The market for drug benefit managers,which provide prescriptions to health plan members,is heating up.
The sector is home to Prescription Solutions from PacifiCare, a Costa Mesa-based pharmacy unit of UnitedHealth Group Inc.
Now a big rival could be in the making.
Express Scripts Inc. of St. Louis is offering about $26 billion for rival Caremark Rx Inc. of Nashville. The bid could quash a deal that Caremark struck in November with CVS Corp., the Rhode Island drugstore chain looking to get into drug benefit management.
Drug prices are one of healthcare’s hotter topics. Rising costs are pressuring drug makers and pharmacies to discount prices. Recent moves by Wal-Mart Stores Inc. and Target Corp. into low-price generic drugs have jolted the industry.
Analysts believe that the Caremark situation could spark other deals.
“There is clearly scope for consolidation,” said Paul Diggle, a drug industry analyst for Nomura Code in London, in an article on CNNMoney.com.
The Express Scripts offer could come under scrutiny “since it reflects the creation of a large (drug benefit manager) and loss of a key competitor,” said Sean Brandle, head of drug consulting for Segal Co., a New York-based benefits, human resources and compensation consulting firm.
How the deal will play out on drug prices is unclear, he said.
“For employers, it represents the hope of reduced costs. But as we have seen before, cost reductions are normally the function of competition among (drug benefit managers),” Brandle said.
Prescription Solutions saw its own consolidation with Minnesota-based UnitedHealth 2005’s buy of PacifiCare Health Systems Inc. in Cypress.
Prescription Solutions, which works with governments, unions and businesses to help control their drug costs through mail orders, was part of PacifiCare’s comeback story in the run-up to the buyout.
Spectrum’s Docket
Spectrum Pharmaceuticals Inc., the Irvine-based drug developer, said last month that a federal court dismissed a patent lawsuit with GlaxoSmithKline PLC.
The lawsuit was over a generic version of Imitrex, Glaxo’s drug for migraines and cluster headaches. It was dismissed following a settlement in November.
Under that deal, Spectrum is going to be allowed to exclusively distribute generic versions of Imitrex, called sumatriptan; in the U.S. Spectrum is launching sumatriptan with Par Pharmaceutical Cos. of New Jersey.
In another matter, Spectrum said it is seeking arbitration in a dispute with its German partner. The dispute with GPC Biotech AG is over a licensing deal for satraplatin, Spectrum’s prostate cancer drug candidate.
Spectrum filed its demand with the American Arbitration Association and charges GPC excluded it from sublicensing fees from Pharmion GMBH, another German company that works with Spectrum and GPC on the drug.
GPC has received $37 million from Pharmion and has a commitment for $22 million more, according to Spectrum.
The charges are grounds for terminating the deal with GPC and receiving full rights to satraplatin, Spectrum said.
GPC fired back at Spectrum, saying Spectrum’s claims were made in bad faith and inconsistent with the licensing deal. GPC said it plans counterclaims against Spectrum.
Trimedyne Raises $3M
Trimedyne Inc., a Lake Forest medical device maker that trades on the low-profile over-the-counter Bulletin Board exchange, has raised $3 million through a private offering of its common stock.
Trimedyne is going to use the money to finance what it calls an expected increase in sales of a new laser fiber, said Marvin Loeb, its chairman, in a release. Trimedyne’s side-firing laser fiber is being introduced by Boston Scientific Corp. of Natick, Mass., in the U.S. and in Japan and by Israel’s Lumenis Ltd. in the rest of the world.
Trimedyne received Food and Drug Administration clearance to market the fiber for use with holmium lasers to treat various conditions, including benign prostatic hyperplasia, or an enlarged prostate. Benign prostatic hyperplasia affects about 55% of men over age 55 and a higher percentage of older men.
Men who suffer from the condition generally take drugs to relieve the condition. They can become less effective over time, leading to the use of electrosurgical procedures to treat the disease.
Alteer Correction
We missed the mark on a couple of points in our Dec. 11 article about Alteer Corp., the Irvine-based medical software company. The company says it raised $16.5 million in 2005. And Charlie Hearn, the company’s former chief executive, no longer is with the company.
Bits and Pieces:
UCI Medical Center’s MDA ALS and Neuromuscular Diseases Center received $500,000 from Augie’s Quest, a foundation started by Augie Nieto, cofounder of Lifecycle Inc., which eventually became one of the largest makers of exercise equipment. Nieto suffers from amyotrophic lateral sclerosis, also known as Lou Gehrig’s disease Apria Healthcare Group Inc. of Lake Forest named Norman Payson, chairman of Dallas-based occupational healthcare company Concentra, to fill a vacancy on its board Toshiba America Medical Systems of Tustin said it would install for testing a 256-slice computed tomography scanner at the Johns Hopkins University School of Medicine and its heart institute in February.
