NEW YORK (CNN/Money) - Merck & Co. said Wednesday it will not sell shares of Medco to the public, canceling the $1 billion IPO of a unit that has been saddled with accounting questions.

In a regulatory filing with the Securities and Exchange Commission, the drug maker blamed "market conditions" for the withdrawal of its pharmacy benefits unit's IPO.

The company had already delayed the IPO earlier this month. At the time, Merck said it remained fully committed to divesting Medco within 12 months.

But the Medco offering had come under scrutiny when Merck revealed in an SEC filing that the unit had booked more than $14 billion in revenue that it didn't actually collect. Chris Loder, a Merck spokesman, defended the company's practice and said the SEC did not object to it when it reviewed the Medco IPO filings.

Loder called the withdrawal filing a formality and said Merck still could sell Medco shares to the public in the future.

Shares of Merck (MRK: Research, Estimates), based in Whitehouse Station, N.J., slipped 11 cents to $48.40 Wednesday morning.

SWS Securities analyst Anne Barlow said she was not surprised by the move after the pricing of Medco's IPO was delayed three times.

"In the big picture, you have bad market conditions," Barlow told Reuters. She said she would not be surprised if Merck tried to take Medco public again later this year or early next year, if conditions improved.

Merck originally filed the IPO on April 17, 2002. The sale of 46.7 million shares at $20 to $22 each would have raised as much as $1 billion.

This is a tough time for companies going public. There were 99 IPOs through June, according to IPOHome.com, compared with 406 in all of 2000.

It's also a rocky period for drug companies, whose shares have been hit this year amid pressure to lower drug prices even as the industry fends off competition from generic drug makers.