Merck & Co has agreed to pay $688 million to resolve two federal securities class-action lawsuits involving the firm’s anti-cholesterol drugs Zocor and Vytorin, thereby avoiding trial.

The lawsuits came about after shareholders, who purchased certain securities, claimed to lose money after the drug giant, and partner Schering-Plough, delayed publication of trial data relating to the Enhance trial, which tested the combination drug Vytorin (ezetimibe plus simvastatin) with Zocor (simvastatin).

The trial itself had found Vytorin – which combines the active ingredients of Zocor and Zetia – was no better in preventing atherosclerosis than the cheaper statin Zocor, despite results it reduced cholesterol levels.

The lawsuits allege that Merck and Schering-Plough – which was bought by Merck in 2009 – knew the trial had failed but concealed the information from investors for a year. When the results were released in January 2008, the company’s share prices plummeted.

In a statement, Bruce Kuhlik, executive vice president and general counsel of Merck, said: “This agreement avoids the uncertainties of a jury trial and will resolve all of the remaining litigation in connection with the enhance study. We believe it is in the best interests of the company and its shareholders to put this matter behind us, and to continue our focus on scientific innovations that improve health worldwide.” The trial was scheduled to begin on 4 March.

The statement also says: “Merck continues to believe that both companies acted responsibly in connection with the Enhance study, and this agreement contains no admission of liability or wrongdoing.”

However, Judson Clark, a healthcare analyst from Edward Jones, told Reuters “there’s probably some merit [to the claims] or they wouldn’t have settled for such a large amount”.   

Under the agreement, which was reached after almost five years of protracted litigation, the company will pay $215 million to resolve the securities class action against all of the Merck defendants and $473 million to resolve the securities class action against all of the Schering-Plough defendants. Both settlements still require court approval.

Investor attorney Salvatore Graziano of Bernstein Litowitz Berger & Grossmann LLP told Bloomberg: “Hopefully, this will serve as a deterrent in the pharmaceutical industry. It continues to be a widespread problem that companies report good results in clinical drug trials quickly and delay or don’t report at all adverse results.”

The company recorded a pre-tax and after-tax charge of $493 million for the settlements. This charge has reduced Merck’s previously reported earnings per share for the 2012 fourth quarter from 46 cents to 30 cents. In a statement, the company says the pay out will have no impact on Merck’s 2013 results of operations.