What is the relationship between Merck and Medco?
Medco was a wholly owned subsidiary of Merck & Co., Inc., a global pharmaceutical company, from 1993 until Medco was spun-off as an independent publicly traded entity in August 2003. Merck is one of the many major pharmaceutical manufacturer’s with whom Medco has a customary rebate agreement. On February 28, 2006, following arms-length negotiations, the managed care agreement that the Company had entered into with Merck while it was a wholly-owned subsidiary of Merck was terminated as of April 1, 2006. The liquidated damages provisions contained in the managed care agreement, under which the Company could have been required to pay liquidated damages if the Company’s Merck-related market share declined below specified levels, will no longer apply.