Bristol-Myers Squibb Co. said a diabetes drug it was touting as part of its turnaround may be abandoned because it will need about five more years of testing.

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NEW YORK — Bristol-Myers Squibb Co., said Thursday that a diabetes drug it was touting as part of its turnaround may be abandoned because it will need about five more years of testing to answer questions raised by regulators.

The setback is also a disappointment for Merck & Co.. which was jointly developing Pargluva with Bristol-Myers.

Merck, which is still flagging from the loss of its blockbuster pain medication Vioxx, is badly in need of new drugs to sell. Bristol-Myers has been struggling with a slew of patent expirations and an accounting scandal.

However, Merck asked Bristol-Myers to end their collaboration after the U.S. Food and Drug Administration earlier this month issued the companies “an approvable letter” which means it anticipated greenlighting the drug if more studies were conducted and the new data were satisfactory. The agency specifically asked for information on the drug’s cardiovascular effects, the companies said.

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Bristol-Myers agreed to begin talks toward ending the relationship.

The news sent Bristol-Myers shares down 5.4 percent to $20.51 in late-session trading, after closing at $21.67 on the New York Stock Exchange. Shares of Whitehouse Station, N.J.-based Merck fell 2.6 percent, or 71 cents. During the regular session, Merck shares lost 27 cents to close at $26.92.

Bristol-Myers spokesman Tony Plohoros said the company still expects to return to sales and earnings growth by 2007, noting strong sales of some of its new products such as AIDS drug Reyataz and schizophrenia treatment Abilify.

“We have and will continue to build a strong pipeline of important medicines in disease areas of significant unmet medical need. A number of these promising compounds are in late-stage development,” Plohoros said.

Merck spokeswoman Janet Skidmore said regulators’ requirements would have meant “a significant delay in the launch of the product” and noted Merck has a diabetes drug of its own in development that it hopes to file with the FDA next year.

Initially, analysts had expected Pargluva would have hit the market by next year although there were always concerns among some that the drug’s risk would outweigh the benefits.

However, the drug already suffered from some bad publicity. Earlier this month, an analysis published on the Web site of the Journal of the American Medical Association found twice as many deaths and cardiovascular problems in diabetic adults taking Pargluva as for those on dummy pills or a competing drug.

If the analysis is correct, the drug could have meant a “public health catastrophe” given that 18 million Americans have diabetes, said Dr. Steven Nissen of the Cleveland Clinic. Nissen worked on the analysis with his colleague Dr. Eric Topol and a clinic statistician.

“This is the Vioxx that isn’t going to happen,” Nissen said, referring to the popular painkiller Merck removed from the market last year after it was linked with serious heart problems. Nissen has done consulting work for several drug companies, including Merck and makers of other diabetes treatments, but said he does not accept fees for that work.

Critics including Nissen have accused the FDA of lax drug surveillance because of Vioxx and other recent safety issues, such as evidence linking some antidepressants with a greater risk of suicidal thoughts in youngsters.