Finance news. My opinion.

Greater use of generic drugs dramatically slowed the growth in prescription drug costs last year, saving an estimated $5.2 billion for commercially insured Americans and benefit plan sponsors, according to a study of Express Scripts' clients released Friday.

In 2007, the average cost of a prescription increased by $1.09 to $54.34, up from $53.25 in 2006, according to a release from the pharmacy benefit management firm. The cost per prescription would have increased by $3.58, to $56.83, without the "generic effect," the company said.

The total spending increase also was influenced by a 2.5 percent increase in usage and a 7.4 percent increase in the average price of a brand drug. The average price of a generic drug decreased 3.1 percent, Express Scripts said.

The category of cholesterol-lowering drugs, the nation's most-used drug category, saw the biggest impact from generics, according to Express Scripts. Known as statins or anti-hyperlipidemics, those drugs cost 15.5 percent less in 2007, averaging $67.32 per prescription versus $79.48 in 2006. After accounting for a 7.5 percent increase in usage, the "generic effect" reduced total spending on cholesterol-lowering drugs by 9 percent, Express Scripts said.

By the end of last year, 48.9 percent of all prescriptions for a cholesterol-lowering drug at Express Scripts were for a generic. Overall, 63.7 percent of all prescriptions at Express Scripts were for a generic last year, the company said.

In 2007, total spending on prescription drugs grew 4.7 percent, which Express Scripts said was the slowest growth it has ever reported, versus 5.9 percent in 2006 and a high of 15.9 percent in 2000 and 2001.

In calculating drug trends, Express Scripts said it includes both member copayments and plan sponsor costs to evaluate total cost. The company said it also accounts for changes in usage, the relative rates of usage, price inflation, units per prescription, and changes in the mix of chemical entities and dosage forms used.

The company said the data set it used for its report included a sample of its clients in 2006-'07. The sample included plan sponsors offering funded, fully integrated prescription benefits within the commercially insured market whose enrollment did not change by more than 50 percent between 2006 and 2007. Members receiving prescriptions through Medicaid and Medicare Part D were excluded. From the client sample, researchers randomly selected about 3 million members from those enrolled at any time in 2006-'07 for analysis. The company plans to later release a more comprehensive review of 2007 prescription trends in its annual Drug Trend Report.

St. Louis-based Express Scripts Inc. (Nasdaq: ESRX) is one of the largest pharmacy benefit managers in the country providing services to more than 55 million people. It has about 3,000 employees in the St. Louis area.

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Novell Inc. says that it has reached an agreement to acquire PlateSpin Ltd., a Toronto-based maker of server-virtualization software, for $205 million.

The deal is expected to close during Novell's second fiscal quarter, company officials said.

Novell (Nasdaq: NOVL), which is based in Waltham, was founded in 1983, and employs more than 5,000 workers.

PlateSpin, founded in 2003, develops applications for the management of data centers, intended to improve the speed and quality of server consolidation, data center relocation and disaster recovery. The acquisition will allow Novell to offer customers a virtualization platform and management solution, company officials said.

Two weeks ago, Novell bought Maynard-based open-source collaboration software maker SiteScape Inc. for an undisclosed amount.

For 2007, Novell reported a loss of $44.5 million, while bringing in revenue of $932.5 million.

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Christian Brothers High School will offer $1 million in tuition help for the 2008-09 school year, a record for the Sacramento Catholic high school.

The school's board of trustees approved the amount this week. Christian Brothers' tuition assistance for the current school year is $924,000, said spokeswoman Kristen McCarthy.

Tuition help is based on financial need. Christian Brothers provides aid to 158 of the school's 1,054 students.

Founded in 1876, the school's tuition and fees for this school year total $11,605, a 5.3 percent increase over last year.

Christian Brothers officials said in a news release that they think offering $1 million in tuition help is a first among the area's Catholic high schools. "Time and time again, it's been shown that education is truly the only long-term solution to breaking the cycle of poverty," school president Lorcan Barnes said in a news release. "Today, 99 percent of our graduates go on to college."

Reaching the $1 million milestone allows Christian Brothers to help more students, and its students, in turn, "go on to make our community a better place," he said.

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Japan's export growth unexpectedly quickened in January, as rising demand for cars and steel from China and Russia made up for falling U.S. sales.

Exports, the engine that drove almost half of the economy's expansion last quarter, rose 7.7 percent, from December's 6.9 percent gain, the Finance Ministry said today in Tokyo. The median estimate of 18 economists surveyed by Bloomberg was for a 6.6 percent increase.

Shipments to Asia and Europe rose to records for the month, as growing consumer classes in China, India and Russia create new customers for exporters including Mitsubishi Motors Corp. and Matsushita Electric Industrial Co. Exports to the U.S. fell for a fifth month amid the worst housing slump in 26 years.

“The good news is the destinations for Japan's export products have become far more diversified,'' said Jan Lambregts, head of Asia research at Rabobank International in Hong Kong. The bad news is that “a protracted U.S. recession would be much harder to shelter from.''

The yen was little changed, trading at 108.10 per dollar at 12:13 p.m. in Tokyo from 107.99 before the report was published.

The International Monetary Fund last month forecast emerging economies will expand 6.9 percent in 2008, compared with 1.5 percent growth in the U.S. China will expand 10 percent.

Waning demand in the U.S., the world's biggest economy, will eventually take its toll on the emerging markets where Japan ships about half its goods, Economic and Fiscal Policy Minister Hiroko Ota said last week.

`Feel Some Pain'

“We still haven't felt the hit of slowing growth in Asia,'' said Martin Schulz, a senior economist at the Fujitsu Research Institute in Tokyo. “We're going to feel some pain.''

Exports to Asia gained 8.2 percent to 3.04 trillion yen ($28 billion), the largest amount for the month of January, today's report showed. Shipments to Europe rose 10.6 percent to 993.1 billion yen, also a record for the month.

Imports climbed 9 percent from a year earlier on surging oil costs. Rising imports, combined with a New Year holiday that erased three business days for Japanese shippers, caused the trade deficit to widen to 79.3 billion yen.

Japan tends to have a deficit in January, when ports are closed for the New Year holiday. The country had a shortfall of 3.5 billion yen in January 2007.

Mitsubishi Motors, Japan's fastest-growing auto exporter, said last month its exports last year surged 41 percent, led by demand from Russia. Russian sales jumped 46 percent in 2007.

Matsushita Sales

Matsushita, the nation's largest consumer electronics maker, said last month it expects sales to rise 25 percent next fiscal year in Brazil, Russia, India, China and Vietnam.

Shipments to the U.S. accounted for only about 20 percent of total exports last year, compared with about 30 percent in 2000. In the same period, China's share jumped from 7 percent to 15 percent. Sales to Russia doubled in the past two years.

Japan's economy grew an annualized 3.7 percent last quarter, double the pace economists expected, a report showed last week, as sales to Asia helped companies weather the U.S. slowdown.

Still, there are signs that Japanese manufacturers are bracing for a slowdown. Machinery orders fell for a second month in December and manufacturers said they plan to cut production in back-to-back months for the first time in almost three years.

Slower Profit Growth

Canon Inc., Japan's biggest camera maker, last month forecast that belt-tightening among U.S. consumers will cause sales in the Americas to fall for the first time in nine years. Profit will grow at its slowest pace in as many years, the company said, as a weakening dollar erodes the value of earnings when they're converted back into yen.

Japan's currency has gained 3.5 percent against the dollar this year. Canon said the yen will average 107 a dollar in 2008.

IMF Managing Director Dominique Strauss-Kahn said this month that emerging markets are “not immune'' from a weakening U.S. economy. The ability of developing countries to sustain growth as the U.S. cools has been “exaggerated,'' he said.

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Zinfi Technologies Inc. hired Sugata Sanyal as president and CEO.

The Pleasanton company was previously run by Art Battacharya, its general manager of operations. Battacharya will keep his GM job at the company, which was started in 2003.

Sanyal's last job was as a vice president at SonicWall Inc. He also worked at Philips Electronics.

Zinfi sells software development, network management and help desk support.

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Confidence among American consumers slumped to the lowest level since 1992 and factory output failed to increase, indicating the damage from the housing contraction is pushing the economy toward a recession.

The Reuters/University of Michigan index of consumer sentiment fell to 69.6 in February from 78.4 the previous month. The Federal Reserve said manufacturing production was unchanged in January after two months of gains, while a gauge of activity at New York factories contracted this month.

“We're seeing a clear pattern of sudden weakening in both consumer and business confidence, which frankly is the sign of a recession,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who had the closest forecast for consumer sentiment in a Bloomberg News survey.

U.S. government bonds rallied after the figures, sending two-year note yields to the lowest level since 2004, while the dollar dropped. The reports reinforced traders' anticipation that the Fed will need to cut interest rates by at least a half- point by the end of the March 18 meeting.

Best Buy Co., the largest U.S. consumer electronics chain, today cut its full-year earnings forecast. “Soft domestic customer traffic in January, coupled with our near-term outlook, now indicate that our fourth-quarter revenue will fall short of our planned targets,'' Chief Executive Officer Brad Anderson said in a statement.

Waterford Warning

Waterford Wedgwood Plc, the Dublin-based maker of Royal Doulton crystal and china, today forecast its sales will fall 4 percent this year, due to weaker consumer spending in the U.K. and the U.S.

The reading on consumer sentiment was the weakest since February 1992. Economists had forecast the measure would fall to 76, according to the median of 66 projections in a Bloomberg News survey.

The decline in confidence indicates that pledges of tax rebates and lower interest rates failed to ease Americans' concerns about falling home and stock prices and rising unemployment. President George W. Bush this week signed a $168 billion stimulus package, including tax rebates to more than 130 million households, after a deal with Democratic lawmakers.

“We're starting '08 with modest, if any, economic momentum,'' Alan Gayle, senior investment strategist at Trusco Capital Management in Richmond, Virginia, said in an interview with Bloomberg Television.

Two-year note yields dropped as low as 1.82 percent, and were at 1.91 percent at 4:02 p.m. in New York. Interest-rate futures show the chance of a three-quarter point Fed rate cut, to 2.25 percent, by March rose to 32 percent from 30 percent yesterday.

Dependent on Utilities

Total industrial output rose 0.1 percent for a second straight month, matching economists' forecasts, the Fed said today. Production was held up by unusually cold weather that spurred utility use. Manufacturing, which accounts for four fifths of industrial production, was unchanged from December after a 0.2 percent gain.

The Federal Reserve Bank of New York's general economic index fell to minus 11.7, the first negative reading since May 2005, from 9.0 in January, the bank said today. Readings below zero for the so-called Empire State index signal contraction.

Fed Chairman Ben S. Bernanke yesterday told lawmakers that the central bank is ready to act “as needed'' to address risks to growth. His predecessor, Alan Greenspan, told an audience in Houston late yesterday that “we are clearly on the edge.''

`Clearly Struggling'

“Manufacturers are clearly struggling under the pressure of slower consumer demand and a much more cautious corporate sector,'' said Russell Price, senior economist at H&R Block Financial Advisors in Detroit. “Exports are still a positive for the sector but clearly they are not enough to offset these other factors. The Fed still has more work to do.''

Production of construction supplies dropped 1.1 percent in January, today's Fed report showed. Residential building subtracted 1 percentage point from economic growth last year, the most since 1980.

Reports this year indicate the housing slump is continuing. Builders broke ground on 1.006 million homes at an annual rate in December, the fewest since 1991. The National Association of Realtors said last month sales of existing homes fell more than forecast in December, while prices of single-family homes posted the biggest annual drop probably since the Great Depression.

Capacity Use

Capacity utilization, which measures the proportion of plants in use, was unchanged in January at 81.5 percent, today's report showed. Capacity utilization was forecast to fall to 81.3 percent. The rate has averaged about 81 percent over the last 30 years. Higher rates raise the risk of bottlenecks in production that can push up prices.

Utility production rose 2.2 percent after falling 0.2 percent, the report showed. The average temperature in January was 30.5 degrees Fahrenheit, 0.3 degree below the mean for that month in the 20th century, according to the National Climatic Data Center in Asheville, North Carolina. The Northeast was hit by blizzard conditions at the end of the month.

Economic growth slowed to a 0.6 percent pace in the fourth quarter, and the economy lost jobs in January for the first time in more than four years. Economists surveyed by Bloomberg News this month indicated even odds that the economy will enter a recession this year.

Citing a worsening outlook, the Fed lowered its benchmark interest rate by 1.25 percentage point during two meetings over nine days in January, the fastest rate reduction since the federal funds rate became the main policy tool around 1990.

Car Sales

Cars and light trucks sold at a 15.2 million annual pace in January, the worst showing since October 2005, industry figures showed. Economists for General Motors Corp., Ford Motor Co. and Chrysler LLC said Jan. 15 that U.S. sales of cars and light trucks may fall for a third straight year in 2008.

“This is going to be a challenging year for the auto industry,'' said Paul Traub, a Chrysler economist, at a conference in Detroit last month.

Delinquency rates on U.S. auto loans in asset-backed securities rose in January to the highest levels in 10 years, Fitch Ratings said. Delinquencies for subprime auto loans reached 4.03 percent, a 43 percent increase from a year earlier, the Chicago-based ratings company said in a report yesterday.

Exporters Benefit

Exporters are helping to keep manufacturing from a deeper slump. General Electric Co. said fourth-quarter profit rose 15 percent on higher international sales of jet engines and power- plant turbines, drawing more than half its annual revenue from overseas for the first time.

GE Chief Executive Officer Jeffrey Immelt's push into global markets was led by a 30 percent jump in the GE Infrastructure group's sales, as developing countries built cities, hospitals and airports, and the dollar weakened.

“Every place we went there's a need for power, there's a need for planes, there's lots of capital being invested, and there's just no sign this global infrastructure boom is slowing at all,'' Immelt told a conference call Jan. 18.

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A brokerage match long rumored was announced on Valentine’s Day.

Ferris Baker Watts will sell to RBC Dain Rauscher, bringing to an end more than a century of local ownership for the Washington, D.C.-based brokerage and investment bank.

The Baltimore Business Journal first reported Feb. 8 that RBC Dain and Stifel Financial (NYSE: SF) were bidding for Ferris. Ferris spokeswoman Robin Oegerle referred questions to Minneapolis-based RBC Dain Rauscher, where officials could not immediately be reached for comment Thursday morning.

"From the very start of our discussions with RBC, it became clear that they share our commitment to integrity and excellent service," said Ferris CEO Roger Calvert in a news release.

Ferris will greatly expand RBC’s presence in key markets in the eastern U.S., Midwest and mid-Atlantic, RBC Dain Rauscher CEO John Taft said in the news release. The deal "takes us one step closer to our goal of becoming a nationally recognized investment, advisory and wealth management firm," he said.

Terms of the deal were not disclosed. Industry sources said last week the bidders were offering $200 a share for Ferris, believed to be about 1.5 times the firm’s most recent book value.

The deal follows a turbulent year at Ferris, which disclosed in February 2007 that it was under investigation by the U.S. Department of Justice and the Securities and Exchange Commission. The investigation focused on the trading activity of former Ferris client David Dadante and his IPOF Fund. Prosecutors alleged the fund was a $47 million Ponzi scheme — a pyramid scheme in which money from newly recruited investors is used to pay a return to earlier investors. Dadante pleaded guilty to federal fraud charges in Ohio last year and was sentenced to 13 years in prison.

Former Ferris stockbroker Stephen Glantz also pleaded guilty to charges of fraud and making false statements, and was sentenced to nearly three years in prison. Dadante and Glantz allegedly manipulated the price of stock in a small Georgia company called Innotrac. Last month, Ferris agreed to pay $16 million in cash and Innotrac stock to settle claims against the firm by IPOF Fund investors, according to documents filed in federal court in Ohio.

Along with Ferris’ local stockbrokers, some of them well-known from radio and television appearances, Ferris has a well-established investment banking unit. In 2005, capital markets head Steven Shea described the investment banking world as a champagne glass, and said Ferris was in the stem — a small, specialized firm chasing deals that Wall Street doesn’t want, especially deals for companies under $1 billion. Over the past few years, Ferris had built a niche in initial public offerings for "blank-check" companies — firms created solely to raise funds for acquiring other companies.

Privately held Ferris, which is owned by its employees, has 42 branches with more than 900 employees. Ferris has nearly $19 billion in assets under administration.

Ferris is the ninth-largest brokerage firm in Greater Baltimore, with 66 brokers here, according to Baltimore Business Journal research. The company’s local brokerage force shrank by more than half from 2006 to 2007, BBJ research shows.

RBC Dain is a subsidiary of banking giant Royal Bank of Canada (NYSE: RY). RBC Dain has 150 branches in 40 states.

The deal is expected to be completed by mid-2008, pending approval by U.S. and Canadian regulators and Ferris shareholders.

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Portland real estate magnate Tom Moyer will remake the derelict Cornelius Hotel into business-class accommodations.

The Cornelius Hotel, at Southwest Alder Street and Park Avenue, was built in 1908 and sports a grand lobby but has been closed for several years. Moyer acquired the historic property in 2002 for $2.4 million, according to Multnomah County property records.

The hotel is being renovated by Moyer’s firm, TMT Development Co., in partnership with TVA Architects.

Renovations should start in June and will take about 12 months. The hotel, to be renamed the Alder Park Hotel, opens in June 2009 with 66 rooms, a rooftop deck and other green features as well as basement meeting rooms and a restaurant and bar at street level.

Peter Meijer Architect LLC will serve as historic consultant to TVA. The building was originally designed by Bennes Hendricks and Tobey and was operated by Dr. Charles W. Cornelius, brother of Col. Thomas R. Cornelius, for whom the town of Cornelius was named.

In other real estate news:

Office

• Vesta has leased 20,144 square feet of office space at the Park 217 Business Center in Tigard. Kevin Joshi and Josh Schweitz of GVA Kidder Mathews represented owner WCV Properties.
• Precash Inc., a financial transactions processing, reserve and clearinghouse, has leased 20,013 square feet of office space at the Commonwealth Building, 421 S.W. Sixth Ave. The Grubb & Ellis team of Eric Haskins, Jake Lancaster and David Squire represented the property owner, Unico Properties LLC, dba Commonwealth Acquisition LLC. Chris Elsenbach of Cresa Partners represented Precash.
• Portland Adventist Medical Center has leased 19,123 square feet of office space at Airport Center I in Portland. Jim Carver and Sean McCarthy of GVA Kidder Mathews brokered the lease.
• Ambric Inc., an electronic parts and equipment business, has leased 10,425 square feet of office space at Greystone One at the Woodside Corporate Park in Beaverton. Eric Haskins, Jake Lancaster and David Squire of Grubb & Ellis represented Greystone owner Triple Net Properties LLC. Chris Elsenbach of Cresa Partners represented Ambric.
• Evergreen Engineering LLC has renewed its lease for 8,617 square feet and an expansion lease for 5,700 square feet of office space at Technology Center One in Hillsboro. Miles Von Bergen of Capacity Commercial Group LLC represented the owner, BH Properties LLC. Scott Weigel of CB Richard Ellis represented Evergreen.
• Dr. Richard R. Rosenfield has signed an expansion lease for 6,194 square feet of office space at The Pearl Women’s Center, a medical office building at 120 N.W. 14th Ave. Don Drake of Melvin Mark Brokerage Co. represented the owner, Harsch Investment Properties. Jan Bottcher of CB Richard Ellis represented the physician.

Industrial

• Power Freight Systems Inc. has leased 69,630 square feet of industrial space at Pinefarm Place in Hillsboro. Steven Klein and Peter Stalick of GVA Kidder Mathews represented owner Summit Properties Inc. Miles Von Bergen of Capacity Commercial Group represented Power Freight.
• Avid Health Inc. of Vancouver has leased 23,520 square feet of food product distribution space at Quad 205 Distribution II, 3801 N.E. 109th Ave. William Connelly of Eric Fuller & Associates represented the owner, Kittelson Properties.
• Intercontinental Medical Services paid $9 million for a 90,000-square-foot industrial facility in the 5300 block of Northeast Elam Young Parkway in Hillsboro. Brad Fletcher, Eric Haskins, Jake Lancaster and David Hill of Grubb & Ellis represented the seller, McMorgan Institutional Real Estate. Mike Thomas of Colliers International represented Intercontinental.
• Via West Inc., which provides Internet services, has leased 24,247 square feet of industrial space at the Westbrooke Corporate Center in Hillsboro. Matt Adams, Jake Lancaster and David Squire of Grubb & Ellis represented Westbrooke owner Principal Life Insurance Co.
• Kendall Construction Inc. has leased 11,250 square feet of industrial space at 158th Commerce Park in Northeast Portland. Tony Reser and Tom Talbot of GVA Kidder Mathews represented owner Walton CWOR 158th Commerce Park 10 LLC and Kevin Murphy of GVA Kidder Mathews represented Kendall.

Apartment sale

• The Forest and Garden Apartments, a 51-unit complex in Northwest Portland, has sold for $4.75 million, or $93,137 per unit. The capitalization rate, or return on the investment, is projected at 3.6 percent. The buyer was Portland-based Real Estate Recovery Associates-13th Street Investors LLC. Bill Younce of Sperry Van Ness represented the buyer. The seller was a family trust represented by Riverview Bank.

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The number of tourists choosing to stay in Hawaii hotels dropped in 2007, with more staying in condos, time shares and on cruise ships.

The visitor data was released Friday by the Hawaii Department of Business, Economic Development and Tourism.

On Oahu, 3.37 million stayed in a hotel in 2007, as compared with 3.47 million in 2006.

On Maui the hotel numbers declined from 1.33 million to 1.28 million, while on the Big Island the drop was from 983,000 to 942,000.

Only Kauai saw a rise in hotel bookings, from 602,000 to 630,000.

Visitors choosing to stay in condos and time shares and on cruise ships on all four islands last year was up significantly or remained similar to 2006 figures.

Those choosing to stay at a bed and breakfast on Oahu, Maui and the Big Island all dipped slightly in 2007, while on Kauai those numbers increased.

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A dated system that treats some state workers like tenured professors will likely allow one of them to retire next week with full benefits — despite having confessed to forging dozens of bridge inspection reports.

David Simmons, a nearly 30-year veteran of the Georgia Department of Transportation, admitted he falsified 54 reports since last fall after superiors noticed he and partner Gerald Kelsey recorded a much higher number of inspections than possible in the time allotted.

Kelsey has resigned — although he admitted no wrongdoing — after nearly 10 years with the department.

The pair was assigned some 1,300 bridges in portions of DeKalb, Fulton, Gwinnett and Rockdale counties. GDOT will re-inspect 400 of those bridges, including the 54 Simmons admitted lying about.

Commissioner Gena Abraham said the department does not believe any of the bridges are unsafe but is still investigating.

At the same time, she decried the protections granted to state workers like Simmons, a "classified" employee whose privileged status would make it hard to force him to resign or strip him of his benefits. Simmons plans to retire effective Feb. 11.

Abraham said she has been inundated with requests from GDOT staff to investigate other "issues" and will be looking into them as part of her mission to weed out inefficiency and other problems in the department.

"I'm still very uncomfortable that we're getting eight hours of work for eight hours of pay," Abraham said. "I hope this sends a clear message to my employees."

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