UnitedHealth to buy Pharmacy Benefits Manager Catamaran Corporation for $12 billion

UnitedHealth has announced a deal to buy pharmacy benefits manager Catamaran Corp. for $12.8 billion. The move is a part of pharmacy benefits company fight against rising prescription drug costs.

The work of Pharmacy benefits managers is to help negotiate the prices that customers pay for prescription drugs.

For customers, they are like a key component in the push to contain soaring costs from specialty drugs, complex medicines that can represent treatment breakthroughs. Usually, such drugs cost much higher than other drugs.

The rise in costs due to these drugs may affect more patients as use of the treatments is growing and coverage for them is shrinking.

On Monday, UnitedHealth and Catamaran have said that their deal will combine businesses that have 'distinctive, rapidly growing specialty pharmacy services' for a segment of the market that will most probably quadruple from previous year's estimated $100 billion in revenues to possibly $400 billion by 2020.

Specialty drugs are used in the treatment of certain forms of cancer, multiple sclerosis and hepatitis C, among other conditions. They had always been very costly but were confined to comparatively small patient populations.

But it is changing, as there are some newer hepatitis C treatments that could be used by millions of patients.

According to the nation's largest pharmacy benefits manager, Express Scripts Holding Co., around 32 cents of every dollar spent on prescriptions goes toward a specialty drug now, which is up from 12 cents of every dollar spent in 2009.

Steve Brozak, who covers the pharmaceutical industry as president of WBB Securities, said that for both the companies, the deal is a 'material first step' in understanding how they can contain costs from these newer drugs.