Updated from 8:24 a.m. EDT

Pfizer

(PFE) - Get Report

will undertake additional major testing of its arthritis treatment and pain reliever Celebrex in the wake of

Merck's

(MRK) - Get Report

stunning and costly withdrawal of its rival treatment Vioxx.

Pfizer Monday announced plans to fund additional clinical testing of Celebrex to determine its effect on arthritis patients who have had a recent heart attack.

"Our strong confidence in the cardiovascular safety of Celebrex is based on the substantial body of experience that has accumulated over several years in multiple completed studies and ongoing trials," said Dr. Joseph Feczko, president of worldwide development at Pfizer.

Feczko said some small studies suggest that Celebrex's anti-inflammatory qualities plus other drug characteristics "may improve vascular function in patients with established coronary artery disease." The company added that "patients treated in clinical studies of up to four years show no increased cardiovascular concerns."

Celebrex, approved by the Food and Drug Administration in 1998, is sold in more than 60 countries. More than 27 million U.S. prescriptions have been written.

Pfizer said the new study is part of a larger cardiovascular research program with Celebrex that started over 18 months ago and will be conducted at major universities and hospitals around the world.

It is expected to start in early 2005 and will enroll more than 4,000 patients. Pfizer said it will be "discussing the study design with the FDA and other regulatory agencies prior to finalizing its details and start date." The study will take more than two years.

A Rattled Market

The Pfizer announcement comes amid lingering health questions about the family of drugs called COX-2 inhibitors, which compete with a host of traditional pain relievers that include aspirin, ibuprofen and naproxen.

Merck pulled Vioxx after a company-sponsored study concluded that the drug, available in the U.S. since 1999, increased the risk of heart attacks and strokes in patients who used it for more than 18 months. Vioxx's main uses are for relieving pain and treating arthritis. There was no statistically significant increased risk of cardiovascular problems among patients who used Vioxx for less than 18 months compared to patients who were given a placebo.

Even though Merck said on Sept. 30 that it was pulling Vioxx from the market, the company added that it continues to seek approval from the FDA for Arcoxia, its next-generation COX-2 drug that is available in 47 countries.

Amid calls by some physicians that all COX-2 drugs should be re-evaluated, Pfizer issued results of several reports on Oct. 1, saying Celebrex did not pose a cardiovascular risk. But last week, Pfizer said it would conduct more tests on Bextra, another COX-2 drug on the market, to assess the long-term cardiovascular safety profile.

In a letter to health care professionals, Pfizer said its review of clinical data for nearly 8,000 patients treated with Bextra for six to 52 weeks "suggests there is no increased risk of cardiovascular thromboembolic events in people treated for osteoarthritis and rheumatoid arthritis." A thromboembolism is a blood clot that breaks loose to plug another vessel, causing strokes or pulmonary embolisms.

And in some general surgery settings, Pfizer said Bextra plus an experimental COX-2 drug called parecoxib didn't cause any unusual cardiovascullr side effects.

However, two clinical trials of patients who had undergone coronary artery bypass graft surgery showed "an increase in cardiovascular events" in patients receiving Bextra alone or in combination with parecoxib. The first study was published last year and the second study was just recently completed. Bextra is not approved for use in any surgical setting in the U.S.

Bextra, which reached the U.S. market in 2001, has also carried a label since 2002 alerting doctors and patients to the risk of a rare but serious skin reaction. "The risk of this skin reaction exists with many other medications," Pfizer said last week. "This risk exists with Bextra primarily within the first two weeks of therapy and, while very rare, at a reported rate greater than other COX-2 products, such as Celebrex. Pfizer is working with regulatory authorities around the world to update the Bextra product label."

The Economic Impact

Both Pfizer and Merck have said that Vioxx's results cannot be extrapolated to other members of the COX-2 class because each drug has a different make-up. But the latest revelations about Bextra and Celebrex could temper some analysts' initial cheery views of Pfizer's ability to attract a good portion of the Vioxx patients who must find another treatment for osteoarthritis or pain.

The Vioxx recall has knocked about a third of the value off Merck's share price. Pfizer initially benefited from the withdrawal, but a recent article in the

New England Journal of Medicine

raising additional concerns about the COX-2 group also hurt Pfizer, which has stood by Celebrex.

Pfizer shares were up 29 cents, or 1%, to $28.79 on Monday, slightly above their 52-week low of $27.68 and below the $30.18 closing price of Sept. 29, the day before Merck announced it was withdrawing Vioxx from the market.

Merck's shares were up 8 cents, or 0.3%, at $30.58. Their 52-week low is $29.75, touched on Oct 11. Merck's stock closed at $45.07 on Sept. 29.