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A federal judge approved a settlement in which


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pharmacy benefits unit, Medco, will pay $42.5 million to settle class-action claims that it misadministered various pension plans over the last decade.

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Medco, which Merck has intermittently planned to spin off over the last two years, agreed to a number of policy modifications, including a pledge to keep beneficiaries informed when generic equivalents of drugs they're taking become available.

The settlement would resolve pending and potential litigation by pension plans against Medco Health and Merck based on the federal law that covers such plans, the Employee Retirement Income Security Act. Five of six initial lawsuits filed Dec. 9 signed on to the agreement approved Monday.

A Dec. 11 hearing was scheduled for final approval of the settlement.

Medco didn't admit or deny guilt in reaching the settlement and noted that it has made no concession on a point of law included in the original suit: that it is a "fiduciary" obligated to ensure that decisions are made in the best interests of pension plans and their members.