Medco Health Solutions, Franklin Lakes, N.J., one of the country's biggest prescription benefit managers, posted an 18% increase in profit for the third quarter as higher drug prices and greater use of lower-cost generic medicines offset nearly flat revenues.
Medco, which processes pharmacy and mail-order prescriptions for about 60 million Americans, said net income was $118.1 million, or 43 cents per share. In the year-ago quarter, net income was $100.3 million, or 37 cents per share.
The results include a one-time charge of about $45 million for amortization of intangible assets, an accounting practice that gradually writes off the declining value of customer accounts Medco had when it was acquired by pharmaceutical giant Merck & Co. in 1993. Merck spun off Medco in August 2003.
Revenues increased 2% to $8.7 billion, from $8.5 billion in the third quarter of 2003.
The volume of generic drugs, which bring Medco a higher profit margin, rose to 46.8% of prescriptions filled, from 43.7% a year ago, partly due to new generic competition for the popular depression drug Paxil and Synthroid for thyroid disorders.