Yesterday, Merck (NYSE:MRK) licensed the rights to an over-the-counter (OTC) version of its cholesterol-lowering drug MEVACOR to GlaxoSmithKline (NYSE:GSK), but the deal is far from done.

Merck has been trying to get MEVACOR changed to OTC status since before it lost its patent protection in 2001. The FDA has already rejected its requests for status change twice because of fears that people would misuse the drug, causing its first marketing partner, Johnson & Johnson (NYSE:JNJ), to discontinue the partnership.

Merck will get a third chance at getting the drug approved for OTC use when the FDA meets in the middle of next month. If it receives an approval, Merck will get milestone and royalty payments from Glaxo.

With most -- possibly all -- of the payments coming after FDA approval, investors shouldn't consider the partnership a sign that Merck is worried about a third rejection. Instead, Merck is probably trying to get a partner in place to launch as quickly as it can after the FDA makes a decision.

For Glaxo, the deal demonstrates its continued push toward generating revenue from products in front of the pharmacist's counter, rather than behind it. It recently launched Alli, an OTC version of Roche's Xenical weight-loss treatment, which contributed $69 million in top-line growth last quarter. With revenue falling because of warning labels on Avandia and generic competition from Wellbutrin XL, Coreg IR, and Zofran, the continued diversification seems like a shrewd move to me.

Without knowing the terms of the deal, it's a little hard to determine the real winner here. As long as the OTC sales don't pillage prescription drug sales of cholesterol-lowering drugs ZETIA and VYTORIN, which it markets with Schering-Plough (NYSE:SGP), the new partnership should be a win for Merck.

Further cholesterol-fighting Foolishness:

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.