By Jon Kamp
SXC Health Solutions Corp.'s (SXCI) acquisition of fellow
pharmacy-benefit manager Catalyst Health Solutions hasn't hampered
the company's ability to compete for business, SXC Chief Executive
Mark Thierer said.
Mergers between pharmacy-benefit managers, known as PBMs, can
sometimes prove disruptive for the health plans and companies that
hire them to manage drug benefits. Though SXC and Catalyst closed
their deal just last week, Mr. Thierer said he anticipates the
newly combined company will continue to win new business.
"I'm actually wildly optimistic" about the current selling
season for 2013, which runs until early autumn, the CEO said in an
interview. The company is rolling out a new name Tuesday--Catamaran
Corp.--and will start trading Wednesday under the ticker symbol
CTRX.
"We've already had some wins," Mr. Thierer added, such as a
three-year contract with Blue Cross & Blue Shield of Rhode
Island disclosed in February. "Business is moving."
He said there has been a much higher-than-normal level of PBM
clients putting out requests for proposals, a trend also
highlighted recently by other industry executives and consultants.
While all these requests don't automatically mean clients will
change hands--some may be testing the waters, but could re-sign
with their current benefit manager, consultants have said--Mr.
Thierer said he sees opportunity in the commotion.
He chalked up the busy selling season to a handful of factors
that have caused PBM clients to survey their options, including the
fractured relationship between big PBM Express Scripts Holding Co.
(ESRX) and drugstore Walgreen Co. (WAG). Express Scripts is also
coming off a large transaction--in April it closed on its purchase
of Medco Health Solutions to create the industry's largest
company.
"The big dislocations happening in the industry right now have
driven so many opportunities," Mr. Thierer said. Both SXC and
Catalyst have pipelines of new business activity--meaning requests
to which they are responding that could turn into new
business--that are two or three times bigger than what either
company has ever seen before, he added.
He agreed that mergers usually slow down sales activity at PBMs,
but said "that is absolutely not the case" following the Catalyst
deal.
SXC became the fourth-largest PBM by prescription volume through
the deal, ranking behind Express Scripts, CVS Caremark Corp. (CVS)
and a unit of UnitedHealth Group Inc. (UNH). SXC plans to use its
newfound heft to compete more for the biggest corporate PBM
customers, which have traditionally gravitated toward Medco and CVS
Caremark.
One big question for the newly minted "Catamaran" is whether it
will be able to keep an important customer--the insurer
HealthSpring, which Cigna Corp. (CI) bought early this year--when a
contract ends after 2013. Cigna hasn't disclosed plans for that
contract, though it has said all options are on the table for its
own internal PBM business.
Barclays analyst Lawrence Marsh said he believes SXC can grow
its business with Cigna, rather than losing out, should Cigna
choose to outsource PBM operations. Mr. Thierer said he won't
project what could happen but noted his company is spending a lot
of time talking to Cigna about the possibilities.
"We view our opportunity to expand our relationship with Cigna
as an important one," he said.
SXC shares were up 0.4% to $95.34 in recent trading, and have
risen about 69% this year.
Write to Jon Kamp at jon.kamp@dowjones.com.