Manufacturer’s fees must be delinked from list prices
- Plan sponsors will get substantially more transparency
- Retail pharmacies will receive cost-plus reimbursement
- The Ascent Health Services GPO will move from from Switzerland to the US!
It’s hard to overstate just how dramatically these actions will alter benefit management for patients, plan sponsors, pharmacies, manufacturers, and every PBM competing with Express Scripts.
And this is not a toothless state law. The parties agreed to specific timelines, e.g., “as soon as commercially feasible but no later than January 1, 2028.” There will also be a formal monitor and mandatory compliance reports.
Taken together, these actions signal major momentum toward the Net Pricing Drug Channel (#NPDC)—a market environment in which net prices, not list prices, determine access, economics, and competitive strategy. I look forward to hearing Cigna’s commentary on tomorrow’s Q4 earnings call.
The FTC settlement will help reset the relationship between list and net prices, lower patient costs, and trigger sweeping changes for plan sponsors, pharmacies, manufacturers, and Express Scripts’ PBM competitors.
One major open question: Will the “Meeting Competition” clause (Section XI) provide wiggle room for Express Scripts to make minimal changes due to plan sponsors’ demands?
Perhaps the only downside is that it’s almost time to bid farewell to SpongeBob SquarePants, the honorary mascot of the gross-to-net bubble. As we all know: I suspect Mr. SquarePants is ready for a major shake-up to the current rebate and market access system.
