Aniket Pujari(Bloomberg) — Cigna Group’s Express Scripts reached a settlement with federal antitrust enforcers to resolve allegations that the company artificially inflated the price of insulin for patients through illegal rebate tactics.
The Federal Trade Commission — which filed suit in 2024 — said in a statement Wednesday that Express Scripts would change how it calculates prices for its list of approved drugs. Cigna is one of three pharmacy benefit managers that together control about 80% of prescriptions filled in the US.
The lawsuit against the other two companies, units of CVS Health Corp. and UnitedHealth Group Inc., remains ongoing. Last month, the FTC paused the case to allow the agency to engage in settlement talks with the three companies. A hearing scheduled for Thursday has now been cancelled.
The settlement removes one overhang for Cigna’s Express Scripts, the country’s largest pharmacy benefit manager. The company recently signaled a series of changes to its drug benefit plans that executives called a fundamental business model shift. That includes phasing out many drug rebates, the subject of the FTC’s case. It’s part of a series of changes intended to get ahead of regulation and dispel concerns from investors about risks from Washington.
Cigna shares were up 1.2% at 12:37 p.m. in New York. CVS stock dipped on the news and was down less than 1%. UnitedHealth shares were down 3%.
“As enforced by the settlement, our new, transparent pharmacy benefits model ensures our members get their medicines at the lowest price,” Express Scripts said in an emailed statement.
The company will also offer coverage for drugs on TrumpRx, the Trump administration’s website for direct to consumer drug sales, “upon relevant legal and regulatory changes,” according to the FTC. That website was originally due to launch in January but hasn’t yet.
The settlement contains no monetary penalty for Cigna, which didn’t admit to any liability in the case. Under the agreement, Cigna will standardize plan options to make sure members’ costs are based off net prices of medications, not the higher list prices before discounts and rebates, according to the FTC. It will also stop preferring higher list price drugs over identical ones with lower list prices, the agency said, and agreed to pay retail pharmacies based on their actual costs to purchase medications.
Cigna will also move its group purchasing organization, Ascent Health Services, from Switzerland to the US, the FTC said. Purchasing groups that Cigna and its rivals formed in recent years added new layers to the drug supply chain. The companies, which were also named in the FTC lawsuit, have come under scrutiny from regulators for taking payments from drug manufacturers, potentially driving up costs.
Cigna has already announced a series of changes to its traditional pharmacy benefit model. Late last year, the company said it would end rebates in many private drug plans. Critics say those payments from drugmakers, made to middlemen after a prescription is filled, drive up prices and increase costs for patients at the pharmacy counter.
The decision to phase out rebates spooked investors and sent Cigna shares on their worst selloff since 2008. The company recently said changes to the PBM model would lower earnings by up to $600 million next year.
‘Historic’ Settlement
FTC Chair Andrew Ferguson hailed the settlement as “historic,” saying in a thread on the website X that, “today’s settlement is a huge step toward lowering prescription drug costs.”
The FTC sued Cigna, CVS and UnitedHealth in 2024 during the Biden administration, alleging that the companies made it harder for patients to get lower-cost versions of insulin. It’s part of a broader effort by Washington to scrutinize the role of pharmacy benefit managers, businesses that influence which drugs patients can and cannot get at the pharmacy.
Ferguson was the sole FTC commissioner to vote in favor of the settlement; his colleague, Mark Meador, was recused because of his previous work in private practice.
The FTC said the settlement would reduce out-of-pocket costs for prescription drugs for American patients by $7 billion over the next 10 years, without providing information about how that was calculated.
(Updates with Cigna comment in sixth paragraph.)
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