Dive Brief:
- CVS Health has reached a proposed settlement with the Federal Trade Commission in the agency’s sweeping case against major pharmacy benefit managers for allegedly inflating the cost of U.S. insulin.
- The proposed consent agreement was disclosed Monday in a joint motion from the FTC and CVS for the company’s subsidiaries, PBM Caremark and group purchasing organization Zinc, to withdraw from the case while antitrust regulators consider the deal.
- The filing did not include the terms of the potential settlement, but analysts expect it would be similar to the deal the FTC secured with Cigna’s PBM Express Scripts earlier this year. If CVS reaches a settlement, that would leave UnitedHealth as the lone holdout in the high-profile suit.
Dive Insight:
The FTC sued the three largest drug middlemen in the fall of 2024, accusing them of driving up the cost of insulin through anticompetitive and unfair negotiating practices with pharmaceutical manufacturers. All three — CVS’ Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx — have denied the allegations. Still, Express Scripts took a deal with antitrust regulators in early February, and it appears that Caremark may be following suit.
The proposed settlement would “resolve all of the claims against the Caremark Respondents,” and has already been approved by CVS, FTC attorneys and the FTC’s competition and consumer protection bureaus, according to the filing. It still needs to be approved by FTC leadership, including Chairman Andrew Ferguson.
CVS expects the settlement process to wrap up in the next few weeks, but final terms of the deal are still pending, the company told Healthcare Dive.
Still, the settlement would likely have similar terms to the FTC’s agreement with rival PBM Express Scripts. The settlement requires Express Scripts to delink its compensation from the savings it negotiates with drugmakers, stop preferring drugs with the highest list prices and take other steps that should save patients taking insulin up to $7 billion in out-of-pocket costs over a decade, according to the FTC.
However, analysts say Express Scripts got off relatively easy, having already begun transitioning its business towards a rebate-free model. Cigna executives reassured investors in the days after the deal was announced that the settlement shouldn’t affect the company’s profits.
CVS is likely in a similar boat.
“We don’t anticipate any financial penalty, and with CVS already moving to a transparent cost-plus model over the next few years, we don’t believe anything agreed to with the FTC would be materially different from what CVS has proposed,” J.P. Morgan analyst Lisa Gill wrote in a note on Tuesday. “If the settlement is similar, we broadly view these as manageable and, importantly, not larger in scope than the changes CVS was already implementing.”
“We are pleased to have a proposed settlement agreement in place with the FTC staff. The agreement represents a path forward that builds upon initiatives we have implemented over the past few years,” a CVS spokesperson said, citing Caremark initiatives to lower prescription drug costs, improve access and enhance price transparency.
