Pharmacy Law Lowdown: CVS Caremark’s Settlement with FTC

The Federal Trade Commission (FTC) has secured a major settlement with CVS Caremark and Zinc Health Services.^1,2

Released on July 14, 2026, the order follows a February 2026 agreement with Cigna’s Express Scripts. Alongside UnitedHealthcare’s OptumRx, these 3 conglomerates control 80% of the prescription market, managing benefits for 266 million Americans.^1-4

This settlement resolves a landmark antitrust case accusing middlemen of artificially inflating insulin list prices through unfair rebate practices. Under the terms, Caremark must implement changes to lower patient costs and increase transparency. Yet, independent pharmacists and experts warn that underlying economic pressures on retail pharmacies remain unresolved.^1-3

In this month’s episode of Pharmacy Law Lowdown, our hosts Lucas Morgan, Esq, and Dae Lee, PharmD, Esq, CPBS, from Buchanan Ingersoll & Rooney, break down what has led to the decision, how it relates to some of the other happenings in PBM reform, and what pharmacies need to be on the lookout for as the industry transforms further.

The Secretive Rebate Machine

Historically, PBMs dictated drug access through proprietary formularies. To obtain coverage, manufacturers pay massive rebates based on list prices. The FTC alleged that insulin manufacturers paid up to 70% or 80% of list prices in rebates.⁴

Theoretically, these rebates should reduce plan sponsors’ drug spend, but sponsors lack visibility into actual collections. Instead, PBMs shielded these revenues using wholly owned “rebate aggregators,” like Caremark’s Zinc, acting as GPOs to extract manufacturer fees. The settlement attempts to dismantle this by delinking Caremark’s revenue from drug list prices and requiring Zinc to remain in the US.^1,2,4

Reimbursing Pharmacies on a Cost-Plus Model

For community pharmacies struggling against predatory PBM practices, the settlement introduces a potential lifesaver. Under spread pricing, PBMs reimburse pharmacies less than they charge plan sponsors while keeping the difference, a practice that swallowed millions in Ohio Medicaid generics.^2,4

Beginning January 1, 2028, Caremark must offer retail pharmacies a cost-plus reimbursement option. This model compensates community pharmacies based on actual drug acquisition costs plus a dispensing fee.^1,2

Additionally, Caremark cannot exclude any willing community pharmacy that agrees to standard contract terms, establishing a federal “any willing provider” protection. The FTC also barred Caremark from interfering with digital hub pharmacies that streamline prior authorizations and drug affordability.

The Fine Print and Pharmacy Gaps

Despite these optimistic shifts, independent pharmacies urge caution when reading contract terms. The order stops short of defining a minimum dispensing fee or reimbursement floor, giving Caremark broad discretion over final payouts. To secure cost-plus rates, pharmacies must shoulder the administrative burden of sharing invoice data quarterly.²

Furthermore, the order’s definition of community pharmacies is highly restrictive. It covers only businesses with 3 or fewer store locations that dispense drugs predominantly in person. In rural areas and “pharmacy deserts” where independent pharmacies are closing, home mailing and delivery are essential lifelines. This narrow definition could allow Caremark to exclude pharmacies that deliver or operate more than 3 locations.³

Rearranging Old Incentives?

The settlement locks in $8.5 billion in consumer savings and $4.5 billion in point-of-sale rebates. To complete the picture, the FTC’s case against the third giant, OptumRx, has been withdrawn from adjudication to finalize an announced settlement in principle.^1,2

However, these regulatory agreements contain no monetary penalties, and the fundamental rebate model remains intact. As supermarket pharmacies dominate preferred Medicare Part D networks, independent pharmacies continue to walk away because reimbursement rates fail to cover basic costs.³

As the PBM industry adapts, the core power dynamics between manufacturers, PBMs, and plan sponsors stay largely undisturbed, raising concerns about whether the market is truly reforming or simply rearranging around old incentives.

Be sure to tune into Drug Topics for important updates in pharmacy law and how to handle them from hosts Dae Lee, PharmD, Esq, CPBS, and Lucas Morgan, Esq, shareholders at Buchanan Ingersoll & Rooney, a national law firm that provides legal, business, regulatory, and government relations advice to a wide range of clients. All episodes of Pharmacy Law Lowdown will be available in video format via Drug Topics every third Monday of each month. Check out our most recent episode here: Pharmacy Law Lowdown: Copay Collection Compliance.

REFERENCES

1. FTC secures major settlement with Caremark, resolving antitrust case against second drug middleman. News Release. FTC. July 14, 2026. Accessed August 14, 2026. https://www.ftc.gov/news-events/news/press-releases/2026/07/ftc-secures-major-settlement-caremark-resolving-antitrust-case-against-second-drug-middleman

2. Barbarito A, Bennet SL. FTC’s Caremark settlement: what it means for pharmacies, PSAOs, and wholesalers. Frier Levitt. August 13, 2026. Accessed August 14, 2026. https://www.frierlevitt.com/articles/ftc-caremark-settlement-pharmacies-psaos-wholesalers/

3. Dashevsky J. The FTC and PBM settlement: what’s actually changing in drug pricing? HLTH. April 28, 2026. Accessed August 14, 2026. https://hlth.com/insights/articles/the-ftc-just-settled-with-a-pbm-what-s-actually-changing-in-drug-pricing

4. Pharmacy benefit manager reform. National Conference of State Legislatures. June 1, 2022. Accessed August 14, 2026. https://www.ncsl.org/health/pharmacy-benefit-manager-reform