FTC Settlement With ESI, CAA 2026, and Proposed Rule: What Does It Mean For Plan Sponsors?

An Overview of Regulatory and Legislative Updates For Plan Sponsors

Key Points

• The ESI settlement creates new options for plan sponsors, but few protections apply automatically without proactive action.
• With the CAA 2026, transparency is expanding meaningfully, but important PBM revenue streams remain partially hidden.
• The DOL’s Proposed Rule increases fiduciary accountability by tying PBM compensation transparency directly to ERISA oversight.
• Turning transparency into value will require active governance and independent pharmacy benefit expertise.

On February 12, the Federal Trade Commission (FTC) announced a settlement with Express Scripts (ESI) that signals a meaningful, though limited, shift in how regulators are approaching PBM practices. At the same time, new federal requirements under the Consolidated Appropriations Act of 2026 and a proposed Department of Labor rule are raising the bar for what plan sponsors can see and what PBMs must disclose. Together, these developments reflect growing pressure on vertically integrated PBMs regarding their economic models, transparency, and decision-making. This article breaks down what the FTC settlement actually changes, where gaps remain, and how new transparency rules may reshape pharmacy benefit oversight for plan sponsors.

FTC Proposed Settlement with ESI/Evernorth

On February 12, the FTC announced a settlement with ESI (and its related parties Evernorth, Medco, and Ascent) that would remove ESI from the FTC’s ongoing insulin litigation and investigation into anticompetitive PBM practices. In the FTC’s own words (underlines from PSG):

The purpose of the Consent Agreement is to protect the public from ESI’s anticompetitive conduct and deter others from engaging in similar anticompetitive conduct. Under the terms of the Proposed Decision and Order (“Proposed Order”), ESI will: (1) cease to discriminate against low-WAC  versions of a drug on its standard formularies; (2) provide a standard offering to its plan sponsors that ensures that members will pay no higher than a drug’s net cost; (3) provide full access to its Patient Assurance Program’s insulin benefits to all members when a plan sponsor adopts a formulary that includes an insulin product covered by the Patient Assurance Program unless the plan sponsor opts out in writing; (4) provide a standard offering to all plan sponsors that allows the plan sponsor to transition off rebate guarantees and spread pricing; (5) delink, for its standard offering, drug manufacturers’ compensation to ESI from list prices; (6) increase transparency for plan sponsors; (7) include certain terms in its standard offering to retail community pharmacies; (8) promote the standard offerings to plan sponsors and retail community pharmacies; and (9) reshore its group purchasing organization (“GPO”) Ascent from Switzerland to the United States.

First, of the 9 negotiated items numbered above, 7 apply only to standard offerings or can be opted out of by a client (see underlines above). This flexibility cuts both ways: ESI maintains the ability, in some cases, to continue practices the FTC deemed anticompetitive in its Second Interim Staff Report on Prescription Drug Middlemen, while plan sponsors retain decision-making authority over important benefit decisions like point-of-sale rebates, traditional pricing models, and rebate guarantees. Two items (transparency for plan sponsors and repatriation of Ascent, items 6 and 9) appear to apply regardless of client adoption, to which few plan sponsors would object.

With the lone exception of higher reimbursement for community pharmacies (item 7), 8 of the 9 items in the settlement address plan sponsor concerns with practices of large PBMs and GPOs being investigated by the FTC for anticompetitive practices. “Net cost over rebates” appears to be the primary focus, as evidenced by requiring ESI to:

• Promote low-WAC drugs
• Offer point-of sale-rebates for members
• Cap out-of-pocket costs and provide first-dollar coverage for insulin
• Offer an alternative to rebate guarantees
• Delink reimbursement from list prices
• Increase transparency on drug costs, claims data, and broker/consultant compensation
• Relocate Ascent from Switzerland to the US for an implied increase in oversight and audit.

Again, most of these directives must be made available to plan sponsors to be opted into at their discretion (or in the case of first-dollar insulin coverage, opted out of), while the transparency reporting and the relocation of Ascent will take effect regardless of client adoption.

Finally, you might have noticed a key Cigna/Evernorth/ESI entity missing from the settlement: Quallent. Notably, Quallent is based in the Cayman Islands and distributes private-labeled biosimilar, generic, and specialty generic drugs to pharmacies, primarily those owned by ESI/Evernorth. Preferred placement of Quallent’s drugs on ESI’s formularies is often cited as a concern in anticompetitive PBM practices, and based on its absence from the settlement, will continue to be a source of relatively expensive drugs preferred on ESI/Evernorth formularies.

On March 24, CVS announced their own proposed settlement is navigating the FTC approval process and is rumored to be similar to that of ESI/Evernorth. CVS retail stores provide a vertical-integration element that may differentiate some of the terms relative to ESI/Evernorth. It will also be interesting to see if and what Optum decides to negotiate with the FTC, as they would become the lone FTC-investigated PBM with a GPO and no settlement. As more information arises for both CVS and Optum, we will continue to provide updates.

The public comment period for the settlement closed March 16, so the final version of the settlement should be released in the next few weeks.

Consolidated Appropriations Act of 2026

In 2021, the Consolidated Appropriations Act, 2021 (CAA) was signed, both reinforcing and extending the responsibility fiduciaries must exercise over PBMs and requiring plan sponsors to annually report pharmacy spend in a requirement named the Prescription Drug Data Collection (RxDC). While many pharmacy benefit sponsors receive structured data to support these RxDC reporting requirements, they don’t often receive reporting detailed enough to support the intent of the law, namely fiduciary oversight. We believe the transparency requirements of CAA 2026 will change that, giving plan sponsors deeper insight into their pharmacy costs, enabling more effective oversight of pharmacy benefits, and aiding in the federal filing requirements of the CAA 2021.

This year’s CAA section regarding pharmacy benefits includes NDC-level reporting at least twice per year. This is already an improvement in transparency and accountability that will benefit many plan sponsors through more detailed oversight, most notably PBM coalition members who often receive minimal data. In addition, related entities (e.g., GPOs, retail pharmacies, and specialty pharmacies) are now explicitly included in the reporting. However, the legislation was noticeably silent on PBM-owned manufacturing, relabeling, wholesaling, and pharmaceutical marketing entities (e.g., Cordavis, Quallent, and Nuvaila).

Notable CAA 2026 Transparency Requirements

• Spread amount (if any)
• Channel (e.g., retail, mail, specialty)
• Brand/generic designation and days’ supply
• Claim and member counts
• Member paid amount
• Expected rebates and net cost of drug
• Indirect compensation received by the PBM
• Copay card and manufacturer assistance
• Formulary tiering and utilization management/prior authorization
• Therapeutic class and alternatives
• Acquisition cost for PBM-owned pharmacies
• Broker or consultant fees and commissions

The data and reporting that plan sponsors will be receiving will not be self-explanatory, and the CAA does not require PBMs to help translate that information into meaningful cost or trend optimization. Most of PSG’s clients receive this level of detailed reporting already and retain us year-round to load the data into a usable format via our data analytics platform (Artemetrx), collaborate as an extension of their benefits team in finding ways to bend the cost curve and improve outcomes, and help drive the PBM and other vendors to results.

In addition to transparency-related reporting, the CAA 2026 also requires PBMs to pass through 100% of “rebates, fees, alternative discounts, and other remuneration” received from pharmaceutical manufacturers. Many direct contracts for larger plan sponsors contain this provision today, though some coalition contracts lack some of this language. This legislation, however, does not require the PBM-owned GPOs to pass along the “bona fide fees” they receive from pharmaceutical manufacturers or the margin and marketing fees they make from private labeling and manufacturing biosimilars and other drugs.

Department of Labor Proposed Rule on PBM Fee & Compensation Disclosure

The Department of Labor issued a proposed rule tying PBM disclosure to ERISA plan reporting requirements, which closely aligns with the intended goals of the CAA 2026 legislation. Among the reporting requirements are the services being provided to the plan by the PBM and its affiliates and all direct and indirect compensation received by the PBM and its affiliates. PBMs would be expected to disclose a full accounting of the revenue streams that influence a plan’s pharmacy spend, including manufacturer rebates, spread revenue, copay clawbacks, and any financial arrangements tied to formulary placement. Just as importantly, they must explain why those formulary decisions are being made. This level of clarity is essential for plan sponsors seeking to understand the true economic drivers within their pharmacy benefit and make informed choices that bring accountability, value, and transparency into the PBM relationship.

If finalized, this rule furthers the support of plan sponsors’ fiduciary responsibilities by introducing a regulatory imperative on PBMs to provide information benefit teams have not always had access to. It also increases the onus on PBMs to justify their decision-making, profit margins, and incentives.

Closing Thoughts

Taken together, the FTC’s ESI settlement, the CAA 2026 transparency requirements, and the proposed Department of Labor rule reflect a clear shift toward greater scrutiny of PBM economics. However, even with expanded access to data for plan sponsors, meaningful oversight and cost optimization will still require interpretation, context, and active management.

PSG is uniquely positioned to help plan sponsors turn new disclosures into actionable insights, evaluate PBM incentives, and drive smarter pharmacy benefit strategy. If you would like support navigating these changes or understanding what they mean for your plan, please reach out to schedule a conversation with our team.

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