Moral Strategy of Merck

Introduction:

Merck and Co. announced on September 30th 2004 a voluntary worldwide recall of Vioxx, its arthritis and acute pain medication, from public inventories. The Company’s decision, effective immediately, was based on a new three-year clinical trial.

Faced with the prospect of public endangerment and numerous lawsuits if the company was responsible for undisclosed side effects from the medication, Merck and Co chose to take a preemptive moral action and remove Vioxx from store inventories without FDA direction.

Was this action prudent? Would the “Patients First” policy save Merck and Co. from a public relations nightmare? Finally would this action reduce financial impacts? The lose of a drug from a sales portfolio early in its lifespan is very bad in the pharmaceutical industry. Recalling an immature product voluntarily is almost unheard of.

It takes a number of years to recover the investment made in research and development of a drug; Vioxx had not paid its bills yet. By comparison even today competing pharmaceutical companies have left their own versions of Vioxx on the market. This is after it was discovered that similar and sometimes more extreme cases of stroke and heart attack were linked to the competing drugs such as Celebrex from Pfizer Inc. So was Merck & Co making a serious error or a brilliant public relations maneuver?

The Company Public Statement:

“We are taking this action because we believe it best serves the interests of patients,” said Merck Chairman Ray Gilmartin. “Although we believe it would have been possible to continue to market Vioxx with labeling that would incorporate these new data, given the availability of alternative therapies, and the questions raised by the data, we concluded that a voluntary withdrawal is the responsible course to take.” (Merck and Co, 10/1/2004)

Merck’s