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UnitedHealth Bulks Up for Prescription Drug Cost Battle

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This Tuesday, Oct. 16, 2012, file photo, shows a portion of The UnitedHealth Group Inc.'s  campus in Minnetonka, Minn. The nation’s largest health insurer, UnitedHealth, is staking a bigger claim in pharmacy benefits management with a plan to buy Catamaran Corp., for more than $12 billion in cash, the company announced, Monday, March 30, 2015. (AP Photo/Jim Mone, File)

This Tuesday, Oct. 16, 2012, file photo, shows a portion of The UnitedHealth Group Inc.’s campus in Minnetonka, Minn. The nation’s largest health insurer, UnitedHealth, is staking a bigger claim in pharmacy benefits management with a plan to buy Catamaran Corp., for more than $12 billion in cash, the company announced, Monday, March 30, 2015. (AP Photo/Jim Mone)

TOM MURPHY, AP Business Writer

The nation’s largest health insurer, UnitedHealth, will muscle up for its fight against rising prescription drug costs by spending more than $12 billion to buy pharmacy benefits manager Catamaran Corp.

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 soaring costs from specialty drugs, complex medicines that can represent treatment breakthroughs but often at a much higher price than other drugs.

Rising costs from these drugs are expected to affect more patients as use of the treatments grows and coverage for them shrinks.

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 possibly $400 billion by 2020.

Specialty drugs treat certain forms of cancer, multiple sclerosis and hepatitis C, among other conditions. They have always been pricey but confined to relatively small patient populations. That’s changing, due in part to some newer hepatitis C treatments that could be used by millions of patients.

Nearly 32 cents of every dollar spent on prescriptions now goes toward a specialty drug, according to the nation’s largest pharmacy benefits manager, Express Scripts Holding Co. That’s up from 12 cents of every dollar spent in 2009.

PBMs run prescription drug plans for employers, insurers and other customers. They have been countering rising specialty drug costs by requiring patients to try other treatments first or by doing more care management to make sure customers stay on their medicines. They also can use the leverage that comes from their size to negotiate coverage restrictions that lower costs.

St. Louis-based Express Scripts, which filled about 1.3 billion prescriptions last year, said in December that it will no longer cover Sovaldi and Harvoni — two Gilead Sciences Inc. drugs that cost more than $80,000 each for a full course of treatment — or Johnson & Johnson’s Olysio for some customers except under limited circumstances.

Instead, it made AbbVie Inc.’s Viekira Pak its preferred treatment.

PBMs generally don’t detail the price breaks they get from these negotiations, and the difference may not filter entirely down to patients. More payers are making customers pay more out of pocket for specialty drugs before coverage of the medicines kicks in.

The combination of UnitedHealth Group Inc.’s OptumRx PBM business and Catamaran will create a PBM that fills around 1 billion prescriptions annually.

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

Acquisitions have been a key means of growth in the PBM 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 the Chicago suburb of 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 deal is expected to close during the fourth quarter.

Shares of Catamaran rose 24 percent, or $11.61, to $59.93 Monday in midday trading, while broader indexes also advanced around 1 percent. UnitedHealth, based in Minneapolis, also saw its shares climb 2.6 percent, or $3.11, to $121.12.

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Activism

OPINION: California’s Legislature Has the Wrong Prescription for the Affordability Crisis — Gov. Newsom’s Plan Hits the Mark

Last month, Gov. Newsom included measures in his budget that would encourage greater transparency, accountability, and affordability across the prescription drug supply chain. His plan would deliver real relief to struggling Californians. It would also help expose the hidden markups and practices by big drug companies that push the prices of prescription drugs higher and higher. The legislature should follow the Governor’s lead and embrace sensible, fair regulations that will not raise the cost of medications.

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Rev. Dr. Lawrence E. VanHook. Courtesy of Rev. Dr. Lawrence E. VanHook.
Rev. Dr. Lawrence E. VanHook. Courtesy of Rev. Dr. Lawrence E. VanHook.

By Rev. Dr. Lawrence E. VanHook

As a pastor and East Bay resident, I see firsthand how my community struggles with the rising cost of everyday living. A fellow pastor in Oakland recently told me he cuts his pills in half to make them last longer because of the crushing costs of drugs.

Meanwhile, community members are contending with skyrocketing grocery prices and a lack of affordable healthcare options, while businesses are being forced to close their doors.

Our community is hurting. Things have to change.

The most pressing issue that demands our leaders’ attention is rising healthcare costs, and particularly the rising cost of medications. Annual prescription drug costs in California have spiked by nearly 50% since 2018, from $9.1 billion to $13.6 billion.

Last month, Gov. Newsom included measures in his budget that would encourage greater transparency, accountability, and affordability across the prescription drug supply chain. His plan would deliver real relief to struggling Californians. It would also help expose the hidden markups and practices by big drug companies that push the prices of prescription drugs higher and higher. The legislature should follow the Governor’s lead and embrace sensible, fair regulations that will not raise the cost of medications.

Some lawmakers, however, have advanced legislation that would drive up healthcare costs and set communities like mine back further.

I’m particularly concerned with Senate Bill (SB) 41, sponsored by Sen. Scott Wiener (D-San Francisco), a carbon copy of a 2024 bill that I strongly opposed and Gov. Newsom rightly vetoed. This bill would impose significant healthcare costs on patients, small businesses, and working families, while allowing big drug companies to increase their profits.

SB 41 would impose a new $10.05 pharmacy fee for every prescription filled in California. This new fee, which would apply to millions of Californians, is roughly five times higher than the current average of $2.

For example, a Bay Area family with five monthly prescriptions would be forced to shoulder about $500 more in annual health costs. If a small business covers 25 employees, each with four prescription fills per month (the national average), that would add nearly $10,000 per year in health care costs.

This bill would also restrict how health plan sponsors — like employers, unions, state plans, Medicare, and Medicaid — partner with pharmacy benefit managers (PBMs) to negotiate against big drug companies and deliver the lowest possible costs for employees and members. By mandating a flat fee for pharmacy benefit services, this misguided legislation would undercut your health plan’s ability to drive down costs while handing more profits to pharmaceutical manufacturers.

This bill would also endanger patients by eliminating safety requirements for pharmacies that dispense complex and costly specialty medications. Additionally, it would restrict home delivery for prescriptions, a convenient and affordable service that many families rely on.

Instead of repeating the same tired plan laid out in the big pharma-backed playbook, lawmakers should embrace Newsom’s transparency-first approach and prioritize our communities.

Let’s urge our state legislators to reject policies like SB 41 that would make a difficult situation even worse for communities like ours.

About the Author

Rev. Dr. VanHook is the founder and pastor of The Community Church in Oakland and the founder of The Charis House, a re-entry facility for men recovering from alcohol and drug abuse.

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Activism

Oak Temple Hill Hosts Interfaith Leaders from Across the Bay Area

Distinguished faith leaders Rev. Ken Chambers, executive director the Interfaith Council of Alameda County (ICAC); Michael Pappas, executive director of the San Francisco Interfaith Council; and Dr. Ejaz Naqzi, president of the Contra Costa County Interfaith Council addressed the group on key issues including homelessness, food insecurity, immigration, and meaningful opportunities to care for individuals and communities in need. 

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Troy McCombs (from the state of Washington), Elder Mark Mortensen (from Irvine, CA), Michael Pappas, Rev. Ken Chambers, Dr. Ejaz Naqvi, Elder Sigfried Nauman (from the state of Washington), and Richard Kopf. Courtesy photo.
Troy McCombs (from the state of Washington), Elder Mark Mortensen (from Irvine, CA), Michael Pappas, Rev. Ken Chambers, Dr. Ejaz Naqvi, Elder Sigfried Nauman (from the state of Washington), and Richard Kopf. Courtesy photo.

Special to the Post

Interfaith leaders from the Bay Area participated in a panel discussion at the annual meeting of communication leaders from The Church of Jesus Christ of Latter-day Saints held on Temple Hill in Oakland on May 31. Distinguished faith leaders Rev. Ken Chambers, executive director the Interfaith Council of Alameda County (ICAC); Michael Pappas, executive director of the San Francisco Interfaith Council; and Dr. Ejaz Naqzi, president of the Contra Costa County Interfaith Council addressed the group on key issues including homelessness, food insecurity, immigration, and meaningful opportunities to care for individuals and communities in need.

Chambers, said he is thankful for the leadership and support of the Church of Jesus Christ Latter-Day Saints’ global ministry, which recently worked with the interfaith congregations of ICAC to help Yasjmine Oeveraas a homeless Norwegian mother and her family find shelter and access to government services.

Oeveraas told the story of how she was assisted by ICAC to the Oakland Post. “I’m a Norwegian citizen who escaped an abusive marriage with nowhere to go. We’ve been homeless in Florida since January 2024. Recently, we came to California for my son’s passport, but my plan to drive for Uber fell through, leaving us homeless again. Through 2-1-1, I was connected to Rev. Ken Chambers, pastor of the West Side Missionary Baptist Church and president of the Interfaith Council of Alameda County, and his car park program, which changed our lives. We spent about a week-and-a-half living in our car before being blessed with a trailer. After four years of uncertainty and 18 months of homelessness, this program has given us stability and hope again.

“Now, both my son and I have the opportunity to continue our education. I’m pursuing cyber analytics, something I couldn’t do while living in the car. My son can also complete his education, which is a huge relief. This program has given us the space to focus and regain our dignity. I am working harder than ever to reach my goals and give back to others in need.”

Richard Kopf, communication director for The Church of Jesus Christ in the Bay Area stated: “As followers of Jesus Christ, we embrace interfaith cooperation and are united in our efforts to show God’s love for all of his children.”

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Activism

“Unnecessary Danger”: Gov. Newsom Blasts Rollback of Emergency Abortion Care Protections

Effective May 29, CMS rescinded guidance that had reinforced the obligation of hospitals to provide abortion services under the Emergency Medical Treatment and Labor Act (EMTALA) when necessary to stabilize a patient’s condition. Newsom warned that the rollback will leave patients vulnerable in states with strict or total abortion bans.

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iStock.
iStock.

By Bo Tefu, California Black Media

Gov. Gavin Newsom is criticizing the Centers for Medicare & Medicaid Services (CMS) for rolling back federal protections for emergency abortion care, calling the move an “unnecessary danger” to the lives of pregnant patients in crisis.

Effective May 29, CMS rescinded guidance that had reinforced the obligation of hospitals to provide abortion services under the Emergency Medical Treatment and Labor Act (EMTALA) when necessary to stabilize a patient’s condition.

Newsom warned that the rollback will leave patients vulnerable in states with strict or total abortion bans.

“Today’s decision will endanger lives and lead to emergency room deaths, full stop,” Newsom said in a statement. “Doctors must be empowered to save the lives of their patients, not hem and haw over political red lines when the clock is ticking. In California, we will always protect the right of physicians to do what’s best for their patients and for women to make the reproductive decisions that are best for their families.”

The CMS guidance originally followed the 2022 Dobbs decision, asserting that federal law could preempt state abortion bans in emergency care settings. However, legal challenges from anti-abortion states created uncertainty, and the Trump administration’s dismissal of a key lawsuit against Idaho in March removed federal enforcement in those states.

While the rollback does not change California law, Newsom said it could discourage hospitals and physicians in other states from providing emergency care. States like Idaho, Mississippi, and Oklahoma do not allow abortion as a stabilizing treatment unless a patient’s life is already at risk.

California has taken several steps to expand reproductive protections, including the launch of Abortion.CA.Gov and leadership in the Reproductive Freedom Alliance, a coalition of 23 governors supporting access to abortion care.

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