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The Federal Trade Commission’s (FTC) recent settlement with Caremark Rx LLC and Zinc Health Services LLC (collectively Caremark) marks another significant regulatory intervention in the pharmacy benefit manager (PBM) space. The FTC’s lawsuit focused on allegations that major PBMs used rebating practices that inflated insulin list prices and shifted costs to patients whose out-of-pocket expenses were tied to those list prices.
The Caremark settlement goes beyond insulin, requiring changes to business practices designed to lower member out-of-pocket costs, increase transparency for plan sponsors, and address how Caremark works with retail community pharmacies and pharmacy hub service providers.
For employers, the agreement may signal continued movement toward net-cost pharmacy pricing models, point-of-sale rebate structures, and greater scrutiny of PBM compensation and formulary economics.
Components of the Caremark settlement
Under the FTC’s proposed consent order, Caremark would be required to make several structural changes through its standard offering and related business practices. The settlement terms are similar in many respects to the FTC’s earlier settlement with Express Scripts, but the Caremark agreement also addresses pharmacy hub service provider access.
Key provisions include:
Ceasing discrimination against low wholesale acquisition cost (WAC) versions of drugs on standard formularies.
Providing a standard offering that passes rebates through to members at the point of sale and limits member out-of-pocket costs to no more than the plan sponsor’s contracted rate minus applicable rebate.
Allowing plan sponsors to transition off rebate guarantees and spread pricing within the standard offering.
Delinking, for the standard offering, manufacturer-paid PBM/group purchasing organization’s (GPO) fees from drug list prices.
Increasing transparency for plan sponsors, including more visibility into pricing and compensation arrangements.
Including certain terms in the standard offering to retail community pharmacies, with an opportunity to shift to a cost-plus reimbursement model.
Transitioning and maintaining PBM/GPO activities in the U.S.
Maintaining insulin affordability programs that cap member out-of-pocket costs when an applicable insulin product is covered, unless the plan sponsor opts out in writing.
Prohibiting unfair interference with network pharmacies’ ability to work with pharmacy hub service providers, supported by a monitor empowered to receive complaints and review actions.
Addressing TrumpRx treatment under certain legislative or regulatory changes, including counting eligible patient payments toward deductibles and out-of-pocket maximums when applicable.
Together, these provisions are designed to increase transparency, reduce reliance on rebate-driven pricing practices, and expand member access to lower-cost pharmacy options.
The move toward true net-cost pricing
The settlement further reinforces the market shift toward true net cost pharmacy pricing models. Today’s PBM market largely operates on a gross-to-net framework. A drug may carry a high list price at the pharmacy counter, while manufacturers later provide rebates that reduce the net cost of the medication for the plan.
Under traditional rebate models, members may pay cost-sharing based on the higher list price, while employers receive rebate payments later as part of the plan’s financial arrangement. The Caremark settlement is intended to move more of that value to the point of sale, potentially allowing members to see lower out-of-pocket costs when prescriptions are filled.
Potential implications
While point-of-sale rebate models may improve member affordability, they also create new considerations for employer pharmacy budgets and PBM contracting strategy. Rebate payments remain an important component of the financial model for many employer health plans and are often incorporated into pharmacy projections, premium calculations, and overall plan cost expectations. If more rebate value is applied directly to members at the point of sale, employers may see:
Changes in how pharmacy costs appear in reporting and renewals
Reduced or differently timed rebate payments that are currently used to offset plan costs
New considerations for budget projections and premium-equivalent rate development
Greater need to compare traditional rebate arrangements against net-cost or point-of-sale rebate alternatives
Traditional guarantee structures place a portion of utilization, purchasing, and market risk on the PBM. As employers move toward drug-level rebate transparency and true net-cost pricing arrangements, some of that financial risk and market volatility may shift back to plan sponsors.
PBMs may seek alternative revenue sources as traditional rebate and spread-based economics evolve. These may include administrative fees, clinical program fees, network management fees, data-related fees, and other service charges. Employers should evaluate total PBM compensation arrangements rather than focusing solely on any single pricing component.
As a result, employers may need to reassess how pharmacy spend is modeled, evaluated, and communicated internally. Greater transparency and point-of-sale savings may provide meaningful benefits for members, but employers should recognize that transparency alone does not guarantee lower overall plan costs. Each pricing model should be evaluated based on its total financial impact, risk allocation, and long-term sustainability.
Considerations for employers
As Caremark begins responding to the settlement and communicating with plan sponsors, employers should expect PBM proposals and contract structures to continue evolving.
Future bid structures: Future CVS Caremark proposals may increasingly include rebate-free, point-of-sale rebate, or net-cost pricing alternatives.
Existing contracts: Current agreements should be reviewed carefully to understand rebate guarantees, spread pricing, transparency rights, and renewal timing.
Budget implications: Moving value to the point of sale may improve member affordability but can change the timing and distribution of rebate dollars.
Operational questions: Certain mechanics, including how standard offerings will be presented and how TrumpRx-related provisions may be implemented, may require further clarification.
Market developments: The FTC has now announced settlements involving Express Scripts and Caremark, while the Optum matter has been withdrawn from adjudication to consider a proposed consent agreement.
What employers should do now
Employers do not need to make immediate plan design changes based on the press release alone, but the settlement signals that PBM contracting and pricing structures may continue evolving.
Recommended steps include:
Reviewing CVS Caremark contract terms, renewal timing, rebate guarantees, spread pricing provisions, and transparency rights.
Evaluating how point-of-sale rebate or net-cost pricing models could affect member affordability, employer budget projections, and rebate expectations.
Monitoring CVS Caremark communications to determine whether any election, amendment, or standard offering decision is required.
Comparing any new PBM pricing option against current financial guarantees and total net-cost assumptions.
Working with advisors and pharmacy experts to evaluate potential financial and operational impacts.
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