The decision was widely expected, after a panel of FDA advisers two weeks ago voted 20-1 against approving the drug, Arcoxia.
Arcoxia is in the class of anti-inflammatory drugs called Cox-2 inhibitors, which are touted as less likely to cause stomach bleeding or have other dangers, but they have been linked to heart risks. It is the same class of drugs as Vioxx, which has become a poster child for drug safety problems.
Merck pulled Vioxx from the market in September 2004 after research showed it doubled risk of heart attacks and strokes. That triggered an avalanche of lawsuits - more than 27,000 so far - and a nosedive for Merck's stock price, which has since rebounded.
Despite the safety concerns in the United States, Arcoxia is on sale in 63 other countries. It brought in revenue of $265 million last year, up 22 percent from 2005, but barely one-tenth of the $2.5 billion a year Vioxx fetched at its peak.
As recently as Tuesday, Merck officials said they intended to keep working to get Arcoxia on the U.S. market, the most lucrative in the world.
Merck spokesman Ron Rogers said the company would not discuss whether it now will drop efforts to get Arcoxia approved domestically.
Analyst Steve Brozak of WBB Securities said he believed Merck officials were "just going through the motions" with the FDA approval on Arcoxia.
"This is it. Put a fork in it and it's done," he said. Merck said in a statement that FDA had sent it what is called a "non-approvable letter" that stated the company "would need to provide additional data." Arcoxia had been poised for approval until Vioxx was pulled from the market. Two months later, the FDA issued a letter saying it could approve Arcoxia, but only if Merck provided further safety and efficacy information for the drug. Merck has since produced results from further studies of Arcoxia, but doctors questioned those results because Merck compared Arcoxia in its tests to another, older anti-inflammatory drug, diclofenac - widely used elsewhere, but not in this country - that has elevated risk of heart attacks and strokes. Merck said the two drugs have similar cardiovascular risk. However, Arcoxia causes high blood pressure in more patients than diclofenac. When the FDA advisory panel considered Arcoxia on April 12, Dr. David Graham, a drug safety expert with the agency who was an early critic of Vioxx, told the panel that the drug may significantly increase risk of heart attack and stroke. He said Arcoxia brings no more pain relief than other medicines in the same class. On Tuesday, Peter S. Kim, president of Merck Research Laboratories, told company shareholders at their annual meeting that there was more long-term safety data on Arcoxia than other drugs in the same class and traditional anti-inflammatory medicines. In the statement issued Friday, Kim said the company is disappointed by the FDA decision. "We pursued FDA approval of Arcoxia because we believe strongly that new medicines are needed for patients whose osteoarthritis pain is inadequately managed with currently available therapies," he said. Brozak said the market for arthritis drugs clearly is growing, but that he thinks FDA and the medical community are tired of drugs that "just retool" existing ones. Merck shares sank 57 cents, or 1.1 percent, to close at $51.86 on the New York Stock Exchange, still near a 52-week high of $52.63. Their low over the past year was $32.75. (AP) On the Net: http://www.merck.com AP-CS-04-27-07 1737EDT