The FTC’s complaint rests on several interrelated antitrust theories with significant implications for pharmacy and life sciences companies.

On July 14, 2026, the Federal Trade Commission (FTC) announced a settlement with Caremark Rx LLC and Zinc Health Services LLC (together, Caremark) in the agency’s administrative case against the nation’s three largest pharmacy benefit managers (PBMs). Under the terms of the settlement, Caremark agreed to make certain structural changes to its pharmaceutical pricing and reimbursement practices. The FTC estimates the Caremark settlement will “lock in” up to $8.5 billion in consumer savings over the next 10 years and “unlock” as much as an additional $4.5 billion in savings from point-of-sale rebates over the same period.

Key Takeaways

• The Caremark settlement reflects a significant antitrust enforcement action targeting vertical integration and exclusionary conduct in the healthcare industry, signaling increased regulatory scrutiny of practices that may foreclose competition in pharmaceutical distribution channels.
• Under the settlement, Caremark must restructure its drug pricing and pharmacy compensation practices, pass negotiated discounts to patients, cap out-of-pocket costs on insulin and stop blocking pharmacies from using third-party patient assistance services.
• The hub pharmacy prohibitions and cost-plus reimbursement requirements directly address concerns about vertically integrated PBMs disadvantaging independent and specialty pharmacies.
• The resolution of all three PBM cases through consent orders—following the Express Scripts settlement in February 2026 and Optum’s pending consent agreement—suggests industrywide acceptance that these practices face sustained opposition from regulators.

Background

In September 2024, the FTC brought an administrative action against the nation’s three largest PBMs—Express Scripts, Caremark Rx and OptumRx—and their affiliated group purchasing organizations (GPOs) alleging violations of Section 5 of the FTC Act. Together, these three PBMs administer approximately 80 percent of all prescriptions in the United States.

The FTC alleged that the PBMs created a rebate system prioritizing high rebates from drug manufacturers, leading to artificially inflated insulin list prices. Beginning around 2012, the three PBMs allegedly threatened to exclude drugs from their formularies to extract higher rebates in exchange for favorable placement. These practices benefited the PBMs—which retained some or all of the inflated rebates and list-price-based fees—while harming patients whose out-of-pocket payments are tied to list prices.

Antitrust Theories and Legal Framework

The FTC’s complaint rests on several interrelated antitrust theories with significant implications for pharmacy and life sciences companies.

Section 5 Unfair Methods of Competition

The FTC brought this action under Section 5 of the FTC Act, which prohibits “unfair methods of competition” without requiring proof of monopoly power or anticompetitive agreements. Rather than alleging that any single PBM monopolized a relevant market, the FTC challenged the collective impact of similar practices adopted by three dominant firms controlling 80 percent of the market.

Exclusive Dealing and Foreclosure

The FTC alleged that PBMs used formulary placement decisions to extract exclusionary rebate arrangements from drug manufacturers. By conditioning formulary access on rebate terms that disadvantaged lower-cost alternatives, the PBMs allegedly foreclosed competition in drug pricing and distribution. Arrangements tying market access to pricing concessions may face heightened scrutiny.

Vertical Integration and Self-Preferencing

The hub pharmacy provisions target CVS Health’s vertically integrated structure, under which Caremark allegedly advantaged CVS’s own specialty pharmacy and hub services over independent competitors. This “self-preferencing” theory—familiar from recent technology sector enforcement—reflects concerns that vertically integrated firms may foreclose competition at other levels of the supply chain.

Market Allocation

Although the complaint did not allege explicit horizontal agreements among the three PBMs, the FTC’s theory suggested that parallel conduct by oligopolists adopting similar practices that harm downstream participants can itself constitute an unfair method of competition—even absent coordination.

Key Settlement Terms

Specifically, under the FTC’s proposed consent order, Caremark has agreed to:

• Cease discrimination against lower-cost drug versions. Caremark must stop discriminating against low wholesale acquisition cost versions of a drug on its standard drug coverage lists.
• Pass through rebates at point of sale. Caremark must provide a standard offering to its plan sponsors that ensures members’ out-of-pocket expenses will be based on the drug’s net cost, rather than its inflated list price.
• Cap insulin costs. Caremark must create or maintain drug affordability programs that cap members’ out-of-pocket costs on insulin.
• Support TrumpRx integration. Caremark must provide covered access to “TrumpRx” as part of its standard offering upon relevant legal and regulatory changes.
• Eliminate spread pricing. Caremark must provide a standard offering to all plan sponsors that allows them to transition off rebate guarantees and spread pricing.
• Delink fees from list prices. Fees paid by drug manufacturers to Caremark or its affiliated GPOs must be delinked from list prices in the standard offering.
• Increase plan sponsor transparency. Caremark must increase transparency for plan sponsors, including with mandatory, drug-level reporting, providing data to permit compliance with transparency-in-coverage regulations and disclosing payments to brokers representing plan sponsors.
• Protect community pharmacies. Caremark’s standard offering must give contracted retail community pharmacies the option to choose a cost-plus reimbursement model (i.e., reimbursement based on the pharmacy’s actual drug acquisition cost plus a dispensing fee).
• Prohibit interference with hub pharmacy services. Caremark is prohibited from unfairly interfering with the ability of pharmacies in its networks to work with pharmacy hub service providers—third-party services that help patients access and afford their medications. This prohibition will be backed by a monitor empowered to receive complaints about and review actions taken against pharmacies using hub pharmacy services.

The FTC has provided the public 30 days to submit comments on the proposed consent agreement package.

Implications and Compliance Guidance for Pharmacy and Life Sciences Companies

The Caremark settlement has distinct implications for participants across the pharmaceutical supply chain, and each should take specific steps to evaluate exposure and mitigate risk.

Specialty Pharmacies

Specialty pharmacies face acute exposure to the practices addressed in this settlement. The hub pharmacy provisions directly target arrangements that have historically advantaged PBM-affiliated pharmacies over independent competitors. Specialty pharmacies that have experienced exclusion from PBM networks, interference with hub services relationships or below-cost reimbursement should document these practices carefully. Such documentation may support complaints to the hub pharmacy monitor, state regulatory filings or private antitrust litigation.

Independent and Community Pharmacies

The cost-plus reimbursement option addresses longstanding concerns about below-cost reimbursement. Independent pharmacies should evaluate whether to exercise this option once available, while recognizing that the settlement covers only Caremark—similar relief from Express Scripts and Optum depends on those separate proceedings. Pharmacies should also monitor state PBM reform legislation for additional protections.

Pharmaceutical Manufacturers and Distributors

The settlement’s restrictions on rebate structures signal that regulators view current rebating practices as fundamentally distortive. Manufacturers relying on rebate arrangements to secure formulary placement should anticipate PBMs seeking alternative contracting structures and should evaluate whether existing arrangements could be characterized as exclusive dealing that forecloses competition.

Hospitals and Health Systems

Hospitals operating outpatient pharmacies, infusion centers or specialty pharmacy services face similar competitive dynamics. The hub services prohibition has direct relevance to hospital pharmacies working with third-party patient assistance programs, and systems that have experienced PBM steering may have claims based on the same vertical integration theories underlying this settlement.

Audit Existing PBM and GPO Arrangements

Companies should review their agreements with PBMs and GPOs to identify provisions raising concerns under the FTC’s theories, including rebate claw back provisions, exclusionary formulary terms, spread pricing arrangements and restrictions on working with competing service providers.

Document Anticompetitive Conduct

Market participants that have experienced exclusionary treatment should systematically document the conduct and its competitive effects—evidence of below-cost reimbursement, network exclusion, steering or interference with third-party services is particularly relevant for complaints, regulatory filings or litigation.

Evaluate Alternative Contracting Structures

As PBMs restructure their offerings, pharmacies should evaluate whether cost-plus reimbursement and pass-through rebate models are economically advantageous, modeling the financial impact of different options.

Assess Vertical Integration Risks

Vertically integrated companies should assess whether their structure or practices give them both the incentive and ability to favor their own products or services over rivals’ offerings, potentially foreclosing competition among upstream suppliers, downstream distributors or both.

Monitor State Regulatory Developments

State-level PBM reform legislation continues to proliferate. Companies operating in multiple states should ensure compliance with emerging requirements, which may exceed the federal settlement’s terms.

Consider Private Litigation Options

The FTC settlement does not preclude private antitrust litigation. Pharmacies and other market participants that have suffered competitive injury may have viable claims under federal or state antitrust laws, and the FTC’s findings may provide useful evidence.

Looking Ahead

The Caremark settlement represents a watershed moment in PBM antitrust enforcement. Practices once considered industry standard—rebate-driven formulary decisions, spread pricing and vertical self-preferencing—are now viewed as anticompetitive conduct subject to structural remedies. The scope of relief obtained indicates that regulators will continue to pursue aggressive enforcement in this sector.

These developments unfold against broader federal and state legislative activity. At the federal level, the 2026 Consolidated Appropriations Act (HR 7148) reforms PBM compensation structures and increases transparency requirements. At the state level, more than 40 states have introduced or enacted laws regulating PBM licensure, transparency and pharmacy reimbursement. The convergence of enforcement and legislative pressure suggests the regulatory environment will remain challenging.

For pharmacy and life sciences companies, the message is clear: The current enforcement posture treats many common industry practices as presumptively anticompetitive. Companies should proactively assess their exposure to these antitrust theories. Those that have experienced exclusionary conduct may have viable claims; those whose practices resemble the challenged conduct should evaluate whether changes are warranted.

For More Information

If you have any questions about this Alert, please contact Sean P. McConnell, Jonathan L. Swichar, Bradley A. Wasser, Nina Kalandadze, any of the attorneys in our Antitrust and Competition Group, any of the attorneys in our Pharmacy Litigation Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.