A majority of the panel voted that the drug was safe and effective in most cases, but was divided on the question of approving the safety of higher doses if lower doses did not appear to work for patients.
The panel voted 13 yes, three no with one abstention that starting doses of 15 and 20 milligrams were adequately safe.
But the members were narrowly against the question of whether doses up to 30 and 40 mg would be safe and acceptable -- seven voted it was safe while eight said it was not, and two abstained.
The US Food and Drug Administration is not required to follow the advice of the independent panel but it usually does.
The drug works differently than the top sleeping aid on the market at present, Sanofi's Ambien, or zolpidem, which boosts neurotransmitters known as GABA receptors.
Merck said suvorexant blocks "wakefulness-promoting orexin neurons" from working. If approved, it would be the first time the chemical is released on the US market.
FDA doctors who reviewed the research on the drug ahead of the panel meeting said it appeared effective but not safe at the higher doses studied.
For adults under age 65, the doses ranged from 20 to 40 mg. For those over 65, the doses studied were 15-30 mg.
The independent panel debated the findings all day, with one of the main topics being whether a lower dose of 10 mg would be safe and effective and avoid risks such as dangerous driving from persistent sleepiness after taking the pill.
Merck's representative said the response from a 10 mg dose would be "quite small and not very different from the placebo response."
However, FDA reviewers believed the lesser amount would likely work, leading one doctor on the panel to remark that he felt he was in an episode of the "Twilight Zone," where the government was saying a drug would work while its maker disagreed.
The drug has a half life of 12 hours, meaning it remains in the system long after waking. It is also metabolized much more slowly by overweight women than by normal weight men.
Up to two percent of patients studied reported daytime drowsiness. Among those taking the highest doses, six percent reported that such episodes were severe.
FDA reviewers found that "suvorexant can cause significant impairment in driving the morning after dosing."
Also, eight of 1,268 suvorexant patients had suicidal thoughts in a 12-month study, compared to zero in a placebo group of just over 1,000 people.
The drug is not to be taken in combination with antidepressants, stimulants, and blood thinners.
When asked if further studies should be done to determine if a lower dose of 10 milligrams would be safe and effective a majority of the panel voted no.
Between 30 and 40 percent of US adults say they suffer insomnia symptoms at least once in a given year, and 10-15 percent report chronic insomnia, according to the National Center for Sleep Disorders Research at the National Institutes of Health.