Merck racked up a fourth-quarter loss of $1.6 billion as charges including civil government investigations, restructuring costs, and a pretax $4.9 billion settlement charge related to arthritis drug Vioxx wiped out strong sales gains for the quarter.

The company said it lost $1.6 billion, or 75 cents per share, compared with a profit of $474 million, or 22 cents per share, a year earlier.

Excluding special items totaling $3.4 billion, Merck said it earned 80 cents per share during the quarter.

The drugmaker's worldwide sales were up 3 percent in the fourth quarter, to $6.2 billion, helped by the effects of the weak dollar and strong sales of cholesterol drugs Vytorin and Zetia and allergy treatment Singulair. Analysts, on average, expected earnings of 74 cents a share on $6.3 billion in revenue.

For the full year, worldwide sales climbed 7 percent, to $24.2 billion, while earnings per share were $1.49, or $3.20 excluding special items.

"Our performance in 2007 shows that the customer-focused, more efficient business model we began implementing more than two years ago is working," said Richard T. Clark, Merck's chief executive.

Merck anticipates full-year 2008 earnings in the range of $3.80 to $4, or $3.28 to $3.38 excluding special items.