“This ruling should, theoretically, lower the cost of prescription drugs. In reality, these massive companies will slow-roll their response and find other ways to hide margin. They have to – there is simply too much profit at risk.”
-Northwind CEO Phillip Berry
In September 2024, the Federal Trade Commission (FTC) filed an administrative complaint alleging anticompetitive conduct by the three largest U.S. pharmacy benefit managers (PBMs): Express Scripts (ESI), CVS Caremark, and OptumRx. The FTC’s complaint focused on how rebate-driven practices contributed to inflated prices for insulin which ultimately created financial hardship for patients.
Key findings alleged by the FTC:
- PBMs negotiated rebates and fees tied to a drug’s list price (wholesale acquisition cost), creating incentives for manufacturers to set higher list prices to obtain favorable formulary placement.
- PBMs excluded lower list price insulins from formularies or gave them less preferred placement, steering patients toward higher-rebate (and higher list price) products.
- As a result, patients were forced to pay higher out-of-pocket insulin costs even though net prices after rebates were lower.
The FTC investigation built on the broader view that PBM consolidation (~80 % of U.S. prescriptions are controlled by three PBMs) has increased their leverage in pricing and formulary design at the expense of competition, transparency and the best interest of patients.
In February 2026, the FTC and ESI reached a consent settlement resolving the agency’s claims.
Core elements of the settlement
Under the consent agreement, Express Scripts will be required to:
1. Stop preferring high list-price drugs on standard formularies when identical lower list-price versions exist.
Northwind’s formulary process is based upon the clinical merits of a medication. Should multiple medications be considered clinically equivalent, the lowest net cost is utilized as a part of the criteria to determine formulary status. In this way, both patients and health plans are provided access to the highest quality, lowest cost medications available.
Specific to Northwind’s Diabetes Clinical Blueprint program, additional resources are provided to not only to remove financial barriers to care, but to allow for the educational, social and motivational supports needed to enhance patient care. In this way, programmatic focus is on overall patient engagement, clinical outcomes and total healthcare costs, not simply micromanagement of medication utilization or unit cost.
2. Provide plan sponsors a “standard offering” where patient out-of-pocket costs are based on net drug cost, not inflated list price.
Northwind utilizes an acquisition cost-based methodology to determine pharmacy reimbursement and the resultant out of pocket cost for patients. Furthermore, it is likely that across our book of business, clients will want to alter their benefit design prior reducing the member share of benefit expense further.
Northwind has multiple clients with member share that falls below 10%. Should rebates flow directly to members at the point of sale, as opposed to back to the Plan, the effective member contribution will be further reduced which may create benefit sustainability challenges for certain clients.
3. Provide covered access to TrumpRx as part of standard offerings.
Northwind provides access to direct-to-consumer pricing as part of our adjudication process. Qualifying prescriptions are automatically screened and adjudicated at the lessor of Northwind’s allowable cost, the pharmacy’s usual and customary charge, the pharmacy’s promotional pricing or available direct-to-consumer pricing.
Members benefit from the lowest cost available, and any contribution made by members (deductible, co-insurance or copayment) is automatically included in deductible and/or out-of-pocket maximum accumulators.
Given the recent introduction and rapid evolution of TrumpRx, at this time Northwind does not have comment about this particular platform. However, Northwind is supportive of any effort to lower prescription costs for patients or employers while improving medication access.
4. Provide full access to insulin benefits through its Patient Assurance Program unless a sponsor opts out in writing.
Northwind does not have a program that is a direct equivalent to the Patient Assurance Program; however, the Northwind Member Services team provides care navigation and support through our coupon and patient assistance programming.
5. Allow plan sponsors to transition away from rebate guarantees and spread pricing models.
Rather than spread pricing and rebate guarantee models, Northwind offers full transparency for both pharmacy payments and pharmaceutical manufacturer rebates. Clients are provided full access to pharmacy pricing via claim-level utilization reports that are included with weekly invoice reports and our on-line portal which is updated daily. Manufacturer rebate reimbursement data is delivered to clients on a monthly or quarterly basis with claim level detail (including NDC) provided. Northwind has avoided offering rebate guarantees because of the inherent conflict of interest created by this model.
6. Delink PBM compensation from list prices in standard offerings.
From its inception Northwind has utilized an acquisition cost-based pricing model that is independent of Average Wholesale Price (AWP) or Wholesale Acquisition Cost (WAC or ‘list price’).
7. Increase transparency and reporting to plan sponsors, including drug-level cost data.
Please see Item #5 above.
8. Reform reimbursement to community pharmacies by basing payment on actual acquisition cost plus dispensing/clinical services compensation.
Northwind provides acquisition cost-based reimbursement (plus a professional fee) to all retail pharmacies regardless of size, affiliation or ownership structure. All pharmacies are provided with transparent tools to dispute reimbursement that is deemed to be beneath acquisition cost. Pharmacy compensation is provided on a weekly basis to speed reimbursement thus mitigating inventory carrying costs.
9. Reshore its group purchasing organization (Ascent) from Switzerland to the U.S., enhancing domestic oversight.
Northwind utilizes an independent, outside organization that is domiciled in the United States for rebate aggregation services.
10. Submit to independent monitoring and FTC oversight for compliance.
The FTC ruling is consequential but not necessarily for the reason(s) commonly cited. That it is being portrayed as ground-breaking from the standpoint of transparency or curbing poor behavior should be embarrassing to plan sponsors and advisors alike and is a disingenuous reaction from many who knew better and simply chose not to change – often for reasons of convenience or financial gain. Options, including Northwind, that provide a model free from spread pricing, formulary shell games and rebate obfuscation have existed for years.
Conclusion
What astute observers should be concerned about is the continued evolution of an already complex regulatory environment that intertwines competing state and federal regulations and reporting requirements in a way that is onerous to the point of threatening to push the very innovators of change out of the market.
While well meaning – this bevy of rules has the potential for far-reaching unintended consequences, including constraint of innovation and competition, erosion of ERISA protections and a focus of resources on risk mitigation and regulatory compliance as opposed to efforts that contribute to enhanced employer financial sustainability and patient health and well-being.
