PacifiCare Health Systems Inc. is readying to market its Medicare prescription drug coverage next month.
The Cypress-based company, which is being bought by Minnesota-based UnitedHealth Group Inc., said it is spending $50 million to roll out its drug plan for seniors.
PacifiCare plans to offer its Prescription Solutions drug plan for seniors in all 50 states, joining rivals such as Wellpoint Inc. of Indianapolis, Hartford, Conn.-based Aetna Inc., and Cigna HealthCare, a unit of Philadelphia’s Cigna Corp.
UnitedHealth, which is spending $8 billion to buy PacifiCare in a deal set to wrap up some time in 2006, also plans to offer a Medicare drug plan.
Medicare drug coverage is part of a gift that keeps on giving for PacifiCare and others: 2003’s Medicare Prescription Drug, Improvement and Modernization Act.
Already, the act has steered billions to PacifiCare and others to up their Medicare health insurance plan offerings. The government projects spending $720 billion on the drug program in the next 10 years.
The drug plan, set to start in January, could boost PacifiCare’s Costa Mesa-based Prescription Solutions unit, which is one of the company’s fastest-growing businesses with yearly revenue of nearly $1 billion.
Prescription Solutions runs a mail-order pharmacy for PacifiCare plan enrollees and other customers. PacifiCare and others can start marketing their Medicare drug plans Oct. 1. The Centers for Medicare and Medicaid Services are set to release contract terms by the end of this week, according to PacifiCare spokesman Tyler Mason.
“Our strategy is sort of two bookends,” Mason said.
The first “bookend,” according to Mason, is working with insurance companies that sell “Medigap,” or Medicare supplement insurance. Those include American Republic Insurance Co. of Des Moines, Iowa, Aegon NV of the Netherlands and Columbus, Ohio-based United Commercial Travelers of America, Mason said.
Working with insurers gives PacifiCare access to about 1.5 million current Medicare supplement and other senior insurance policyholders, he said.
Those companies, Mason said, “can co-brand with PacifiCare” for a drug plan without taking on risks, which PacifiCare will do.
The second part of the plan is working through “field marketing organizations,” or groups of insurance brokerages that sell Medicare health maintenance organization plans to seniors.
In the past, PacifiCare primarily sold its Medicare Advantage HMO plans through its own salespeople, Mason said. PacifiCare also has started paying brokers commissions for selling Medicare products within the past two years, he said.
Enrollment for Medicare drug plans starts Nov. 15. Seniors who enroll by year’s end are set to see coverage start Jan. 1.
The drug plan is the largest expansion in the history of the 40-year-old federal health insurance program.
PacifiCare is looking to play off its Medicare health plans in going after senior prescriptions.
Wall Street once fretted about PacifiCare’s dependence on Medicare. But those concerns pretty much have fallen by the wayside, thanks to the 2003 Medicare reform law that infused PacifiCare and its rivals with $14 billion in funding.
Goldman Sachs & Co., the New York-based investment bank, issued a research report earlier this summer that estimated that the drug program could generate as much as $10 billion in revenue and $250 million in earnings in 2006 for nine insurers, including PacifiCare and UnitedHealth.
PacifiCare isn’t the only big-spending health plan that’s getting into drugs. UnitedHealth is spending $75 million. Humana Inc. of Louisville, Ky., is spending $80 million. Aetna’s planning to spend $50 million to launch its drug plan.
Goldman Sachs believes that 17.5 million seniors, or 41% of those who will be eligible for the plan, are going to enroll in it next year.
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FDA Approves Eye Laser From Advanced Medical
Advanced Medical Optics Inc., the Santa Ana maker of contact lens and eye surgery products, said the Food and Drug Administration has approved its latest laser medical device to treat nearsighted patients with astigmatism.
Advanced Medical said the approval of its Star S4 IR excimer laser improved the company’s CustomVue procedure, which treats myopia and astigmatism.
The company said clinical trials found that 98% of patients who received the CustomVue nearsightedness treatment with the Star S4 IR had their vision corrected to 20/40 or better at six months.
Some 84% were corrected to 20/20 vision or better without glasses or contact lenses.
The device maker acquired the Star S4 system through its acquisition of Santa Clara’s Visx Inc., which made lasers to correct vision.
Advanced Medical bought Visx for $1.3 billion in May.
With Visx, Advanced Medical stands to break the $1 billion annual sales mark this year, up from $742 million last year.
,Vita Reed
