Merck & Co. (MRK) and Schering-Plough Corp. (SGP) agreed to pay $5.4 million and comply with certain rules to settle a probe by 35 U.S. states and the District of Columbia into whether the drug makers' handling of a negative study of their cholesterol drugs violated consumer-protection laws.

The settlement doesn't require any other payments, or any admission of misconduct or liability. Merck and Schering-Plough, which jointly market the drugs and are in the process of merging, did agree to non-monetary provisions in the settlement, however.

The investigations arose from the so-called Enhance clinical trial, whose results were released in January 2008 and showed that Vytorin - a single-pill combination of Zetia and the drug simvastatin - was no better than simvastatin alone at slowing artery thickening. The results contributed to a 12% decline in combined sales of Vytorin and Zetia last year, to $4.56 billion.

Merck and Schering-Plough came under criticism last year because they waited nearly two years from the Enhance study's completion to release the results. Critics suggested the companies delayed the release because they knew they were negative, but the companies said data-quality problems required repeated analyses, and that top executives didn't know the outcome until shortly before public release.

The controversy sparked various government investigations and private litigation. Among them were attorneys general representing the 35 states and D.C., who probed whether Merck and Schering violated state consumer protection laws, primarily due to the long delay in releasing results of the trial.

The settlement reflects "our belief that the companies conducted the Enhance trial in good faith and that our promotion of Vytorin and Zetia was in compliance with the law," Merck spokesman Ron Rogers said.

Tony Green, spokesman for the Oregon Department of Justice, which spearheaded the probe, said that if patients and their doctors had been aware of the Enhance trial results sooner, "it's entirely possible they would have behaved differently."

As government settlements go in the drug industry, the $5.4 million to be paid by Merck and Schering-Plough is pretty small - Eli Lilly & Co. (LLY) agreed to pay $1.4 billion earlier this year to settle government probes of its drug marketing.

But Merck and Schering aren't out of the woods yet with Enhance. Wednesday's pact is only the first resolution of any Enhance-related legal matters, but other Enhance legal matters remain unresolved. Merck disclosed in September 2008 the U.S. Justice Department's civil division is investigating whether the companies' conduct related to Vytorin caused false claims to be submitted to federal health programs. Historically, false-claims investigations have led to larger settlements in the drug industry.

Various private lawsuits alleging consumer-fraud violations, personal injuries and securities-law violations also have been filed against the companies.

In Wednesday's settlement, the companies agreed to continue to comply with various federal laws requiring truthful marketing of the products, Merck said.

According to Oregon's attorney general office, Merck agreed to:

-Obtain pre-approval from the U.S. Food and Drug Administration for all direct-to-consumer television advertisements;

-Comply with FDA suggestions to modify drug advertising;

-Register clinical trials and post their results;

-Prohibit so-called "ghost writing" of articles, which usually refers to companies asking outside doctors or researchers to sign their names to medical-journal studies prepared primarily with company funding.

-Reduce conflicts of interest for data safety monitoring boards that ensure the safety of participants in clinical trials; and,

-Comply with detailed rules prohibiting the deceptive use of clinical trials.

Merck's Rogers said the company already complies with these rules.

Merck shares rose 41 cents to $27.57. Schering was up 36 cents at $25.28.

-By Peter Loftus, Dow Jones Newswires; 215-656-8289; peter.loftus@dowjones.com

(John Kell contributed to this report.)