FTC Cracks Down on Pharmacy Benefit Middlemen: What the Caremark Settlement Means for Drug Prices and Consumers

A prescription can look covered on paper and still deliver sticker shock at the pharmacy counter. The Federal Trade Commission's July 14, 2026, settlement with Caremark Rx LLC and Zinc Health Services LLC targets rebate arrangements the agency alleges helped keep insulin prices high — a rare federal move against the largely unseen middlemen whose financial incentives can shape what patients pay.

Caremark Rx LLC is CVS Health Corporation's pharmacy benefit manager, or PBM. Zinc Health Services LLC, also wholly owned by CVS Health, serves as Caremark's internal group purchasing organization, negotiating drug prices and rebates with manufacturers for Caremark's commercial clients. The settlement follows a September 2024 FTC administrative complaint against the three largest pharmacy benefit managers — Caremark, Express Scripts and OptumRx — alleging they used unfair methods of competition to artificially inflate insulin list prices through anticompetitive rebate practices. In 2024, Express Scripts held 30 percent market share, CVS Caremark held 27 percent and OptumRx held 23 percent, together processing 80 percent of all U.S. prescription claims and covering over 270 million people.

Pharmacy benefit managers act as intermediaries between drug manufacturers, insurance plans and pharmacies, ostensibly negotiating rebates and discounts to reduce costs for patients and insurers. An FTC interim staff report on prescription drug middlemen outlines how dominant PBMs can raise drug costs and overcharge patients, emphasizing their power over which drugs are accessible and at what price, the imposition of unfair contractual terms on independent pharmacies, and rebate agreements with brand manufacturers that may exclude lower-cost competing products from formularies.

The FTC alleged that Caremark and Zinc threatened to exclude drugs from their formularies unless manufacturers paid higher rebates, creating a financial incentive for manufacturers to raise insulin sticker prices to fund those rebates. The companies systematically excluded lower-priced insulin products in favor of high-list-price, highly rebated alternatives, even when cheaper options were available. The rebate strategy forced vulnerable patients to pay higher out-of-pocket costs based on inflated list prices while Caremark, Zinc and their group purchasing organizations increased their profits. The list price of Humalog, a brand-name insulin, increased 1,200 percent between 1999 and 2017 as a result.

The settlement requires Caremark to stop preferring high-Wholesale Acquisition Cost drugs over lower-cost alternatives when low-Wholesale Acquisition Cost versions are economically preferable and available. Patient out-of-pocket costs must be based on the contracted amount between Caremark and the plan sponsor minus rebates, not the drug's list price. The settlement decision and order imposes specific dollar copay caps based on the days' supply of insulin: $25 for a 0-to-34-day supply, $50 for a 35-to-68-day supply and $75 for a 69-or-more-day supply. Caremark must provide enhanced drug-level cost reporting, pharmacy claims reporting and full disclosure of consultant and broker compensation to plan sponsors. Caremark must also provide access to a Copay Certainty Program with first-dollar coverage, launching no later than Jan. 1, 2028. All rebate-negotiating assets and functions for Zinc must remain based in the United States.

The settlement's key requirements are limited to commercial pharmacy benefit arrangements and explicitly exclude government-sponsored programs such as Medicare, Medicaid and Exchange plans. The copay caps and formulary changes focus specifically on insulin, not the broader universe of prescription drugs where similar rebate-driven pricing strategies may continue. The National Community Pharmacists Association reported concerns that the settlement is confined to commercial plans and that the FTC's orders may broadly release CVS from regulatory oversight of certain current anticompetitive practices toward competitor pharmacies. Whether copay relief reaches patients depends on whether their employers and plan sponsors adopt the new pricing structures and Copay Certainty Programs Caremark must now offer.

The FTC secured an earlier landmark settlement with Express Scripts on Feb. 4, 2026, in which Express Scripts agreed to delink compensation from list prices, stop preferring high-cost drugs over cheaper equivalents on standard formularies and increase transparency. That settlement is expected by the FTC to reduce patients' out-of-pocket costs for insulin by up to $7 billion over a decade. OptumRx has reached a tentative settlement with the FTC as of July 2026, making it the final of the three major PBMs to settle, though the agreement has not yet been finalized or publicly disclosed in detail. The Eighth Circuit Court of Appeals dismissed the countersuit filed by Express Scripts, CVS Caremark and OptumRx against the FTC after the PBMs chose to settle or agree to proposed settlements.

A House Judiciary Committee interim report from Jan. 21, 2026, concluded that CVS Health and CVS Caremark may have engaged in anticompetitive conduct by restricting independent pharmacies from working with third-party digital pharmacy hubs, including monitoring hub relationships, changing provider manuals to create regulatory uncertainty, and using audits and enforcement actions. The series of settlements and ongoing congressional scrutiny signals intensifying regulatory pressure on the PBM industry, though whether this momentum translates into broader structural reform or legislation affecting drugs beyond insulin remains to be seen.