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Review of Merck & Co. Case

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Abstract

Merck & Co. is one of the largest pharmaceutical companies, not only in the United States but also in the world. The company specializes in the development, manufacture, and distribution of pharmaceuticals and leads research into the development of groundbreaking drugs. Merck's case is a good example of the risks and rewards inherent in the pharmaceutical industry. In 2005, the company agreed to pay $4.85 billion as compensation to the kin of almost 3,500 individuals who died as a result of heart attacks and stroke in addition to another 33,000 who suffered lesser injuries after taking Merck's drug Vioxx. This analysis aims to provide an in-depth review of Merck & Co. case and deliberate on the particulars of this lawsuit.

 

Review of Merck & Co. Case

After setting aside money amounting to $970 million to cater for around 9,600 litigations from more than 18,200 complainants in 2005, Merck & Co. eventually agreed to pay $4.85 billion in settlements to the families of the 3,500 people who died from either strokes or heart attacks and the almost 33,000 individuals who suffered lesser injuries after taking the drug Vioxx which Merck & Co. had touted to be a cure for rheumatoid arthritis (Wilson, 2011). There were numerous interested parties in the case owing to the large number of individuals affected either directly or indirectly. Records indicate that between the introduction of the drug into the market after the Food and Drug Administration approval in 1999 to the time it was removed from the market in 2004, about twenty-five million Americans had taken Vioxx (Wadman, 2007). As a result, numerous patients and their families were directly affected by the physical side effects of Vioxx. Furthermore, investors felt aggrieved because of the retributive sanctions meted upon the company by the courts and the billions of dollars losses in stock value upon the drug’s withdrawal from circulation. The case proved to be significantly complicated mostly because of the number of individuals involved and the amount of money involved. Consequently, a lot of time was taken in efforts to resolve the case.

Analysis

Laws broken

As mentioned earlier, there were several interested parties in this case which in turn implies that there were many claims leveled against Merck & Co. In the year 2007, the company agreed to pay $4.85 billion as settlement for 27,000 litigations leveled against it by individuals claiming that they had suffered losses either in the form of death or injury after consuming the drug (CBS News, 2008). Furthermore, as a result of continued litigation against the company, another settlement amounting to $37 was announced in 2012. This settlement was meant to be compensation to Canadian people or their estates. In 2016, the compensation was to investors who claimed the company’s practices had cost them significant income losses. In addition to this, Merc & Co. also plead guilty to the charge of unlawfully introducing a drug into regional commerce. To this effect, the company was compelled to pay $321 million as a criminal fine for the single transgression stated above (Wilson, 2011).

The above misdemeanor charge arose from the fact that Merck & Co. promoted the drug Vioxx, as a treatment for rheumatoid arthritis prior to its approval by the Food and Drug Administration for such use. Another settlement involving civil claims that the company's irregular promotion of the drug led to doctors prescribing the drug and then billing the government for Vioxx attracted further sanctions. To this effect, Merck paid $426 million to the federal government on top of $202 million in payments to state Medicaid organizations (CBS News, 2008). On the above revelations, the laws broken amount to negligence and physical endangerment from a personal point of view. Conversely, on a corporate perspective, it amounted to negligence and misrepresentation of information.

Ethical concerns

The ethical concern evident in this case is the casual way in which Merck elected to ignore the welfare of its consumers and the inherent responsibility the company had towards them. As a company specializing in the production of drugs meant for human consumption, the company bears great responsibility and it ought to be cognizant of the dire effects that distributing drugs with serious side effects such as Vioxx might present. As a drugs company, the company’s main focus ought to be the patient and while profits are also part of the agenda, pursuing profits should not supersede the former (Wadman, 2007). Furthermore, the company had the responsibility to not act unethically in ways that might put the investors at a risk of financial losses. Finally, the company has the ethical responsibility to act ethically by taking responsibility for any mistakes.

Condition Vioxx was meant to treat

One of the accusations leveled against Merck & Co. was that they promoted the drug Vioxx as a treatment for rheumatoid arthritis even before the Food and Drug Agency could approve the drug’s use for that purpose. Consequently, doctors started prescribing Vioxx to patients on the back of Merck’s promotion of the drug as such even though the FDA had not officially approved it for that purpose. Instead, Vioxx was meant to be a supreme painkiller (Wilson, 2011).

Alternative effects

After acquiring FDA approval for Vioxx in 1999, Merck embarked on extensive production and supply of the drug. By 2003, it was readily available in more than eighty countries in the world (CBS News, 2008). In the same period, evidence from Merck & Co. and other stakeholders indicated that individuals who took the drug were at a higher risk of suffering heart attacks and strokes. Nonetheless, the company did not take steps to withdraw the drug from the market, only doing so in September 2004 (CBS News, 2008).

In addition to this, the drug’s introduction into the market and subsequent withdrawal couple with fines and lawsuits that followed, the investors were left to shoulder the financial losses. For this reason, the company was sued for downplaying the effects of Vioxx which effectively led to significant financial losses in stock value which ran to billions of dollars.

How Merck could have avoided the situation

The company’s decision to promote the drug as a treatment for rheumatoid arthritis while the drug was meant to be an effective painkiller is arguably the worst decision the company made. In addition to this, the company claimed benefits the drug allegedly had even though the FDA had not officially approved it for that purpose (Wadman, 2007). It is worth noting that the FDA had approved the drug as a painkiller in 1999 and the decision by someone in the company to expand its use before the FDA’s approval was a bad decision. The company could, in hindsight, have opted to follow the Food and Drug Agency regulations and not ignore the findings which showed the drug’s dire side effects.

Conclusion

The Merck & Co. case is a good example of the major upheavals that exist in the pharmaceutical industry. While the potential for profit is high, the chances of suffering significant financial damage are just as high. While the company did make the decision to withdraw the drug upon discovering the side effects, this only happened almost a year later. While I do not think that the company meant to cause harm, the company’s decision to expand its uses without FDA approval was an ill-advised move which led to the loss of lives and money.

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