CORRECTED - UPDATE 1-Merck, Schering reach Vytorin deal with states

(Corrects wording in paragraph 6 to show allegations were part of an investigation, not a civil lawsuit)

NEW YORK, July 15 (Reuters) - Merck & Co MRK.N and Schering-Plough Corp SGP.N have agreed to pay $5.4 million to 35 states to settle allegations that they delayed releasing negative findings from a study of their cholesterol fighter Vytorin, the drugmakers said on Wednesday.

The 35 states and District of Columbia had alleged the drugmakers, which sell Vytorin and a related medicine called Zetia through a joint venture, delayed notifying the public for 20 months about unfavorable data from their so-called Enhance study.

“As part of the resolution of the multi-state investigation, the companies agreed to reimburse the investigative costs of the 35 states and the District of Columbia which totaled $5.4 million,” the drugmakers said in a joint press release.

The drugmakers, which plan to merge later this year, said they are not required under the settlement to admit any misconduct or to make any additional payments.

The study found that Vytorin -- a pill which combines Zetia with Merck’s older Zocor cholesterol fighter -- was no more effective in reducing plaque in the carotid arteries than an inexpensive generic form of Zocor (simvastatin).

Prior to releasing some of the negative study results in January 2008, Merck and Schering-Plough heavily promoted Vytorin in direct to consumer advertising, the state attorneys general alleged in their investigation.

Sales of Vytorin and Zetia, which had become big blockbuster products, plunged when results of the trial, which ended in May 2006, finally became known. They have remained on the downswing ever since.

Massachusetts Attorney General Martha Coakley said in a release that the settlement prohibits Merck and Schering-Plough from making false, misleading or deceptive claims about Vytorin and Zetia.

Moreover, she said the deal requires them to receive approval from the U.S. Food and Drug Administration before running any television ads for the drugs and to meet certain criteria when providing data about clinical studies in media outlets.

In addition, the settlement bans “ghost writing” of medical articles, by requiring individuals who are named as authors on company-sponsored manuscripts to meet certain requirements regarding their level of involvement. (Editing by Richard Chang and Gerald E. McCormick)