After Walgreen reported that fourth-quarter net income fell 3.8 percent, shares in the big pharmacy benefit managers - Medco Health Solutions, CVS Caremark and Express Scripts - took a beating today as investors grew worried over the profits on generic drugs, such as copycat versions of Merck’s Zocor. PBMs, of course, push generics as a salve to high healthcare costs. The big retailer blamed lower generic reimbursement and higher expenses. But one analyst believes Walgreen’s financial shortfall was more of a budgeting problem rather than a generic drugs issue. He noted that the retailer appeared to increase certain discretionary expenditures in anticipation of higher profits from sales of drugs like generic Zocor. “What they’re trying to say is that they had a much higher profit target in mind,” Barrington Research’s Derek Leckow told MarketWatch. “It’s a question of their internal expectations.”

The US Supreme Court will proceed with a showdown over patient suits against medical-device makers even though the patient who sued Medtronic in the case died almost three years ago. The justices today rejected a Medtronic bid to have the case dismissed, saying the man’s widow can press ahead with the suit on his behalf, Bloomberg News reports. Chief Justice John Roberts and Justice Antonin Scalia dissented. The justices will use Charles Riegel’s case, which involves a catheter that burst during an angioplasty, to consider whether patients can sue over devices cleared for sale by the FDA. The issue has arisen in scores of lawsuits against Medtronic and other device makers.