Merck and Co. says it will spin off its pharmacy benefits management subsidiary, Medco Health Solutions, to Merck shareholders on Aug. 19.
In a release, the Whitehouse Station, N.J.-based company says shareholders will receive 0.1206 share of Medco common stock for each share of Merck held as of Aug. 12.
Merck, the world's third-largest drugmaker, last summer had announced plans to spin off Franklin Lakes, N.J.-based Medco. Later it delayed the offering, citing weak market conditions, while some Wall Street analysts speculated that an ongoing federal investigation of the PBM industry was a factor.
On Monday, a federal judge tentatively approved a $42.5 million settlement in a lawsuit filed against Merck and Medco for alleged failure to disclose their relationship. In that lawsuit, Medco was accused of favoring Merck drugs in its role as a contractor for drug discounts for health plans.
But Medco is still facing a probe from federal prosecutors alleging that its use of rebates from drugmakers is a conflict of interest with its mission to lower drug costs.
In June, U.S. Attorney Patrick Meehan in Philadelphia joined two whistleblower civil lawsuits filed against Medco. In the lawsuits, a physician and two former company employees charge the PBM with manipulating prescriptions to defraud federally funded health plans.
Medco has denied all allegations.