FTC-Express Scripts Consent Order Contains Significant Terms Impacting Plan Drug Costs

On February 4, 2026, the Federal Trade Commission (FTC) and Express Scripts, Inc., and its affiliated entities (collectively, ESI) announced a settlement requiring ESI to adopt changes to its business practices to increase transparency and drive down patients' out-of-pocket costs. The settlement resolves the FTC's lawsuit against ESI, which alleged that ESI artificially inflated the list price of insulin drugs by using anti-competitive and unfair rebating practices and impaired patients' access to lower list price products, ultimately shifting the cost of high insulin list prices to patients.

More specifically, the FTC's enforcement action against ESI, as well as Caremark Rx and OptumRx, alleged that the pharmacy benefit managers (PBMs) created a system that artificially drove up the list prices of drugs by preferencing rebates. The complaint alleged that this system pushed insulin manufacturers, among others, to compete for preferred formulary coverage based on the size of rebates off the list price rather than net price, which ultimately benefitted the PBMs (including ESI) who keep a portion of the inflated rebates. According to the FTC's complaint, the inflated list prices raised out-of-pocket payments like copays and coinsurance that are tied to the list price of the drug.

Under the FTC's proposed consent order, ESI has agreed to:

• Stop preferring its standard formularies' high wholesale acquisition cost versions of a drug over identical low wholesale acquisition cost versions
• Provide a standard offering to its plan sponsors that ensures members' out-of-pocket expenses will be based on a drug's net cost, rather than list price
• Provide covered access to TrumpRx as part of its standard offering, upon relevant legal and regulatory changes
• 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
• Provide a standard offering to all plan sponsors that allows the plan sponsor to transition off rebate guarantees and spread pricing
• Delink drug manufacturers' compensation to ESI from list prices as part of its standard offering
• Increase transparency for plan sponsors, including with mandatory, drug-level reporting, providing data to permit compliance with the Transparency in Coverage (TiC) regulations, and disclosing payments to brokers representing plan sponsors
• Transition its standard offering to retail community pharmacies to a more transparent model based on the actual acquisition cost for a drug product plus a dispensing fee and additional compensation for non-dispensing services
• Promote the standard offerings to plan sponsors and retail community pharmacies
• Reshore its group purchasing organization, Ascent, from Switzerland to the U.S.

The FTC vote to accept the consent agreement for public comment was 1-0, with Commissioner Meador recused. The public will have 30 days to submit comments on the proposed consent agreement package. Instructions for filing comments appear on the docket. Once processed, they will be posted on regulations.gov.

Fifth Circuit Addresses Arbitration of Plan-Wide ERISA Breach Claims

On February 10, 2026, the U.S. Court of Appeals for the Fifth Circuit issued its decision in Parrott v. International Bancshares Corporation, et al., No. 25 50367 (5th Cir.), addressing whether a plan participant may be compelled to arbitrate fiduciary breach claims brought on behalf of an ERISA plan. The court reversed the district court's refusal to compel arbitration of the plaintiff's ERISA § 502(a)(2) claim, affirmed the denial of arbitration as to his individual § 502(a)(3) claims, and held that certain provisions of the plan's arbitration clause – including its standard of review clause and its prohibition on representative actions – were unenforceable as applied to ERISA fiduciary breach claims. The court remanded the case to the district court to address whether unenforceable parts of the provision could be severed.

The putative class action lawsuit was filed on August 14, 2024, alleging that the defendants breached fiduciary duties by mismanaging the company's 401(k) plan, including by selecting and retaining underperforming investment options. The plaintiff asserted claims on behalf of the plan under § 502(a)(2) and individual claims under § 502(a)(3). In response, the defendants moved to compel arbitration based on a March 2024 plan amendment that added a mandatory arbitration clause and purported to apply retroactively to January 1, 2024. This amendment occurred after the plaintiff had already received his distribution and was no longer employed by the defendant. The arbitration clause provided that each claimant waived "the right… to sue IBC… in court and to have such claims decided by a judge or jury," which expressly applied to both benefit claims and claims brought on behalf of the plan. The district court denied the motion and the defendants appealed.

On appeal, the Fifth Circuit held that a participant's personal consent is irrelevant for § 502(a)(2) claims, which must be brought in a representative capacity on behalf of the plan. Relying on the Supreme Court's decision in LaRue v. DeWolff, Boberg & Associates, 552 U.S. 248, 256 (2008), the court emphasized that § 502(a)(2) claims are inherently representative, must be brought "on behalf of the plan" and do not exist to remedy "individual injuries distinct from plan injuries." The court therefore held that "it is the consent of the Plan that is relevant" and that the plan did consent to the clause. Because the plan consented to arbitration through its amendment process, the court reversed the denial of arbitration for the § 502(a)(2) claim.

As to the plaintiff's individual claim under § 502(a)(3), the court reasoned that because he never personally agreed to arbitrate – and because the defendants forfeited any argument by failing to brief the issue – the district court's denial of arbitration as to those claims was appropriate. 

The court separately examined whether the arbitration clause's anti-representation and remedy limitation terms were enforceable under the "effective vindication" doctrine. It held that by requiring all claims to be brought solely in an "individual capacity and not in a representative capacity or on a class, collective, or group basis," the clause impermissibly restricted the statutory remedies available under 29 U.S.C. § 1109 and was incompatible with § 502(a)(2). As a result, the court determined that the terms violated the effective vindication doctrine and were unenforceable as written. The court remanded back to the district court the question of whether those terms could be severed from the arbitration provision under the severability clause in the plan. The court also held that the plan's arbitration specific standard of review provision violated ERISA's anti-exculpation rule, 29 U.S.C. § 1110(a), as applied to fiduciary breach claims.

This decision provides important guidance for employers, plan sponsors, and fiduciaries evaluating the strategic use of arbitration provisions in defined contribution plans. The Fifth Circuit's position is that plan-level consent through unilateral amendment can bind representative § 502(a)(2) claims to arbitration, but not § 502(a)(3) claims where consent was not individually provided. The court further made clear that arbitration provisions cannot restrict ERISA's remedial scheme or prevent representative plan wide actions. As plan sponsors continue to confront rising fiduciary breach litigation, Parrott highlights the care required when drafting and implementing such clauses.

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