Updated from 1:05 p.m. EST

For several years before and after Vioxx was approved for commercial use, executives of

Merck

(MRK) - Get Report

were reportedly aware of -- and tried to play down -- the drug's potential risk for causing cardiovascular problems such as heart attack and stroke.

Citing internal emails, marketing documents and interviews with "outside scientists," an article in

The Wall Street Journal's

Monday edition says Merck "fought forcefully for years to keep safety concerns from destroying the drug's commercial prospects."

The news Monday helped drive down the already-battered stock. On a split-adjusted basis, shares fell to their lowest level since April 1996. The stock lost $3.11, or 9.9%, to $28.20. More than 55.4 million shares changed hands, which is about four times the daily normal volume for the last three months.

Also on Monday, Prudential Equity Group cut its rating on Merck's stock to neutral weight from overweight and Standard & Poor's placed Merck's corporate credit and unsecured debt ratings on its CreditWatch list "with negative implications," thus putting Merck AAA credit rating at risk.

Merck withdrew Vioxx from the market on Sept. 30, saying that a company-sponsored study had shown that long-term use of the drug -- longer than 18 months -- raised the risk of cardiovascular problems when test results of Vioxx users were compared with people taking placebo. However, during a period of less than 18 months, the company said there was no statistically significant difference in heart and stroke issues between Vioxx patients and people taking placebo.

But the

Journal

article says the prospect of cardiovascular risk emerged in the mid- to late 1990s, adding that internal emails say company officials discussed how to design clinical studies that, the newspaper says, would "minimize the unflattering comparison" that showed Vioxx had a greater heart risk than cheaper pain relievers. Vioxx was approved by the Food and Drug Administration in 1999 and has been used primarily to treat pain and arthritis.

The article noted that several emails in 1996 and 1997 from company executives raised concerns about the drug, as did several emails after the drug was approved by the FDA. But early company press releases ignored, deflected or played down any potential heart-related problems. Internal company marketing materials showed, in part, that sales representatives were told to "dodge" questions from doctors about heart risks.

On Friday, Merck took a pre-emptive strike, saying it had been alerted that documents related to Vioxx litigation had been made public. The documents, Merck said, aren't supposed to be released according to a court order. Merck didn't identify the documents or the court.

"These documents are pulled from the millions of documents Merck has produced to date during these legal proceedings," Merck said. "Past experience of other companies in such situations suggests that documents will be deliberately presented out of context to advance the interest of the parties who have started Vioxx. As such, the documents, the surrounding events and the business practices of Merck may well be misinterpreted in any reporting." Merck didn't identify the publication.

The company reiterated that it "acted responsibly and appropriately" in removing Vioxx from the market after its carefully designed clinical study showed the increased cardiovascular risk. Up until then, Merck had criticized several other studies making a link between Vioxx and greater risk of cardiovascular problems as technically flawed and scientifically suspect.

"When questions arose about the safety of Vioxx, Merck took steps to investigate and address these issues," the company said. Merck "worked diligently" with the Food and Drug Administration and foreign regulators "to ensure that the safety profile of Vioxx was reflected appropriately in the prescribing information." The FDA changed the Vioxx label in April 2002 designed to alert doctors and patients about the potential heart risk.

Merck said Friday it would not comment on the documents, adding that it will present its case in court and not in the media. Merck added that it "continues to believe it has meritorious defenses against the claims made against the company."

Merck estimates that 105 million U.S. prescriptions were written for Vioxx between May 1999, when the product was launched, and August 2004. The company says approximately 20 million people in the U.S. have used the drug. Merck recently said it could not at this time estimate the number of people outside the U.S. who have used the drug.

"Following the withdrawal of Vioxx, the Merck investment thesis has broke down," said Tim Anderson, Prudential Equity Group's drug industry analyst, in a note to clients Monday explaining why he cut his rating on Merck. According to Thomson First Call, Merck now has 24 neutral recommendations, three buy ratings and one sell recommendation.

"Dividend yield is high, and we don't believe Vioxx will be the next Phen-Fen despite what gets portrayed in the media," said Anderson, referring to the diet drug combination whose legal bills have punished

Wyeth

(WYE)

. "We also think that the downside to share price from current levels is minimal." (He doesn't own shares; his firm doesn't have an investment banking relationship).

S&P said it was putting Merck on its CreditWatch list because of increasing concern about the magnitude of possible litigation" due to Vioxx, said S&P credit analyst Arthur Wong. S&P plans to meet with Merck's management to discuss the company's "long-term ability to retain its credit strength." the ratings firm said. S&P also affirmed its 'A-1+' short-term corporate credit and commercial paper ratings on Merck.