Medco Health Solutions
Medco Health Solutions was a major American pharmacy benefit management and pharmacy services company acquired by Express Scripts in 2012.
Last updated August 25, 2026
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Overview
Medco Health Solutions, Inc. was an American pharmacy benefit management company that administered prescription-drug benefits for private and public employers, health plans, labor unions, government agencies, and people covered by Medicare Part D plans. Its activities combined benefit-plan administration, mail-order and specialty pharmacy, retail-pharmacy network management, prescription review, medication adherence support, health outcomes research, and services intended to improve the clinical and financial performance of drug treatment. The business began in 1983 as National Pharmacies. Following an initial public offering in 1984, it became Medco Containment Services. Merck & Co. acquired the company in 1993, after which it operated under the Merck-Medco identity. Merck announced plans to separate the business in 2002, and Medco Health Solutions became an independent public company in August 2003. As an independent company, Medco expanded beyond traditional claims processing and pharmacy-plan administration through acquisitions, technology partnerships, specialty-pharmacy operations, international ventures, and evidence-based research. Medco’s core United States business used a large retail-pharmacy network alongside automated mail-order facilities. Its mail-order operations supplied maintenance medicines and other prescriptions directly to members, while its benefit-management systems handled formulary administration, clinical review, electronic prescribing, utilization management, and interactions among patients, physicians, pharmacies, employers, and health plans. In 2011, the company reported more than $70 billion in revenue and ranked 34th on the Fortune 500. Its mail-order business generated approximately $26 billion in net revenue that year, and Medco reported processing 757.7 million prescriptions, including 113 million through mail-order pharmacies. The company broadened its specialty and patient-service capabilities through the 2005 acquisition of Accredo Health, the 2007 acquisition of PolyMedica, the 2010 acquisitions of DNA Direct and United BioSource Corporation, and European investments and joint ventures. It also established the Medco Research Institute in 2009 to conduct evidence-based research concerning medicines, treatment outcomes, and healthcare economics. International initiatives included electronic prescription review work with Sweden’s Apoteket, a majority investment in Europa Apotheek, and home-based pharmacy services in the United Kingdom. Medco was also involved in significant legal settlements concerning alleged improper incentives from pharmaceutical manufacturers, medication switching practices, and false claims submitted to government programs. In 2004 it agreed to pay $29.3 million to settle allegations brought by 20 states. In 2005 it agreed to pay the United States $155 million plus interest in a separate settlement involving alleged kickbacks and false claims; the company did not admit liability. These cases reflected broader scrutiny of the commercial and clinical incentives operating within the pharmacy benefit management sector. Medco was a member of the S&P 500 and was ranked first from 2008 through 2012 in Fortune’s World’s Most Admired Companies category for Healthcare: Pharmacy and Other Services. Express Scripts acquired Medco in April 2012. Following that transaction, Medco ceased to operate as an independent company, and its business was integrated into the combined Express Scripts organization.
History
Medco Health Solutions traces its origins to 1983, when the business was established as National Pharmacies. The company entered public markets in 1984 and adopted the name Medco Containment Services. Its early identity reflected the emerging role of pharmacy benefit managers in controlling prescription-drug spending for employers, insurers, and other healthcare purchasers. Merck & Co. acquired Medco Containment in 1993. Under Merck ownership, the business became known as Merck-Medco and operated as the pharmaceutical company’s pharmacy-benefit and prescription-services arm. The relationship gave Medco access to substantial pharmaceutical and healthcare resources while also placing its contracting and medication-management practices under increasing regulatory and commercial scrutiny. In 2002, Merck announced plans to separate Merck-Medco. The separation was completed in August 2003, when Medco Health Solutions became an independent company. As an independent public corporation, Medco developed a broad pharmacy-services model combining benefit-plan administration, clinical programs, automated mail-order fulfillment, specialty pharmacy, and retail-pharmacy network services. It served commercial employers, government entities, health plans, unions, and Medicare Part D beneficiaries. Medco pursued acquisitions to expand into specialty medicines and patient-support services. In 2005 it acquired Accredo Health, strengthening its specialty-pharmacy capabilities. In 2007 it acquired PolyMedica, a diabetes-care supplier. In 2010 it acquired DNA Direct, which provided genetic testing services, and United BioSource Corporation, which assessed medication safety, value, and outcomes after products reached the market. These transactions reflected the company’s effort to connect prescription fulfillment with specialized clinical and information services. The company also developed an international presence. In 2008, it acquired a majority interest in Europa Apotheek, a Netherlands-based business serving mail-order and specialty-pharmacy customers in Germany. Europa Apotheek later acquired shop-apotheke.com, a German online retailer of over-the-counter and healthcare products. In 2009, Medco created a joint venture with United Drug to provide home-based pharmacy care in the United Kingdom for National Health Service patients; Medco acquired United Drug’s remaining interest in 2011. Medco also formed a European venture with Celesio in 2010 for patients with chronic and complex conditions and took full ownership in 2011. Technology and research were important parts of Medco’s operating model. Its automated pharmacies in the United States supported high-volume prescription fulfillment, while its systems managed formulary rules, electronic prescriptions, clinical checks, and pharmacy claims. In 2009, the company established the Medco Research Institute as an evidence-based research organization. In Sweden, it collaborated with Apoteket on automated electronic prescription review intended to improve both patient outcomes and healthcare spending. Medco’s scale made it one of the largest pharmacy operations in the United States. It operated ten mail-order pharmacies and worked with a nationwide network of roughly 60,000 retail pharmacies. Its automated facilities in Las Vegas, Indianapolis, and Willingboro, New Jersey, together had the capacity to fill more than three million prescriptions per week. In 2011, the company processed 757.7 million prescriptions, including 113 million through mail order, and reported more than $70 billion in revenue. It was listed in the S&P 500 and ranked 34th on the 2011 Fortune 500. The company’s growth occurred alongside controversy over pharmacy benefit manager incentives and relationships with drug manufacturers. In 2004, Medco settled claims brought by 20 states concerning alleged undisclosed incentives and improper pressure to switch patients’ medications. In 2005, it reached a separate federal settlement involving alleged pharmaceutical kickbacks and false claims. Neither settlement involved an admission of guilt or a finding of wrongdoing by Medco. Express Scripts acquired Medco in April 2012. The transaction combined two major American pharmacy benefit managers and brought Medco’s mail-order, specialty-pharmacy, clinical, and benefit-administration activities into Express Scripts. Medco therefore no longer operates as an independent company, although its historical operations form part of the development of the modern pharmacy benefit management industry.
- 2012
Acquired by Express Scripts
[1]Express Scripts acquired Medco Health Solutions in April, ending its existence as an independent company.
- 2010
Expansion into genetic testing and medication-value services
[1]Medco acquired DNA Direct and United BioSource Corporation, expanding into genetic testing and medication safety and value assessment.
- 2009
Medco Research Institute established
[1]The company established the Medco Research Institute to conduct evidence-based research.
- 2008
Apoteket electronic prescription collaboration
[1]Medco partnered with Sweden’s Apoteket to develop automated electronic prescription review technology.
- 2007
PolyMedica acquisition
[1]Medco acquired PolyMedica, a diabetes-care supplier.
- 2005
Accredo Health acquisition
[1]Medco acquired specialty-pharmacy company Accredo Health for approximately $2.2 billion.
- 2003
Medco becomes independent
[1]Medco Health Solutions became an independent company in August.
- 2002
Merck announces separation plan
[1]Merck announced plans to spin off its Merck-Medco pharmacy-benefit business.
- 1993
Acquired by Merck
[1]Merck & Co. acquired Medco Containment, which subsequently operated as Merck-Medco.
- 1984
Public offering and Medco Containment Services identity
[1]After an initial public offering, National Pharmacies became Medco Containment Services.
Products and positioning
A large-scale pharmacy benefit manager positioned around prescription-cost containment, integrated mail-order and specialty pharmacy, clinical utilization management, medication access, and evidence-based healthcare services.
Mail-order pharmacy
Medco Pharmacy
Medco Pharmacy was the company’s direct-to-member mail-order prescription service. It supported maintenance medications and other eligible prescriptions through automated fulfillment centers and online ordering. The mail-order model was designed to improve convenience, support recurring therapies, and help employers and health plans manage prescription spending. In 2011, Medco reported that its mail-order pharmacies processed 113 million of the company’s 757.7 million prescriptions.
Healthcare administration
Pharmacy benefit management services
Medco administered prescription-drug benefits for employers, health plans, unions, government agencies, and Medicare Part D plans. Its services included claims processing, formulary management, retail-pharmacy network contracting, utilization controls, clinical review, electronic prescribing, and programs intended to improve adherence and medication outcomes while controlling costs.
Specialty pharmacy · 2005
Accredo specialty pharmacy services
Following its 2005 acquisition of Accredo Health, Medco expanded its ability to dispense and support specialty medicines. Specialty pharmacy services typically involve complex, high-cost, or temperature-sensitive therapies and may include patient education, adherence support, clinical monitoring, and coordination with healthcare providers and payers.
Healthcare technology · 2008
Electronic prescription review
Medco developed automated prescription-review capabilities that checked electronic prescriptions and related clinical or financial considerations. Its 2008 collaboration with Apoteket sought to apply this type of technology in Sweden to improve medication decisions, patient outcomes, and healthcare-system economics.
Healthcare research · 2009
Medco Research Institute
Established in 2009, the Medco Research Institute was an evidence-based research organization focused on medicines, treatment outcomes, healthcare utilization, and the economic and clinical effects of prescription therapies. It represented Medco’s effort to supplement benefit administration and dispensing with research-driven healthcare analysis.
Controversies
2005
Federal kickback and false-claims settlement
Medco agreed to pay the United States $155 million plus interest to resolve allegations that it accepted kickbacks from drug manufacturers and submitted false claims to the government. The settlement did not include an admission of guilt.
2004
Multistate allegations concerning incentives and medication switching
Twenty states alleged that Medco failed to disclose incentives received from pharmaceutical companies and improperly switched or pressured physicians to switch patients’ medicines, potentially increasing health-plan costs. Medco agreed to pay $29.3 million to settle the case without admitting guilt or accepting a finding of wrongdoing.
Brand decisions
2012
Sell the company to Express ScriptsM&ABackground
Medco and Express Scripts were among the largest pharmacy benefit managers in the United States, and combining their operations offered greater scale across prescription administration, mail order, and specialty pharmacy.
Action taken
Express Scripts acquired Medco Health Solutions in April 2012.
Aftermath
Medco ceased to operate as an independent company and its activities were integrated into Express Scripts.
2010
Acquire DNA Direct and United BioSource CorporationM&ABackground
Medco was extending beyond traditional benefit administration into personalized medicine, genetic testing, medication safety, and post-market value assessment.
Action taken
Medco acquired DNA Direct and United BioSource Corporation.
Aftermath
The acquisitions added genetic-testing services and capabilities for evaluating medication safety, value, and outcomes.
2005
Acquire Accredo HealthM&ABackground
Medco sought to strengthen its position in specialty pharmacy and support patients using complex therapies.
Action taken
Medco acquired Accredo Health, a specialty pharmaceutical company, for approximately $2.2 billion.
Aftermath
The transaction expanded Medco’s specialty-pharmacy platform and broadened its prescription-services portfolio.
Acquisition price. $2.2 billion (2005)
2002
Separate the pharmacy-benefit business from MerckStrategyBackground
Merck’s pharmacy-benefit subsidiary had developed into a large operating business with customers and capabilities distinct from Merck’s pharmaceutical manufacturing activities.
Action taken
Merck announced plans to spin off Merck-Medco, leading to Medco Health Solutions becoming independent in 2003.
Aftermath
Medco operated as an independent public pharmacy benefit manager and expanded through acquisitions, technology, specialty pharmacy, and international ventures.
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