American Home Products ( AHP) and Schering-Plough ( SGP) said earnings rose in the third quarter, although both were hampered by ongoing problems in their pharmaceutical operations. American Home said earnings before costs associated with its ongoing Redux and Pondimin litigation were $867 million, or 65 cents a share, in the quarter, up from $762 million, or 58 cents a share, a year ago and two cents better than analysts' forecasts. The company said revenue rose 7% to $3.74 billion on a 9% increase in pharmaceutical sales. The company also posted an after-tax charge of $615 million, or 46 cents a share, in the latest period for the diet-drug litigation, cutting its bottom-line profit to $252 million, or 19 cents a share. The expense represents expected future funding for a class-action settlement of the case, which has been in settlement proceedings for two years. American Home said overall drug revenue was buoyed by brisk sales of Protonix, its gastroesophageal reflux treatment, and Effexor, an antidepressant. Those gains offset declines in products including its Premarin hormone-replacement therapy, sales of which fell because of promotions. Meanwhile, Schering-Plough said it earned $601 million, or 41 cents a share, in the third quarter compared with $591 million, or 40 cents a share, a year ago. The results were in line with analysts' expectations. Revenue was roughly flat at $2.4 billion. In the U.S., the company's overall drug sales fell 1% due to continuing manufacturing issues at two of its domestic plants. In a "disclosure notice" appended to its earnings release, Schering-Plough said future results could be affected by the FDA's investigation of those issues, which center on plants in New Jersey and Puerto Rico. "We are continuing our broad efforts to resolve the manufacturing issues that are negatively affecting U.S. operations and results," the company said. The Kenilworth, N.J., company said worldwide pharmaceutical sales rose 1% on higher sales in two segments: allergy and respiratory, and anti-infective and anticancer. Claritin sales were up 5% to $828 million while sales of Nasonex rose 39% to $136 million. Sales in its anticancer and antihepatitis line Intron A fell 11% to $301 million.