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Pharma Analyst:  "PBM" Spells "Opportunity"

Cost containment may spell trouble for much of the health-care sector, but Charles Boorady, healthcare providers analyst for Citigroup, says it's likely to spell success for pharmacy benefits managers.

"A couple of things will likely get signed into law in 2009," he said. "One is legislation to facilitate getting biotech generic drugs to the market; we think the PBMs are beneficiaries of that." (See his full comments in the video)

He sees the fallout from another trend benefiting the benefits managers.

"We also think they'll continue to pay doctors a 2 percent bonus to write prescriptions electronically," he said. "As you know, doctors mostly write these prescriptions by hand; 20 percent of prescriptions go unfilled; if they write them electronically, they're more likely to get filled, and they're more likely to get filled by mail-order PBMs."

Recommendations:

Boorady's list includes UnitedHealth Group, Wellpoint, Medco Health Solutions, and Express Scripts.

Disclosures:

UnitedHealth Group, Wellpoint, Medco Health Solutions, and Express Scripts are all investment banking clients of Boorady's firm. In addition, his firm makes a market in shares of Express Scripts.

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