Eve Jamali | SVP, Managing Director, US Access Strategy & Analytics
Andrew Cournoyer | SVP, Head of Access Experience Team
While the ruling applies specifically to Express Scripts, its implications are systemic. It signals a broader shift toward transparency, net pricing, and patient-centered value, and away from the opaque rebate- and spread-driven models that have long defined the pharmaceutical supply chain. Moreover, this ruling affects Express Scripts' “standard formularies,” which include the national formularies offered to commercial plan sponsors. To this point, federal rulings and orders have applied to government health programs, such as Medicare and Medicaid.
But this is not a clean break. PBMs, including ExpressScripts, have seen this coming. Many have already begun adjusting their models, shifting toward pass-through rebate arrangements and exploring diversificationof revenue streams such as administrative fees, specialty pharmacy and mail-order markups, audit fees, and data monetization. Last October, the industry received a preview of this new landscape when Evernorth (Cigna’s health services division) announced its Rebate-Free Pharmacy Benefit model.
Many core components of the FTC settlement shared design elements consistent with this new benefit design, including point-of-sale pass-through rebates, cost-plus pharmacy reimbursement, and improved price transparency. This, coupled with the FTC’s latest move requiring the repatriation of Ascent, its Group Purchasing Organization (GPO), back to the U.S., introduces new complexity. It’s not just about ending one revenue stream; it’s about reconfiguring the entire architecture of PBM profitability.
For pharmaceutical manufacturers, this is not a PBM problemto watch from the sidelines. It will require manufacturers to reassess their pricing and contracting strategies, understand the impacts on channel strategy, and ultimately determine how to compete for access while keeping an eye on where the squeeze will come next. The FTC’s action, combined with mounting legislative pressure and public scrutiny, is forcing a redefinition of how value is created, measured, and monetized across the drug distribution ecosystem.
The FTC’s settlement prohibits Express Scripts from:
Moving forward, Express Scripts will need to adopt a “net price” model, in which PBM compensation is delinked from drug prices and based on flat, bona fide service fees. This aligns with broader federal mandates under the Modernizing and Ensuring PBM Accountability Act (MEPA), which imposes similar requirements across Medicare and Medicaid by 2028–2029. Additionally, we can anticipate actions by Express Scripts and Cigna to offset the revenue impacts of this business model restructuring. Beyond potentially higher service fees, Cigna’s earnings call on February 5, 2026, highlights several key initiatives it will rely on to drive additional revenue and cost savings, including biosimilar adoption, expanded specialty capabilities and services, and patient support programs.
The bundling of PBMs with insurers and specialty pharmaciesallows conglomerates to obscure the true profitability of each business unit. Internal transfers between affiliated entities and consolidated financial reporting make it difficult for regulators, plan sponsors, and manufacturers to assess the value extracted at each step of the supply chain.
While the FTC has not yet required disaggregated reporting, its findings and recommendations, including calls for clearer definitions of PBM fees and auditable data, suggest that the days of opaque, vertically integrated profit capture may be numbered.
Pharma should ask:
When asked during its earnings call whether the FTC settlement would require changes to its formulary strategy, Cigna responded: “The formulary is a bit fluid. It’s governed by clinical efficacy and comparative effectiveness.” This statement reinforces a critical truth: formulary access is shaped by the strength of a product’s clinical profile, its real-world outcomes, and its economic value to the system.
However, as with most legislative-based actions, considerable gray area exists. For example, the FTC’s first provision in the settlement states that a high-list-price drug cannot be advantaged (i.e., preferred) over a low-list-price version if available. The definitions of the settlement definelow-list price version as “same active ingredient.” This means that manufacturers will still be able to compete for preferred access by leveraging rebate contract strategies (existing or new) that win on net cost.
This example highlights the importance of a measured response, weighing each provision carefully and how it ultimately impacts existing access strategies.
To that end, the bar is rising. Success in this newenvironment will depend on the ability to deliver:
While the FTC’s PBM overhaul reshapes how Express Scripts’ standard formularies are constructed and how rebates flow, it does not change the fact that benefit design sits squarely in the hands of employers and health plans, not PBMs. A formulary determines which drugs are preferred, non‑preferred, or subject to utilization controls, and the ruling only focuses on the resulting net cost as a driver of positioning. But the “back half” of the equation carries equal (or greater) weight, in that benefit design will dictate how those tiers translate into out‑of‑pocket costs.
This decision is entirely an employer or health plan decision. Self‑insured employers have full authority to shape member cost‑sharing because they bear the financial risk. They choose how copays, coinsurance, point‑of‑sale rebate applications, and “lesser‑of” provisions are structured. Fully insured employers participate in similar decisions, but their options are mediated through the health plan’s standardized benefit design offerings. Today (prior to this settlement), many employer groups and health plans opt for custom formularies and employ their own algorithms for decision making, and this dynamic will not change as a result of this ruling.
As PBMs comply with new transparency and pass‑through requirements (some have already done so for years), employers retain full discretion over how cost‑sharing is structured, and the FTC cannot dictate those choices. In practice, real patient impact depends far less on PBM mechanics and far more on the benefit design philosophy chosen by the employer or health plan.
The FTC ruling doesn’t just change how PBMs operate; it reshapes the entire evidence, value proposition, and contracting grid. Key implications include net price exposure, heightened scrutiny of evidence, and distribution strategy considerations.
With PBMs prohibited from retaining rebates or tying compensation to list prices, the traditional rebate-for-access model is unsustainable. Manufacturers must:
With cost-plus pharmacy reimbursement and “any willing pharmacy” provisions on the horizon, manufacturers need to re-evaluate distribution strategies and diversify dispensing channels beyond PBM-owned specialty pharmacies. Some initialconsiderations on this front include:
To stay ahead of the curve, manufacturers should be asking:
The FTC’s ruling is a strategic inflection point. The traditional PBM model, built on rebate retention, spread pricing, and vertical integration, is being challenged, starting with ESI, and is expected to follow suit by the two other major PBMs.
Manufacturers that act now by auditing their exposure, retooling their contracting models, and engaging with stakeholders will be best positioned to lead in the post-rebate, net-price era. Additionally, market signals and responses should be monitored, such as the launch of Cigna’s Rebate Free Pharmacy Benefit model, slated to be rolled out among its fully-insured membership in 2027. And possibly more important, manufacturers should magnify their focus on self-insured employers who sit at the crossroad of switching to the redesigned PBM model or maintaining their custom formularies and benefit designs.
The question is no longer whether the PBM model will change. It already has. The only question that remains: Are you ready?
Stay tuned for Part 2 of our analysis, which will explore the growing influence of employer groups and at-risk payers in this redesigned PBM landscape.
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