The FTC has accepted a settlement with CVS's pharmacy benefit manager that caps insulin copays and ends spread pricing, and a plan sponsor can contract out of most of it in writing

The remedy is a default, not a rule. That distinction is in Section XII of the proposed order, and it governs almost everything else in the document.

The Federal Trade Commission said on Tuesday that it has accepted, subject to final approval, a consent agreement from Caremark Rx and Zinc Health Services, the pharmacy benefit manager and group purchasing organisation owned by CVS Health. The agreement would settle the charges the Commission brought against Caremark in its insulin case and close the separate investigation it opened in 2023 into whether Caremark unlawfully harmed competition for pharmacy services. The analysis was filed for publication on 5 August, and comments are due 30 days after that.

The Commission sued the three largest pharmacy benefit managers in September 2024: Express Scripts, Caremark and Optum, along with their affiliated purchasing organisations. This agreement covers Caremark.

What the Commission alleges

The complaint alleges that Caremark created a system of competition that prioritises rebates over patient affordability, placing high-list-price, high-rebate versions of insulin on its standard commercial formularies while excluding low-list-price versions of the same drugs, even where the two had comparable net prices. It alleges the practice shifted the cost of inflated list prices onto patients whose payments track list price, meaning those in a deductible phase and those paying coinsurance.

The separate investigation, the Commission says, seeks to determine whether Caremark required members to use its affiliated pharmacies or coerced unaffiliated pharmacies into unfavourable terms. That inquiry reached no finding. It is being closed by the settlement rather than concluded.

None of this has been adjudicated. The Commission will decide after the comment period whether to withdraw, modify or finalise the order, and its own analysis states that the analysis is not an official interpretation of the terms.

The terms

The order would run ten years from an implementation date set no later than 1 January 2027, and a monitor would report annually to the Commission for the first three of them.

Caremark would place low-list-price versions of a drug on its four standard commercial formularies at no disadvantage to the high-list-price version, unless the cheaper version carries a higher net cost or the drug appears in the FDA shortage database. Manufacturer compensation would be delinked from list price. Rebate guarantees and spread pricing would come out of the standard offering, rebates would reach members at the point of sale, and plan sponsors would receive an annual report of each drug's costs, claim-level pharmacy reporting, and what Caremark paid consultants and brokers.

Independent pharmacies get their own standard offering. A retail community pharmacy, defined as a business with three or fewer locations, would be paid its actual acquisition cost plus a dispensing fee, paid separately for non-dispensing services, and could not be excluded if it accepts the terms. Caremark could not restrict a pharmacy from working with a digital hub, and would have to apply its audit criteria equally to CVS affiliates.

The exception that shapes the rest

Sections II, III, IV, V and VIII are all subject to Section XII. A plan sponsor or a pharmacy that asks in writing for different terms may have them, provided Caremark serves the standard offering along with a written acknowledgement that the counterparty has read and understood it, and provided the counterparty signs and returns that acknowledgement.

Read that against Section X, which requires Caremark to advertise the standard offerings, disclose them clearly in marketing material, refrain from disparaging them, and refrain from coercing anyone into different terms. Together the two sections describe a remedy that works by making the protective option the visible default and putting the burden of leaving it on the party that leaves.

One set of obligations has no such door. Fully insured health plans offered by Aetna must adopt the patient protections in Section II, and the meeting-competition exception does not reach them.