WASHINGTON - Federal regulators announced a settlement Wednesday with Express Scripts to change how the company handles prescription drug pricing. The agreement aims to lower out-of-pocket costs for patients who use insulin and other medications.

The Federal Trade Commission, or FTC, sued the company over its role as a pharmacy benefit manager. These companies act as middlemen between drug makers, insurance plans, and pharmacies. The government alleged that Express Scripts used business practices that drove up the price of insulin. According to the FTC, the company preferred drugs with high list prices because they came with larger rebates. While these rebates benefited the middleman, they often led to higher costs for patients whose insurance payments were based on the original high price.

Under the terms of the settlement, Express Scripts must make several changes to its operations. The company must offer plans that base patient payments on the lower net cost of a drug rather than the higher list price. The company can no longer favor expensive versions of a drug over identical, cheaper versions on its standard lists of covered medicines. The agreement expands a program that limits the cost of insulin to $25 per month for most members. Express Scripts must also provide clearer reports to the employers and organizations that hire them to manage their drug plans.

The settlement also addresses how the company works with neighborhood drugstores. Express Scripts agreed to move toward a payment model based on the actual cost of the medicine plus a fee for the pharmacist's services. The change is intended to provide more consistent revenue for community pharmacies. Additionally, the company will move its international purchasing office from Switzerland back to the United States. Officials say this will bring a large portion of the company's business back under domestic oversight.

The agreement will be open for public comment for 30 days before it becomes final. Once approved, the changes are expected to save patients billions of dollars in medical costs over the next 10 years. Federal officials are continuing similar legal actions against other large pharmacy benefit managers to address drug pricing across the industry.