Recent pharmacy settlements with federal regulators are expected to meaningfully lower medication costs for millions of Americans through concrete restrictions on how pharmacies set prices and handle insurance rebates. In February 2026, the Federal Trade Commission secured a landmark settlement with Express Scripts, the nation’s largest pharmacy benefit manager, that will prohibit the company from deliberately keeping lower-cost drugs off insurance formularies to maximize rebate harvesting. More significantly, the settlement expands caps on insulin out-of-pocket costs to $25 per month for most insured patients—a direct reduction that applies to one of the most expensive medications Americans regularly purchase.
These settlements represent a shift in how federal regulators are addressing drug pricing, moving beyond abstract rules to require specific cost reductions. A patient currently paying $80 per month for insulin through their insurance, for example, could see that cost drop to $25 immediately upon the settlement’s implementation. Across the country, the insulin cost cap alone is projected to save patients up to $7 billion over the next ten years.
Table of Contents
- How Pharmacy Benefit Managers Have Been Driving Up Drug Costs
- What the Express Scripts Settlement Means for Insulin Patients
- Medicare’s Aggressive New Drug Price Negotiation Program
- How These Changes Affect Community Pharmacies and Patient Access
- Caremark Settlement and Additional Protections Against Unfair Pharmacy Practices
- Timeline for When Cost Reductions Take Effect
- Who Benefits and What to Do if Your Costs Don’t Drop
How Pharmacy Benefit Managers Have Been Driving Up Drug Costs
Pharmacy benefit managers—often called PBMs—sit between patients, insurers, and pharmacies, controlling which drugs get covered and at what price. For decades, they’ve used a practice called “rebate harvesting,” where they deliberately exclude cheaper generic drugs from insurance formularies to steer patients toward higher-cost brand-name drugs that generate larger rebates from manufacturers. The PBM keeps part of that rebate, creates a financial incentive to avoid lower-cost options, and the patient ends up paying higher out-of-pocket costs. Express Scripts’ settlement specifically bans this practice.
The FTC determined that Express Scripts had systematically excluded low-cost drugs from standard insurance plans to maximize rebate revenue, directly harming patients who had no way to know their insurance plan was steering them toward more expensive alternatives. Under the new rules, Express Scripts must structure its pharmacy networks and drug formularies in ways that don’t artificially favor higher-cost medications. When Express Scripts recommends or includes a drug on a formulary, it must do so based on therapeutic value and cost-effectiveness, not rebate size. The settlement also requires transparent payment to community pharmacies using a straightforward formula: the actual acquisition cost of the drug plus a reasonable dispensing fee. This prevents PBMs from squeezing independent pharmacies with opaque pricing that varies widely based on proprietary negotiations.
What the Express Scripts Settlement Means for Insulin Patients
Insulin users have faced some of the steepest price increases in the American healthcare system, with costs tripling over the past decade even as the insulin formulations themselves haven’t fundamentally changed. Many patients with insurance have been forced to choose between their diabetes medication and groceries, often trying to stretch out doses to make insulin last longer—a medically dangerous practice that leads to hospitalizations and complications. The settlement expands the Patient Assurance Program, which caps insulin out-of-pocket costs at $25 per month for patients with employer health plans or individual marketplace insurance. This applies to all FDA-approved insulin products and covers rapid-acting, long-acting, and combination insulins.
The cap is automatic for most patients unless their employer or plan explicitly opts out, meaning patients won’t have to jump through extra steps to access the lower price. For a patient taking four vials of insulin per month at a typical pharmacy price of $300 per vial before insurance, the difference is dramatic: instead of paying $80–$150 out of pocket on a standard high-deductible plan, they’ll pay $25. One important limitation: the $25 cap applies only to insulin products with already-existing rebate agreements. Newer insulin formulations or future products not yet covered by rebate arrangements might not qualify, though regulators are likely to extend the protection as new options enter the market.
Medicare’s Aggressive New Drug Price Negotiation Program
Separate from the pharmacy settlement landscape, Medicare implemented a drug price negotiation program in 2026 that directly negotiates prices with manufacturers for the costliest drugs. The program covers ten drugs in its first year, with additional drugs scheduled for negotiation in subsequent years. The negotiated prices achieve discounts of 38 to 79 percent off list prices—far steeper than the modest reductions typically negotiated by insurers. For beneficiaries with Medicare Part D coverage, these negotiated prices translate into projected savings of $1.5 billion across the Medicare population in 2026 alone.
If a cancer drug’s list price is $15,000 per month and negotiators secure a 50 percent discount, Medicare beneficiaries will pay based on that $7,500 price point rather than the full list price. While patients’ actual out-of-pocket costs depend on their specific plan and deductible, the lower negotiated price reduces the overall pool from which their copayments and coinsurance are calculated. The 10 drugs selected for the first negotiation cycle are among Medicare’s highest-spending medications, including treatments for diabetes, heart disease, cancer, and autoimmune conditions. This is meaningful because these drugs represent the medications where seniors have the least financial flexibility; they’re life-sustaining or disease-modifying, and patients can’t simply choose not to take them.
How These Changes Affect Community Pharmacies and Patient Access
While large chains like CVS and Walgreens operate under massive PBM contracts, small independent pharmacies have been squeezed hardest by opaque PBM payment structures. The Express Scripts settlement requires transparent, formula-based payment to all contracted pharmacies, which strengthens the financial viability of community pharmacies. Some independent pharmacies have closed in recent years specifically because PBM reimbursements fell below their acquisition costs, forcing them to lose money on every filled prescription. With guaranteed minimum payments based on actual acquisition cost plus dispensing fee, community pharmacies are projected to receive millions in new annual revenue.
This matters for patient access because independent pharmacies often provide services that chains don’t: extended hours, personalized counseling, medication therapy management, and services for patients in underserved rural areas. When these pharmacies close, patients—especially elderly patients—lose convenience and personalized care. However, there’s a tradeoff. The settlement requires community pharmacies to maintain adequate staff and hours, and some may still face pressure from other cost factors unrelated to PBM reimbursement, such as rising property taxes or labor costs. The settlement doesn’t fix every structural problem facing independent pharmacies, only the specific problem of unfair PBM payment practices.
Caremark Settlement and Additional Protections Against Unfair Pharmacy Practices
In July 2026, just months after the Express Scripts settlement, the FTC secured a similar settlement with Caremark Rx LLC and its subsidiary Zinc Health Services LLC, the second-largest PBM in the country. Caremark agreed to adopt business practice changes aimed at reducing out-of-pocket costs for patients and ensuring that community pharmacies are paid fairly and have genuine access to insurance networks. The Caremark settlement contains many of the same core protections as the Express Scripts case: prohibiting deliberate formulary exclusions designed to harvest rebates, requiring transparent pharmacy payments, and ensuring that lower-cost therapeutic alternatives are actually available to patients.
However, Caremark’s specific conduct involved additional issues around how it prioritized mail-order pharmacies it owned and operated, creating artificial incentives for patients to use the company’s own facilities rather than independent community pharmacies. The settlement restricts these self-dealing arrangements. These parallel settlements signal that the FTC is willing to pursue multiple large PBMs simultaneously, suggesting that similar enforcement actions or remedies may follow against other major PBMs. The settlements also establish a clear legal standard: PBMs cannot design their networks and formularies primarily to maximize corporate profits through rebates if that design directly harms patients.
Timeline for When Cost Reductions Take Effect
The Express Scripts settlement became effective in early 2026, meaning the $25 insulin cap and rebate-harvesting prohibitions are in force now. Patients with existing insulin prescriptions should already see the reduced copay reflected on their next fill if their plan is subject to the Patient Assurance Program. The pharmacy payment reforms requiring transparent formulas are also in effect, though independent pharmacies have been gradually implementing the new payment structures.
For Medicare beneficiaries, the negotiated drug prices took effect on January 1, 2026, so those savings are already available to people with Part D coverage. Patients don’t need to take any action to access these discounts; they’re automatic when the prescription is filled. Plans will adjust patient cost-sharing based on the new negotiated prices, typically reducing copayments or coinsurance for the affected drugs.
Who Benefits and What to Do if Your Costs Don’t Drop
The insulin cost cap applies to patients with employer health plans, individual marketplace insurance, or other private health coverage. Medicaid beneficiaries and uninsured patients are covered under different programs and aren’t directly affected by this settlement. If you have commercial insurance and take insulin, you should see the $25 cap automatically applied; if you don’t, contact your insurer or pharmacist to verify that your plan is compliant with the settlement.
For Medicare beneficiaries, the negotiated drug prices apply only to the ten drugs initially selected for negotiation. If you take one of these drugs, you’ll benefit from lower negotiated prices. If you take a different high-cost drug, the negotiation program doesn’t yet apply to your medication, though additional drugs are scheduled to enter the program in future years. Patients can check whether their specific medications are included by reviewing the CMS negotiated prices list or asking their pharmacist.
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