The nation's largest health insurer,
Pharmacy benefits managers, or PBMs, help negotiate the prices that customers pay for prescription drugs. They are seen as a key component in the push to contain rising specialty drug costs, an expense that could overwhelm parts of the health care system, especially the federal-state
Specialty drugs are complex medicines often represent treatment breakthroughs but come with much higher prices than older drugs. Experts say specialty drugs have always been pricey but confined to relatively small patient populations. That's changing, due in part to some relatively new hepatitis C treatments that could be used by millions of patients.
UnitedHealth and Catamaran said Monday that their deal will combine businesses that have "distinctive, rapidly growing specialty pharmacy services" for a segment of the market that is expected to quadruple from an estimated $100 billion in revenues last year to $400 billion by 2020.
UnitedHealth Group Inc.'s OptumRx PBM business fills about 600 million prescriptions annually. Catamaran expects to fill 400 million this year.
The nation's largest PBM, Express Scripts Holding Co., filled about 1.3 billion prescriptions last year.
Express Scripts executives have spoken out frequently about soaring costs from specialty drugs, and the St. Louis company threw its weight into this fight late last year by restricting coverage. It said in December it will no longer cover Sovaldi and Harvoni — two Gilead Sciences drugs that cost more than $80,000 each for a full course of treatment — or Johnson & Johnson's Olysio except under limited circumstances.
Instead, it made AbbVie Inc.'s Viekira Pak the preferred treatment for its patients.
PBMs can make these restrictions in part because of the leverage they get from the millions of customers they represent. Acquisitions have been a key means of growth in the sector for years.
In 2012, Express Scripts became the nation's largest PBM by completing a $29.1 billion acquisition of rival Medco Health Solutions. That same year, Catamaran changed its name from SXC Health Solutions after spending more than $4 billion to buy another PBM, Catalyst Health.
UnitedHealth said Monday that, for the latest deal, it will spend $61.50 in cash on each share of Catamaran. That's a 27 percent premium to Catamaran's closing price Friday.
Catamaran, based in Schaumburg, Illinois, had about 207.5 million shares outstanding at the end of January, which puts the deal price at roughly $12.76 billion.
The acquisition is expected to close during the fourth quarter.