Business Ethics and the Merck & Co., Inc. Case Study

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Susan Gustafson

Business Ethics

Mark Matthews, Ph.D.

February 10, 2004

Applying Ethics to the Merck Case

The purpose of my essay is to show whether the business decisions made by the management team of Merck pharmaceutical are ethical. Using corporate assets for charitable purposes, the company manufactures and distributes a drug called Mectizan at no charge to impoverished nations and their inhabitants.

I will expound on three ethical theories and then analyze the Merck case according to each theory, summarizing how the authors and proponents of each theory would position themselves regarding this case. The three theories that will be used to examine the case are John Stuart Mill's ethical theory of Utilitarianism, Immanuel Kant's Supreme Principal of Morality theory, and The Voice of Care, which is a contemporary challenge to dominant ethical views such as Kants and Mills'.

I have chosen to use only the materials covered in our classroom text and information gained as a result of classroom lectures. I will not interject my opinions but analyze the case from the perspective of the authors of the theories.

The Merck Case

Merck & Co. Inc. is one of the world's largest pharmaceutical companies in the world. Corporate headquarters are here in the United States. In 2001 Merck recognized over 47 billion dollars in revenue.

Research scientists at Merck discovered a cure for the disease river blindness, caused by a parasite and carried by the black fly, which adversely affects large populations in third world countries. After testing the drug through clinical trials to assure its' safety, the company tried to market the drug through sources such as The World Health Organization and several U.S. health agencies. The United States government was also called upon to introduce legislation to obtain funding for the distribution of Mectizan to impoverished countries. Merck's attempts to find buyers were unsuccessful. The management team decided to manufacture and distribute the drug for free, as the company held core values of "preserving and improving human life" and "being committed to the highest standards of ethics and integrity." These core company values were not taken lightly but literally. George Merck, the company president from 1925 to 1950, was quoted in the text as having written these words about Merck's values; "medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered that, the larger they have been."

30 million people in 32 countries are now treated each year with Mectizan at Merck's expense. The cost of the entire program is unknown to management but they estimate that each pill costs the company around $ 1.50 to manufacture.

In light of these facts, I have to question if management is making ethical decisions about the use of stockholder and or shareholder equity interests in deciding to provide this charitable contribution. I will now examine three important but vastly different ethical theories and apply them to the Merck case to discover how the founders and proponents of each theory would view the case and what positions they would take

John Stuart Mill's Theory of Utilitarianism

John Stuart Mill held two theories on utilitarianism: a normative and a psychological one. Normative views of Mills' include his "principle of utility" which says actions are right if they produce the greatest amount of happiness and pleasure and wrong if they cause displeasure and pain. His psychological theory says people want to live in harmony with their fellow man and that they have a basic sensitivity to the needs of others. This moral sensitivity will cause people to act in beneficial ways towards others while curbing a tendency to do harm to others. This is a consequentialist theory. The rightness or wrongness of an action depends on its' outcome, or so Mill argued....
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