Is the FTC's Use of Section 5 Against PBMs the Birth of a New 'Structural' Antitrust Era?

For nearly forty years, American antitrust law has operated under a relatively predictable set of rules: to stop a company from dominating a market, the government generally had to prove that the firm either held a clear monopoly or was actively colluding with rivals. This framework, rooted in the Sherman and Clayton Acts, made complex supply chains notoriously difficult to regulate. But a recent legal campaign against the nation’s largest pharmacy benefit managers has upended that consensus. The Federal Trade Commission has successfully forced sweeping structural changes on the pharmaceutical industry not by proving a monopoly, but by resurrecting a long-dormant legal mechanism: Section 5 of the Federal Trade Commission Act. The resulting settlements have sparked a fierce debate over whether this represents a necessary modernization of market oversight or an unchecked expansion of regulatory power.[3][4]

The tension centers on the role of pharmacy benefit managers, the powerful intermediaries that negotiate drug prices between pharmaceutical manufacturers, health insurers, and pharmacies. In September 2024, the FTC filed an administrative lawsuit against the three largest firms in this sector—Express Scripts, Caremark Rx, and OptumRx—which collectively administer approximately eighty percent of all prescriptions in the United States. The agency alleged that these firms created an exclusionary rebate system that artificially inflated the list prices of life-saving medications, particularly insulin. By threatening to exclude certain drugs from their covered lists, or formularies, the middlemen allegedly extracted massive rebates from manufacturers, enriching themselves while shifting the financial burden onto vulnerable patients.[2]

What made the FTC’s lawsuit revolutionary was not just the target, but the weapon. Instead of relying on traditional antitrust statutes, the agency brought the case as a standalone violation of Section 5 of the FTC Act, which broadly prohibits "unfair methods of competition." Unlike the Sherman Act, Section 5 does not require the government to prove that a single firm holds monopoly power or that multiple firms engaged in a coordinated conspiracy. It allows the agency to target parallel, oligopolistic behavior—where a few dominant firms adopt similar practices that collectively harm the market, even without explicit coordination. This distinction is the bedrock of the new structural approach to antitrust enforcement.[3][4]

The strategy appears to be working. In early 2026, the FTC secured landmark settlements with Express Scripts and Caremark Rx, fundamentally altering how these companies operate. Under the July 2026 Caremark agreement, the firm must abandon its rebate-driven formulary decisions, pass negotiated discounts directly to patients at the point of sale, and cease practices that disadvantage independent community pharmacies. The FTC estimates that the Caremark settlement alone will lock in up to $8.5 billion in consumer savings over the next decade, with billions more unlocked through point-of-sale rebates. These are not mere financial penalties; they are mandated structural overhauls of a core business model.[1]

These settlements provide the strongest evidence yet that a new structural era of antitrust enforcement has arrived. By successfully wielding Section 5, the FTC has demonstrated that it can dismantle entrenched industry practices without enduring the decades-long litigation typically required to prove monopolization. Legal analysts note that practices once considered standard industry behavior—such as vertical self-preferencing and spread pricing—are now vulnerable to structural remedies if they are deemed exploitative or exclusionary. This approach effectively allows the agency to police pricing structures and competitive incentives across entire supply chains, rather than merely blocking mergers or punishing cartels.[4]

However, the revival of Section 5 introduces profound uncertainty into the American economy. Critics, including major business groups like the U.S. Chamber of Commerce, argue that the statute’s vague prohibition against unfair methods gives the FTC nearly unbounded discretion to declare routine business conduct illegal. Because Section 5 cases do not require the traditional "rule of reason" economic analysis—which weighs a practice's harms against its potential benefits to consumers—opponents warn that the agency can now bypass the rigorous evidentiary standards that have governed antitrust law for decades. This raises the question of whether the courts will ultimately defer to the FTC's broad interpretation or rein in its authority if a future target refuses to settle.[4]

The implications extend far beyond the pharmacy counter. If the standalone Section 5 strategy survives judicial scrutiny, it provides a blueprint for challenging complex, vertically integrated markets across the economy. Tech platforms that preference their own services, agricultural conglomerates that dictate terms to farmers, and private equity firms rolling up regional healthcare providers could all face similar structural interventions. The pharmacy benefit manager settlements prove that the FTC is willing to use this tool aggressively to reshape industries from the inside out, leveraging the threat of administrative litigation to force compliance.[1][4]

Whether this marks a permanent shift in American capitalism depends on the durability of these early victories. For now, the successful deployment of Section 5 against the pharmaceutical middlemen stands as a watershed moment. It signals that the era of relying solely on the Sherman Act to police corporate power is over, replaced by a more agile, and highly contested, regulatory framework that targets the mechanics of competition itself. As other industries watch the fallout, the definition of what constitutes fair competition is being rewritten in real time.[4]