Flood of generics slows Costco’s pharmacy growth
ISSAQUAH, Wash. Costco reported slower growth at pharmacies during its first quarter due in part to an influx of lower-priced generic drugs. Total sales increased 4 percent to $634 million for the three-month period ended Nov. 25.
Costco reported a 1.2 percent increase in prescription sales of $306 million for the quarter and a 6.8 percent jump in over-the-counter sales of $328 million. The company ended the quarter with 383 pharmacies. Costco’s vice president of pharmacy, Vic Curtis, said sales of generic versions of such popular drugs as Zocor and Norvasc had a greater impact on Costco than on most other retailers.
“It was really magnified for us because our prices on generics are so low,” Curtis said. “So, having so many drugs [make the] transition to generics at the same time is taking a toll.”
Curtis estimates the higher volume of generics “took about 9 percent off of our top line” compared with 4 percent or 5 percent at other chains. “It’s a bit of a struggle right now,” Curtis said.
He also said Costco is close to announcing the site of its second central fill center and could have a deal finalized in time to open the center in 2008. Costco hasn’t discussed where it plans to build the center, but it’s likely to be in one of the chain’s large West Coast markets. Its first central fill in Everett, Wash., opened in 2006 and currently fills prescriptions for online orders and for 40 pharmacies in Washington and Oregon.
Overall, Costco produced another strong showing with sales of food and electronics leading the way. Costco posted earnings of $262 million for the quarter and total sales of $15.81 billion compared with $14.15 billion last year. Same store sales at its U.S. stores increased 6 percent for the quarter.
Costco’s 6 percent increase in sales was far better than the low-single digit gains posted by such mass merchants as Wal-Mart and Target, reflecting a customer base of higher-income consumers who are more immune to high gas prices. One area where sales increased more than expected was at Costco.com, where online sales jumped 45 percent in the first quarter and are on pace to exceed $1.5 billion in fiscal 2008.
Costco opened 10 stores during the quarter and ended with 529 stores. It expects to open seven stores in the second quarter and 30 stores for the full year, along with nine relocations.
FDA approves Depomed’s 1,000 mg Glumetza
MENLO PARK, Calif. Depomed has received approval from the Food and Drug Administration for a 1,000 mg strength of Glumetza tablets. Glumetza is used as an adjunct to diet and exercise to improve glycemic control in adult patients with Type 2 diabetes.
“This approval is good news for patients with Type 2 diabetes who are on metformin therapy and prefer to take fewer tablets per day,” stated Carl Pelzel, president and chief executive officer of Depomed. “The American Diabetes Association guidelines recommend that metformin therapy be titrated to its maximally effective dose, generally regarded as 2,000 mg/day as tolerated. We believe this 1,000 mg dosage form is a great addition to the Glumetza franchise, as we now have two ways for patients to achieve 24-hour glycemic control: the original Glumetza 500 mg tablets, which start out as small, easy-to-swallow tablets that expand once in the stomach, and the new 1,000 mg tablets, which require fewer tablets to hit the target dose. We are working very closely with our commercial supplier, Biovail, to make these tablets commercially available in the United States in the near future.”
Depomed acquired exclusive U.S. rights to the 1,000 mg formulation of Glumetza in December 2005 from Biovail, and has a supply agreement with Biovail related to the formulation. Glumetza had sales of $3.8 million in the third quarter of 2007.
Ivans launches LIME Medicare Internet solution
STAMFORD, Conn. Ivans, a technology company that provides Medicare connectivity solutions and services has unveiled its new product, an Internet solution for healthcare providers that processes Medicare transactions, called LIME.
The goal of the program will be to save providers time and money through its elimination of manual searches and by streamlining the claims process so claims are paid faster and more accurately. The program is approved by the Centers for Medicare and Medicaid Services and is compliant with the Health Insurance Portability and Accountability Act.
Using LIME, providers are able to process Medicare claims 10 times faster than dial-up modems. Providers indicated that while it used to take one hour to process three claims, by using the new program 30 claims can be processed during that same time period. Because this is a multi-user solution that can be used for other Medicare transactions such as eligibility and claims remittance, the time and money saved in a one-year period is equivalent to three staff members working full-time.
Currently, more than 100,000 part A and part B healthcare providers are supported by Ivans solutions.