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WHAT IT MEANS AND WHY IT'S IMPORTANT — We didn’t include this story in this week’s edition of the Fix because we thought SXC and Catalyst picked a really cool name (it’s OK), or even because we think CEO Mark Thierer is one of the brightest executives in the business (he is). It’s because Catamaran is a company to watch.
(THE NEWS: SXC Health Solutions changes name to Catamaran. For the full story, click here)
While everyone has been focused on ESI-Medco, Catamaran has emerged as a strong No. 4 [pharmacy benefit manager], behind UnitedHealth Group. When all of the ESI-Medco hoopla first began, Thierer, on an earnings call, told analysts that the news didn’t concern him that much, and if anything, it created new opportunities to offer sophisticated clients a legitimate alternative in the PBM market. “The big dislocations happening in the industry rght now have driven so many opportunities,” Thierer told the Wall Street Journal.
The new ESI is the classic, old-school PBM model that has come under attack for years. Critics of the model argue that the company is really a one-trick pony, best at driving down pharmacy reimbursements and steering patients into its own mail order business.
CVS Caremark, with its integrated PBM-pharmacy-retail clinic “sweet spots,” is able to bundle a lot of different offerings and create unique products and services in the areas of overlap between each of its business units that none of its competitors can offer in the PBM market. And then there’s Catamaran, which has a unique vision to sell its services a la carte to payers — you can just buy the technology services that SXC started its business with back in the early 90s, when it sold tech solutions to PBM customers before becoming a PBM itself, or you can buy the pharmacy benefit management component, too.
So far, it appears that Catamaran is making traction, including some impressive recent wins, Thierer has noted, such as the three-year contract it picked up in February with Blue Cross Blue Shield of Rhode Island.
To be sure, it has its challenges ahead of it, too, but Thierer believes his company creates a viable alternative in the traditional PBM market. So far, Catamaran — just like its progenitors SXC and Catalyst before it — appears to making believers out of a significant number of payers. That’s why you need to pay attention to this company.