UnitedHealth to buy pharmacy benefits manager Catamaran

Staff Writer
Columbus CEO

The nation's largest health insurer, UnitedHealth, has muscled up in its fight against rising specialty drug costs, spending more than $12 billion to buy pharmacy benefits manager Catamaran Corp.

Pharmacy benefits managers, or PBMs, process claims and run prescription drug plans for insurers, employers and other customers. They help negotiate prices customers and insurers pay for drugs and are seen as a key component in the push to contain rising costs from specialty drugs. These are complex medicines that often represent treatment breakthroughs but come with much higher prices than older, more traditional medicines.

UnitedHealth Group Inc. already has a PBM business named OptumRx that fills about 600 million prescriptions annually. Catamaran expects to fill 400 million this year.

UnitedHealth said Monday that it will spend $61.50 in cash on each share of Catamaran in a deal it expects to close during the fourth quarter. That's a 27 percent premium to Catamaran's closing price Friday, and shares of the pharmacy benefits manager are climbing sharply in early morning trading.

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 companies said their businesses both have "distinctive, rapidly growing specialty pharmacy services businesses" 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.

The nation's largest PBM, Express Scripts Holding Co., has long complained about the soaring costs that come from specialty drugs, especially newer hepatitis C treatments like Gilead Sciences Inc.'s Sovaldi, which comes with higher cure rates and a per-pill price that can run as high as $1,000.

Shares of Catamaran rose 26 percent, or $12.67, to $60.99 more than two hours before markets opened. UnitedHealth, based in Minneapolis, saw its shares climb 2.6 percent, or $3.14, to $121.15.