Merck & Co. recorded more than US$12 billion in revenue over the past three years from its pharmacy-benefits unit, although the subsidiary never collected the money.

The revenue represents consumers' co-payments to pharmacies for prescription drugs, to cover their portion of costs under insurance plans. Pharmacies keep the co-payments.

Merck, based in Whitehouse Station, New Jersey, said Monday its treatment agreed with generally accepted accounting practices and had no impact on earnings since the revenue was offset in financial reports as an expense, The Associated Press reported.

But stock in the world's third-largest drug maker fell more than 2% amid heightened investor suspicion about accounting issues. Merck was trading on the New York Stock Exchange at US$47.81, down US$1.05.

The company counted US$12.4 billion in co-payments as 1999-2001 revenue generated by its Medco unit, which manages pharmacy-benefit programs for businesses and health-insurance companies, Merck told the Securities and Exchange Commission.

A spokesman said independent accountants PricewaterhouseCoopers concur with this treatment.