UPDATE 1-J&J, Schering-Plough arthritis drug gets EU nod

* Once-monthly Simponi approved for 3 uses in Europe

* Schering-Plough has European marketing rights

NEW YORK Oct 6 (Reuters) - European health regulators have approved Johnson & Johnson's (JNJ.N) new once-monthly arthritis drug Simponi, J&J and Schering-Plough Corp SGP.N said on Tuesday.

The drug, which will be sold in Europe by Schering-Plough under a deal with J&J, was approved in Europe to treat active moderate-to-severe rheumatoid arthritis, active and progressive psoriatic arthritis and severe, active ankylosing spondylitis, the companies said.

Simponi, a follow-up to J&J's widely used Remicade arthritis treatment, was approved in the United States and Canada in April. Both drugs work by blocking an inflammation-causing protein known as tumor necrosis factor.

"Simponi has been shown to significantly reduce the signs and symptoms and improve physical function of rheumatoid arthritis, ankylosing spondylitis and psoriatic arthritis, three debilitating rheumatic diseases," Iain McInnes, Professor of Experimental Medicine at University of Glasgow who conducted clinical research on the drug, said in a statement.

Schering-Plough will assume exclusive marketing rights outside the United States except in Japan, Indonesia, Taiwan, Hong Kong and China, the companies said.

However, it remains unclear whether Schering-Plough will be able to retain its Remicade and Simponi rights following completion of its $41 billion acquisition by Merck & Co (MRK.N).

Merck has said it will inherit overseas rights to the drugs, but J&J is planning to challenge that high-stakes assumption.

Under its deal with J&J, Schering-Plough is obliged to return overseas rights if control of Schering-Plough changes.

But Merck has structured its acquisition of Schering as a "reverse merger," meaning Schering-Plough technically would acquire the larger Merck.

The strategy would allow Schering-Plough to claim it is a continuing enterprise and therefore has not undergone a change in control that would trigger its obligation to give up overseas rights to the two lucrative arthritis drugs.

J&J, which has full U.S. rights to the drugs, reported second-quarter Remicade sales of $1.1 billion.

The Merck/Schering-Plough merger is expected to close later this year.

Schering-Plough shares were up 1.7 percent to $28.67 in early afternoon trade, while J&J shares were up 0.7 percent to $60.24, both on the New York Stock Exchange. (Reporting by Bill Berkrot; Editing by Tim Dobbyn)