Cigna Agreement With Catamaran Expected To Save Millions Annually In Pharmacy Drug Purchasing, Management

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Cigna Corp. announced late Monday it has a new 10-year agreement with Catamaran, a company that buys prescription drugs in bulk and provides technological advantages to manage drug inventories for the health insurer.

The arrangement builds on an agreement that Catamaran had with Cigna’s subsidiary, HealthSpring. At stake is the pharmacy benefits program for about 8 million Cigna customers who stand to benefit from savings as Catamaran negotiates behind the scenes with prescription drug companies.

The customers are Cigna members who get prescriptions through home delivery, or at retail stores that have negotiated arrangements with the insurer. Cigna will continue to manage the pharmacy programs for its 8 million customers and Catamaran will fulfill orders for prescriptions for Cigna’s home delivery programs and the insurer’s retail network, in addition to processing claims.

Cigna said the arrangement will save the insurer 50 cents per share starting in 2015, which analysts at Credit Suisse estimated to be about $213 million annually.

“This strategic [pharmacy benefits management] partnering agreement will complement Cigna’s strengths of partnering with physicians to engage customers in their overall health and wellness,” Cigna CEO and President David M. Cordani said in a prepared statement. “Connected to Catamaran’s industry-leading health care information technology and service solutions, we will deliver differentiated options for clients and more affordable customer solutions in a rapidly evolving market.”

Catamaran is planning to open an office in Hartford, though none of the details of the move are publicly available yet. The company has, as it takes on new clients, opened offices in other cities, such as a 13,000-square-foot office that opened in December in Indianapolis, Ind., to support the state’s Medicaid customers.

During its second quarter earnings this year, Cigna expects to record a one-time transaction cost of about $25 million for advisory fees related to the agreement.

About Matthew Sturdevant

Full-time staff journalist at The Hartford Courant and magazine freelancer with a master's degree in writing from Dartmouth. My work has appeared in The Los Angeles Times, The Chicago Tribune, Taiwan News, The Baltimore Sun and many other news sources. My blog has been referenced by Politico.com, the Kaiser Family Foundation, the Georgetown Law Library and a number of organizations in healthcare and business. Sturdevant’s blog is "a well-written wealth of ideas," said The Donald W. Reynolds National Center for Business Journalism, (businessjournalism.org, May 18, 2011). I have experience writing for newspapers, magazines, Web sites and blogs as well as shooting and editing video. I made regular appearances on news-talk radio and on the NBC affiliate station in Corpus Christi, Texas. I made occasional appearances on the Fox affiliate in Connecticut promoting Hartford Courant articles.

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