SXC Health Solutions’ Proposed Acquisition of Catalyst Health

April 19, 2012

“The proposed acquisition by SXC (informedRx) of Catalyst Health Solutions will create four very large PBMs competing for market share,” says Edward Kaplan, senior vice president and national health practice leader at The Segal Company.

“Informed and Catalyst are both mid-sized PBMs that have been growing over the last few years through acquisitions. This transaction, if approved by the FTC, will likely mean the new combined PBM will be in the top four in terms of size,” Kaplan observes.

Typically, PBMs involved in transactions will honor their commitments through the life of the contract terms. However, changes in account management, mail order facilities, claim systems, network panels and formularies may take place in the future. If past history predicts future behavior, this and other mergers may result in a highly competitive market place for market share.

Kaplan reports an uptick in PBM competitive bidding by clients in the last few months for a variety of reasons. “Dramatic changes in patent expirations, plan designs, PBM operations and vendor ownership are creating client concerns,” he says.

Kaplan notes that other smaller PBMs continue to play an important role in the market place as alternatives to the large PBMs, for buyers looking for more control over their Rx benefits program.

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