What's Happening?
The Cigna Group has reached a settlement with the Federal Trade Commission (FTC) to resolve a lawsuit concerning insulin pricing practices. The lawsuit accused Cigna's pharmacy benefit manager, Express Scripts, of manipulating drug formularies to favor high-priced insulin products. The settlement, announced in February 2026, mandates structural reforms that are expected to save American patients approximately $7 billion in out-of-pocket costs over the next decade. Cigna will overhaul its business practices, including decoupling earnings from drug list prices, which fundamentally alters the traditional profit model of pharmacy benefit managers (PBMs). The agreement also requires Cigna to relocate its group purchasing organization, Ascent Health
Services, to the U.S. to ensure compliance with domestic transparency laws.
Why It's Important?
This settlement marks a significant shift in the pharmaceutical supply chain, particularly affecting the PBM industry. By mandating transparency and decoupling earnings from drug list prices, the agreement challenges the traditional PBM business model, which has been criticized for contributing to high drug costs. The settlement is expected to benefit millions of diabetic patients by lowering the financial barriers to insulin access. It also sets a precedent for regulatory oversight in the healthcare sector, potentially influencing future legislation and industry practices. The settlement places pressure on other major PBMs, such as CVS Health and UnitedHealth Group, to consider similar reforms.
What's Next?
Cigna will need to implement the mandated reforms over the next decade, focusing on transparency and fair pricing models. The company will transition to a service-fee model, which may compress margins in the short term but could position Cigna as a leader in a more transparent healthcare market. The settlement also increases pressure on other PBMs to settle ongoing litigation with the FTC or face potentially stricter terms. Investors and industry stakeholders will closely monitor Cigna's progress in adapting to these changes and the broader impact on the healthcare industry.
