By Lari Harding, SVP, Industry Affairs & Strategic Partnerships, Inmar Intelligence
The Federal Trade Commission (FTC) has proposed a consent order with Express Scripts (ESI), one of the nation’s largest pharmacy benefit managers (PBMs), to resolve allegations related to insulin pricing practices and broader competition concerns. Published in the Federal Register on February 12, 2026, the agreement outlines sweeping reforms addressing formulary design, rebate practices, patient out-of-pocket costs, transparency, and pharmacy reimbursement. The FTC is accepting public comments through March 16, 2026.
Many of the settlement’s provisions move the market in the right direction. By requiring fair placement of lower-WAC (Wholesale Acquisition Cost) drugs on formularies, limiting patient cost-sharing to net prices, expanding insulin affordability access, restricting spread pricing in standard offerings, delinking manufacturer compensation from inflated list prices, and increasing transparency to plan sponsors, the agreement begins to unwind the rebate-driven incentives that have distorted pharmacy economics for years. These reforms reduce artificial list-price inflation, lower prescription abandonment at the counter, stabilize dispensing volume, and create greater visibility into PBM revenue flows. If broadly adopted, they shift the system toward a more transparent, net-cost-based framework that can support more predictable reimbursement for retail pharmacies. However, one key provision of the settlement draws a structural distinction that may unintentionally perpetuate competitive imbalance within the retail pharmacy market.
Section VIII of the settlement addresses Express Scripts’ pharmacy reimbursement practices, but its protections apply only to “retail community pharmacies,” defined as businesses operating three or fewer retail locations. Under Section VIII, Express Scripts must create a standard offering that pays these pharmacies based on actual acquisition cost plus a dispensing fee, compensates them for non-dispensing services, and prohibits exclusion of qualifying pharmacies willing to accept the terms.
The net economics from the top three PBMs fall materially below the broader market average, indicating that retail pharmacies of all sizes have been economically harmed by the top three PBMs who are operating in a market structure where a small number of buyers control most of the purchasing power, while there are many sellers. By limiting Section VIII protections to pharmacies with three or fewer stores, the settlement risks addressing only a small fraction of retail pharmacies, leaving community chains without similar reimbursement safeguards.
| PBMs | Brand Reimbursement Effective Rate and Dispensing Fee | Combined Brand and Generic Net Economics or Gross Margin per $100 of WAC Dispensed |
|---|---|---|
| Top Three PBMs | WAC - 6.55% and $2.27 | $5.79 |
| All Other PBMs | WAC - 6.10% and $6.03 | $10.54 |
| Combined | WAC - 6.45% and $3.82 | $6.74 |
Source: Inmar Intelligence 2025 Reimbursement Data across pharmacy chains and independents
According to Inmar Intelligence 2025 reimbursement data, across the top three PBMs—representing roughly 80% of prescription volume—pharmacies realized $5.79 per $100 of WAC dispensed. Across all other PBMs combined, pharmacies realized $10.54. Net economics per $100 dispensed refers to the gross profit a pharmacy earns for every $100 of drug Wholesale Acquisition Cost (WAC) that it dispenses, after accounting for ingredient reimbursement, acquisition cost, and dispensing fees. It is calculated by taking the payer reimbursement (expressed as a percentage of WAC), subtracting the pharmacy’s acquisition cost (also expressed relative to WAC), and then adding the dispensing fee. The result shows the gross spread generated on drug cost before labor, occupancy, fees, and other operating expenses. The metric incorporates purchasing scale advantages available to larger chains, allowing for apples-to-apples comparison across pharmacy formats. The Inmar data demonstrates the same pattern for one-store independents and large chains.
Retail pharmacy economics remains extraordinarily fragile. A $6.74 gross margin per $100 of drug cost translates into just 6.74% before accounting for labor, rent, technology, regulatory compliance, audit reserves, and the financing costs associated with extended receivable timelines. In comparison, physician reimbursement is determined using the Resource-Based Relative Value Scale (RBRVS), which bases payment on the resources, time, and professional effort required to provide a service, while pharmacy reimbursement today is primarily tied to the cost of the medication rather than the resources required to deliver pharmacy services. The average pharmacy generates approximately $8.2 million in annual sales, yet earns only ~$50,000 in annual profit—leaving little capacity to absorb reimbursement compression, delayed payments, or increased administrative burden. The combined net economics per $100 of WAC dispensed for all PBMs, excluding the top three, was $10.54. This further demonstrates the imbalance in market structure from the top three PBMs.
In this context, even incremental reimbursement compression or payment delays can significantly affect financial sustainability. Multiple recent cost-to-dispense studies (VA, CO, KS, IN, NC) estimate dispensing costs ranging from $9 to $14 per prescription—often exceeding current dispensing fees.
The intent is to ensure that similar market realities are addressed consistently across all community-based pharmacy models. The FTC–Express Scripts settlement represents a substantial step toward addressing long-standing structural issues in drug pricing and PBM contracting practices. As policymakers evaluate its implementation and potential broader application, there may be an opportunity to consider how reimbursement reforms can support sustainable access across all community-based pharmacy models, including regional and chain operators that serve rural and underserved markets.
Extending reimbursement protections beyond a three-store threshold would more fully address the competitive dynamics the settlement seeks to correct. Ensuring a balanced and durable marketplace is about preserving patient access to safe medication dispensing, clinical oversight, and frontline pharmacy care in communities nationwide. A framework that promotes transparency, fair competition, and sustainable reimbursement across pharmacy types will best support that shared objective.