UPDATE 3-US FDA sees pancreatitis link with Merck's Januvia

* FDA: 88 pancreatitis cases reported

* Merck official says no link to diabetes drug

* Doctors should monitor patients, agency says
(Adds European recommendation for use with insulin, closing
share price)

By Susan Heavey

WASHINGTON, Sept 25 (Reuters) - U.S. health officials said
on Friday they suspect Merck & Co Inc's (MRK.N: Quote, Profile, Research) blockbuster
diabetes drug Januvia may be linked to serious cases of
inflamed pancreas, but company officials disputed the
connection.

The Food and Drug Administration said that 88 cases of
acute pancreatitis had been reported since the drug's approval
in 2006 through February 2009.

Because a number of patients developed the condition soon
after taking Januvia, or related drug Janumet, and more than
half saw it disappear after they stopped using it, "FDA
believes there may be an association" with the drug.

Of the reported cases, 19 patients saw problems within 30
days of the drugs' use, and 47 cases resolved after use of
Januvia or Janumet was discontinued, the agency said.

But Dr. John Amatruda, a Merck senior vice president for
diabetes products, said: "We don't believe that the data
establishes a relationship" between the condition and the
drugs, which both contain the active ingredient sitagliptin.

Patients with diabetes are twice as likely to develop
pancreatitis even without medication, Amatruda said.

Several other rival products, including Amylin
Pharmaceuticals Inc's (AMLN.O: Quote, Profile, Research) Byetta, have also been linked to
an increased risk of pancreatitis, which can be deadly if not
treated.

Barbara Ryan, an analyst at Deutsche Bank, said the news is
unlikely to affect sales of Januvia. Merck has forecast 2009
combined sales of between $2.4 billion and $2.7 billion for the
two drugs.

"It's more an issue related to diabetes. You're going to
find that irrespective of what therapy people are on," she
said. "The question is whether the incidence is higher than
what would be expected."

Merck later announced that a European health advisory
committee recommended Januvia and Janumet be approved for use
as an add-on to insulin for the treatment of type 2 diabetes.

The company is awaiting a decision from the FDA on whether
its diabetes drugs can be used with insulin in the United
States. The Januvia and Janumet labels state that they have not
been studied in combination with insulin, the company said.

Merck shares closed up 24 cents $31.25 on the New York
Stock Exchange.

The FDA said it was working with Merck to add information
about the cases to the drugs' labels and that doctors should
closely monitor their patients.
(Additional reporting by Bill Berkrot in New York; Editing by
Tim Dobbyn and Matthew Lewis)