UPDATE 4-UnitedHealth to buy pharmacy benefit firm Catamaran for $12.8 bln
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By Sneha Banerjee
March 30 (Reuters) - Health insurer UnitedHealth Group Inc agreed to buy Catamaran Corp in a deal worth about $12.8 billion to boost its pharmacy benefit business as it competes with bigger rivals such as Express Scripts Holdings Co.
Pharmacy benefit managers (PBM) administer drug benefits for employers and health plans and run large mail order pharmacies, helping them get better prices from drugmakers.
As employers look to cut prescription costs on expensive drugs, the deal with Catamaran will give UnitedHealth's pharmacy benefits unit, OptumRx, the scale to negotiate favorable prices from pharmacy companies.
U.S. drug prices rose 12 percent in 2014 due to a new treatment for hepatitis C that cost more than $80,000 but cured almost all recipients with few side effects. Another new class of drugs, to treat high cholesterol, is expected to hit the market in 2015 and has insurers worried about drug costs this year as well.
The purchase of Catamaran will increase UnitedHealth's market share to 15 percent to 20 percent of the people who receive their drug benefits through pharmacy benefit managers, BMO Capital Markets analyst Jennifer Lynch said in a research note.
With a combined 1 billion scripts annually, UnitedHealth will be about the same size as current industry number two, CVS Health Corp, she added.
Catamaran was formed after SXC Health Solutions and PBM Catalyst Health Solutions merged in 2012. Continued...