Case Against Merck and Co.

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The Case Against Merck and Co., Inc.

Chris Brefeld

August 2, 2010

The Case of Merck and Co., Inc.

Merck and Co., Inc. is one of the largest pharmaceutical companies in the world with a market capitalization of over $110 billion dollars. The company describes itself as a global research-driven pharmaceutical company that discovers, develops, manufactures, and markets vaccines and medicines to address unmet medical needs. The company also makes an effort to increase access to its medicine by donating and delivering them to people who need them. One particular area that has been a large part of Merck’s recent success is its pipeline of drugs to treat high cholesterol which is a major risk factor for cardiovascular disease. Because cardiovascular disease is the number one killer in the United States, the yearly market for cholesterol lowering drugs is worth close to 20 billion dollars (Freundlich 2009). In fact, the best selling drug in the world is used to treat high cholesterol. In spite of increased generic and new arrival competition, Lipitor retained its top position as the best selling global drug brand with sales of $13.35 billion in 2008 (Maggon 2010). Lipitor is manufactured and marketed by Pfizer, one of Merck’s main competitors. Merck’s Zocor was itself a multi-billion dollar drug, achieving annual sales of $4.4 billion in 2005, and was second only to Pfizer’s Lipitor in terms of market share and sales prior to losing its patent protection in 2006 (Genesee v. Merck 2008). With this much money at stake for companies in the pharmaceutical industry, the pressure to deliver effective new therapies can sometimes create ethical and social responsibility issues. These issues are at the heart of a class action complaint that is currently ongoing against Merck. This paper will discuss the allegations against Merck related to their multi-billion dollar blockbuster drugs Vytorin and Zetia. It will also discuss the complex ethical issues surrounding the allegations as they relate to the actions that Merck took to maintain its status as a major player in the multi-billion dollar cholesterol market. The case against Merck centers around the alleged concealment of material information and misleading statements that were made in regards to a large, multi-year clinical trial called The Effect of Ezetimibe Plus Simvastatin Versus Simvastatin Alone on Atherosclerosis in the Carotid Artery (ENHANCE). The complaint contends that false information and the delay in releasing the clinical results artificially inflated the share price of the company’s stock. The ENHANCE trial was designed to compare the improvement in the progression of atherosclerosis in patients that took Vytorin (a drug combining Zocor (simvastatin) and Zetia (ezetimibe)), with patients that took only Zocor (simvastatin). In other words the trial isolated the carotid artery as the place where plaque buildup would be measured to determine whether the Zocor/Zetia mix in Vytorin was more effective at reducing plaque than Zocor alone. The combination pill Vytorin failed to show any improvement in the progression of atherosclerosis over patients taking Zocor (simvastatin), a drug that is available as a generic and sells for a fraction of the price (Genesee v. Merck 2008). The main reason I took interest in this subject is because I am employed in the pharmaceutical industry. The products that my company manufactures, markets, and sells are in direct competition with Merck’s. I also feel that because I am in this industry I should understand as much as possible about negative information in the press concerning “Big Pharma”. I also find this case interesting because the United States struggles to reign in health care costs while physicians are prescribing what seems like an unproven and costly medication to millions of patients. Hamilton (2008) states this about the scandal: “It’s also offered an illuminating look at how drug companies push...
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