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FTC Secures Landmark Settlement with Express Scripts Over Insulin Costs
The Federal Trade Commission (FTC) has reached a settlement with Express Scripts, a major pharmacy benefit manager (PBM) owned by Cigna, allowing the company to exit a lawsuit alleging inflated insulin costs. The agreement requires notable changes to Express Scripts’ buisness practices, aiming to lower drug costs for American patients.
Key Changes in the Settlement
Under the terms of the settlement, Express Scripts has agreed to:
- Reformulate Drug Benefit Designs: The company will no longer prioritize drugs with higher list prices on its standard formularies when cheaper alternatives are available.
- Delink Compensation: Express Scripts will separate its compensation from the savings it negotiates with drug manufacturers. This aims to eliminate incentives to favor higher-cost drugs.
- Increase Transparency: The PBM will report more data on drug spending and disclose any financial incentives received from brokers who influence employer PBM choices.
- Reshore Group Purchasing Association: Express Scripts will move its group purchasing organization, Ascent, from Switzerland back to the United States.
Addressing Group Purchasing Organizations (GPOs)
GPOs aggregate PBMs’ members to negotiate with drugmakers.They have been criticized for perhaps facilitating practices that allow PBMs to retain larger drug rebates as profit. Bringing Ascent back to the U.S. is intended to increase oversight of these organizations, as currently no major gpos are headquartered domestically.
Projected Cost Savings and Pharmacy Reimbursement
The FTC estimates the settlement could lower patients’ out-of-pocket costs for drugs like insulin by up to $7 billion over a decade.Express Scripts will also transition its pharmacy reimbursement model to a cost-plus system, which is expected to generate millions of dollars in new revenue for community pharmacies.This transition was already underway, as reported by Healthcare Dive.