Wall Street Weighs In On FTC-CVS Health Proposed Settlement: Not Major Surprise But Removes Air Of Uncertainty

• Sources told Reuters that the deal is modeled on a similar agreement inked between FTC and Cigna’s pharmacy benefit manager Express Scripts.
• Leerink said the report that CVS Health has likely reached a proposed settlement with the FTC isn't a “major surprise.”

Shares of CVS Health (CVS) closed 2% higher on Tuesday on the heels of a report that the company has reached a proposed settlement with the Federal Trade Commission ​on insulin pricing.

As per a report from Reuters News, the final terms of the deal are still pending and will be confirmed once it is officially finalized. As per the report, the company expects the settlement process to conclude in the coming weeks.

Sources told Reuters that the deal is modeled on a similar agreement inked between FTC and Cigna’s pharmacy benefit manager Express Scripts. The deal between the two companies could be signed into effect earlier than two weeks, the report added.

FTC sued Express Scripts, UnitedHealth’s Optum and CVS’s Caremark in 2024, alleging they deliberately excluded lower-cost insulin to favor higher-rebate, high-price products in list of drugs covered by insurers.

Leerink Chimes In

Leerink said the report that CVS Health has likely reached a proposed settlement with the FTC isn't a “major surprise.” However, the firm added that completing any settlement is an incremental positive as it removes an "air of uncertainty" from a pharmacy benefit management business that has had numerous recent overhangs.

Leerink reiterated an ‘Outperform’ rating and $98 price target on CVS Health shares. The price target represents a potential upside of about 35% from the stock’s closing price on Tuesday.

Express Scripts Settlement

Cigna’s Express Scripts reached a landmark settlement last month with the FTC to resolve allegations that its anticompetitive rebating practices artificially inflated insulin list prices. The deal required Express Script to adopt fundamental changes to its business practices in favor of transparency and delink manufacturer compensation from drug prices, thereby bringing down cost for patients.

The settlement is expected to bring down patients’ out-of-pocket costs for drugs like insulin by up to $7 billion over 10 years, FTC then said.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around CVS rose from ‘neutral’ to ‘bullish’ territory over the past 24 hours, while message volume remained at ‘normal’ levels.

CVS stock has gained 8% over the past 12 months. 

Read More: US Markets Rally After Hours On Optimism For An End To Middle East Tensions

For updates and corrections, email newsroom[at]stocktwits[dot]com.