Eagan-based pharmacy benefits manager Prime Therapeutics has announced a $1.35 billion deal to purchase a medical pharmacy management organization, a move company leaders say was made to address inflated pharmacy costs. 

Prime announced Thursday it has entered into a definitive agreement with Centene Corporation to acquire Magellan Health, Inc.’s pharmacy business, Magellan Rx Management,  an organization that specializes in drug management, Medicaid administration, and pharmacy benefits management. 

“This is a timely and important move,” Ken Paulus, CEO and president of Prime, said in a news release.  “As pharmacy costs balloon, bold action is necessary. By bringing together the capabilities and talents of Prime and Magellan Rx, we are positioned to deliver breakthrough value to the clients and members we serve.”

Magellan Rx serves more than 16 million members across 28 states and Washington, D.C., providing Medicaid and state pharmacy program administration solutions. Prime offers utilization management, network management, claims processing, and patient-centric clinical programs to more than 33 million Americans. Last year Prime processed nearly 400 million pharmacy claims, according to the company. 

“We are thrilled to be joining forces with Prime as we usher in the next chapter of our company’s evolution,” Mostafa Kamal, CEO, Magellan Rx Management, said in a statement. “This is a strategic combination that will accelerate our work in bringing next-generation pharmacy solutions to market, creating an even more powerful value proposition for the customers and members we serve.” 

Magellan Rx will continue to operate as a stand-alone business unit under Prime for the foreseeable future. 

The transaction is subject to clearance under the Hart-Scott Rodino Act and receipt of required state regulatory approvals, with an anticipated closing date later this year.

 Solomon Partners is serving as exclusive financial advisor and placement agent to Prime and McDermott Will & Emery and Fox Rothschild LLP are serving as its legal counsel.  Allen & Company LLC and Evercore are serving as financial advisors to Centene, and Skadden, Arps, Slate, Meagher & Flom LLP are serving as its legal counsel.