Merck: Vioxx Report - Research Paper Example

Merck: Vioxx Report On March 4, 1999, Ray Gilmartin, Merck and Company’s CEO gave a speech that marked the release of VIOXX into the market. In the speech, Gilmartin (1999) noted that the release of the drug marked a major point in the lives of patients suffering from osteoarthritis. Before the introduction of Vioxx into the market, the drugs used for the treatment of the condition were unsatisfactory and were notably associated with several risks. The drug, a nonsteroidal anti-inflammatory drug (NSAID), was meant to treat acute pain, dysmenorrhoea, and osteoarthritis. Basically a painkiller going by the name Rofecoxib, Vioxx was on May 20, 1999 approved by the Food and Drug Administration (FDA) as safe for use by humans. As it were, the drug’s release in the market supposedly was a major breakthrough not only for Merck and Company but for patients suffering from osteoarthritis as well. Although Vioxx hit the market with a thud, it later turned out to be surrounded by controversies which led to its recall from the market. Although there is sufficient evidence to believe that Merck acted in bad faith in marketing a product that it knew was harmful to the public, the way it handled the drug recall greatly served to put it in good public favor. Background to the Case Merck was keen on seeing the launch of Vioxx into the global market and was sure that its would be a success story. No wonder the company launched a study to prove the superiority of the drug shortly before the FDA approved it. The success of the drug was rooted in the premise that it was associated with fewer gastrointestinal problems, unlike its counterparts (WSJ Research, 2005). Indeed a study conducted by Merck involving over 8,000 participants had revealed that the drug was safer than naproxen, an older painkiller. Essentially, those who took Vioxx experienced less gastrointestinal bleeding and fewer ulcers than those who took naproxen. Months after the introduction of the drug into the market, a study conducted by the Vioxx Gastrointestinal Outcomes Research study (VIGOR) team established that the drug significantly increased the risk of heart problems among patients. In the minutes of the VIGOR panel, it was noted that, “…while the trends are disconcerting, the numbers of events are small” (Prakash & Vikki, 2007, par. 7). In this sense, although there was evidence to show that the drug was not safe for use, the drug giant continued to produce and sell the product as a safe market leader. Across the world, well over 80 million people had Rofecoxib as part of their prescriptions oblivious of the fact that it was jeopardizing their health. A few years after the launch of the Vioxx, the truth about the risks of consuming the drug began to dawn on the world. Different sources revealed how Merck had misled physicians and patients of the safety and efficacy of the drug while doing all it could to prevent scientists working with the Federal Drug Administration from revealing the problems that were associated with it. In so doing, the organization contravened federal drug regulations while massively profiting from the harmful product. In September, 2004, Merck announced that it was voluntarily withdrawing Vioxx from the market owing to the high risks that long-term and high dosage use of the drugs posed to users (Bhatnagar, 2004). As a result of the revelation that the company was hiding crucial information from the public regarding the safety of the drug, the company has had to deal with several court cases and has spent billions of dollars in legal expenses. Management of the Vioxx Recall The crisis that Merck got itself into demanded a lot from its managers and public relations officials. As previously noted, the organization took an initial step toward preventing more problems by announcing that it was “voluntarily” withdrawing Vioxx from the market following concerns that it was associated with heart problems and stroke. The company’s CEO, Raymond Gilmartin, noted in a press conference that, 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 (Bhatnagar, 2004, par. 4). The statement by Gilmartin served to put the company in good public light as it gave the impression that the company was more concerned about the health and welfare of the public than it was of the profits that it was getting from the harmful drug. The statement also worked for the good of the company considering that it made the public believe that the company took the initiative to recall the drugs from the market at a time when different sources were publishing information regarding the drug and the company’s misinformation of the public. In addition, the CEO gave direction on how the company could be contacted for more information relating to the withdrawal of the drug (Bhatnagar, 2004). By taking this measure, the company emerged as one that was keen on dealing with the crisis squarely as opposed to hiding its face from the public. Although there is ample ground to believe that Merck had hoodwinked peer reviewers affiliated with the Journal of the American Medical Association by hiding some data that would have revealed the association between Vioxx and heart problems, the VIGOR team noted that their evaluation of the situation led them to conclude that appropriate clinical trial principles were followed and that the three heart attacks that had been pointed out by the reviewers had occurred after the elapse of the "prespecified cutoff date" for which cardiovascular problems were to be reported ((Prakash & Vikki, 2007, par. 38). Taking into account the financial liabilities it was bound to incur from thousands of lawsuits that it would face as a direct result of the harmful drug, Merck announced that it would pay about 4.85 billion dollars to a settlement fund (Prakash & Vikki, 2007). Without admitting liability, this move served to pass the message that the company was keen on compensating the public for the losses they suffered as a result of using the drug without being compelled to do so by courts of law. Although the company suffered a major blow and its financial performance got affected, the organization’s CEO maintained that he would not resign and that the company was “very strong financially, with very strong cash flow" (Bhatnagar, 2004, par. 16; Appleby & Krantz, 2004). In this case, the CEO maintained that the company had not been grossly affected by the crisis but was confident and optimistic of its future. Essentially, the CEO’s statement served to assure the company’s main stakeholders that they had no cause to fear since the company would rebound from its current losses and negative publicity. In conclusion, Merck acted in bad faith by hiding crucial information from the public regarding the risk of using Vioxx. While this is the case, the company, through its leaders, handled the recall of the drug successfully. The company’s success in this sense emerged from the way its CEO assured the public of its concern for public safety over profit; how he assured stakeholders of the company’s stability in spite of the crisis, the release of funds to avoid litigations, and how the company avoided liability for the crisis. References Appleby, J. & Krantz, M. (October 30, 2004). Merck estimates $2.5B impact from pulling Vioxx plug. Usa Today http://usatoday30.usatoday.com/money/industries/health/drugs/2004-09-30-merck-cover_x.htm Bhatnagar, P. (October 6, 2004). Merck yanks arthritis drug Vioxx. CNN Money. Retrieved October 27, 2014 http://money.cnn.com/2004/09/30/news/fortune500/merck/ Gilmartin R. (1999). VIOXX Product Release Meeting Ray Gilmartin Dinner Speech, March 4. Retrieved October 27, 201 http://dida.library.ucsf.edu/pdf/oxx05a10 Prakash, S. & Vikki V. (2007). Timeline: The Rise and Fall of Vioxx. Retrieved October 27, 2014 http://www.npr.org/templates/story/story.php?storyId=5470430 WSJ Research (Aug. 19, 2005). Vioxx Timeline. Wall Street Journal. Retrieved October 27, 2014 http://online.wsj.com/articles/SB112437251652016649 Read More