Case Study: Merck & Company: the Vioxx Recall

Powerful Essays
Running head: CASE STUDY: MERCK & COMPANY: THE VIOXX RECALL

Merck & Company: The Vioxx Recall
Albert Balogun
California Baptist University
BUS 520A: Managerial Ethics
Jim Bishop, PhD
June 30, 2010

Merck & Company: The Vioxx Recall The issues involved in Merck, a pharmaceutical manufacturing company’s recall of one its products, Vioxx, is the effect of direct-to-consumer (DTC) advertising of prescription drug on the society public health, the impact of it on the doctor –patient relationship and other ethical considerations. The purpose of this paper is to make an exposition of issues that the recall case entailed including the ethical issues that were involved, and the propriety of DTC advertising method. The legal implications of the recall and the effect of an enactment of a law by the Congress to prevent the use of DTC method of advertising will also be examined. The Beginning of Merck Troubles A number of reasons could be adduced for Merck’s troubles; from a very reputable pharmaceutical company to one that had its major brand withdrawn from the market with considerable adverse financial implications. Apart from the role of direct-to-consumer (DTC) pharmaceutical advertising and its impact on the company’s decision-making process during the period preceding and leading to the recall of Vioxx which will be the central focus of this paper, other reasons exist as well. These include the competitiveness of very high magnitude that existed in the pharmaceutical industry in the 1990s and the dilemma that Merck faced as a result of a number of its patents that were due to expire. These patents were mostly on the company’s most profitable drug lines (Green, 2007). With declining fortune, Merck found DTC irresistible and relied on it heavily to shore up its market share and to remain competitive. This was the case particularly in the aggressive marketing

You May Also Find These Documents Helpful

  • Better Essays

    Merck & Co

    • 1066 Words
    • 5 Pages

    1. How has Merck been able to achieve substantial returns to capital given the large costs and lengthy time to develop a new drug?…

    • 1066 Words
    • 5 Pages
    Better Essays
  • Good Essays

    Merck Case

    • 587 Words
    • 4 Pages

    Merck had a 14% increase in sales between 1997 and 1998 and 22% increase in sales from 1998 – 1999, and a 13% annual increase in earnings over the same period. Merck’s business strategy consists of two parts: (1) developing and marketing new drugs through internal research, and (2) developing partnerships with smaller biotechnology companies. Since 1995, Merck had launched 15 new products that earned $5.9 billion on sales of $32.7 billion. Furthermore, Merck may agree to license new drugs from other firms and with its larger capital and greater assets, can assume the risk of submitting the drug through various regulatory approval phases. If the drug becomes profitable, Merck can earn significant cash flows while paying a royalty to the licensor. However, most important is the option that Merck has in deciding when to abandon or continue on this project (deferability or optionality). If Merck reaches a point when its expected NPV is negative, it can simply abandon the project. As a licensee, Merck can allow smaller biotechnology firms to focus on research and development. These smaller firms often have smaller budgets and are not financially or personnel equipped to handle the costly and long FDA approval process, and the subsequent marketing, distribution, and sales of new drugs. This task is better suited for a larger company, such as Merck, which has more resources and money.…

    • 587 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Ethics and Pharmacare

    • 2854 Words
    • 9 Pages

    In this paper I will analyze and assess legal and ethical modifications on marketing relations as it relates to both consumers and organizations. This research will analyze three to five ethical issues that relates to marketing and advertising, intellectual property, and regulation of product safety. The discussion of arguing for or against Direct-to-Consumer (DTC) marketing by drug companies will also be analyze. This paper will also determine who regulates compounding pharmacies under the current regulatory scheme, what the Food and Drug Administration (FDA) could/should have done in the PharmaCARE scenario and whether the FDA should be granted more power over compounding pharmacies.…

    • 2854 Words
    • 9 Pages
    Powerful Essays
  • Good Essays

    Dcpa Pros And Cons

    • 540 Words
    • 3 Pages

    In America’s society, advertisements are everywhere. There are many commercials and magazine spreads dedicated to the promotion of doctor prescribed medications. Known as direct-to-consumer pharmaceutical advertising (DTCPA), new information is showing these could be more harmful than beneficial. Marketing of these drugs, unbeknownst to consumers, often takes place before information of long-term safety is known. Furthermore, patient’s views of doctoral qualifications can be undermined if the practitioner fails to prescribe the requested medication. Arguments for the benefits of DTCPA are often outweighed by the harms they cause. Banned in every country except New Zealand and the United States, DTCPA that includes product claims are more harmful than positive.…

    • 540 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Hcs/ 490 Outline

    • 475 Words
    • 2 Pages

    d. Ensure that customers and medical specialists are given enough info about prescription drugs on branding and marketing IV. The chosen medical goods or services classification a. Drug Advertising, Branding and Publicity V. Reason for selecting this section a. The DDMAC division of the FDA is accountable for regulating conformity in advertising, branding and public relations. b. The DDMAC is accountable for proficient healthcare promotional procedures for direct-to-consumers advertising c. Info is given as well as what may or may not be included in end-user copies. VI. Conclusion a. Associate the significance of FDA regulations on drugs with existing measures…

    • 475 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Facility Plan

    • 326 Words
    • 2 Pages

    It is important to communicate with and address the issues raised by stakeholders because protection of public health is the basis for all communication with stakeholders. The information being conveyed is pertinent to the urgent recall of a faulty product or the sharing of new prescribing information. It is both situations are grounded in the regulators key function as a protector of public health. The information and effective communication can assist in the development of a good relationship between the regulatory network, and its environment, and may also assist in influencing the wider environment by informing, and changing attitudes in the various target groups. The reasons to communicate are development of trust, social, responsibility, market transparency, and professional ethics all of which support the overall goal of protecting public health. Changes in society and technology have brought about new mechanisms to access information on medicines, and medical treatment. Society is more informed on health matters, and the consumer has become more active in treatment, and medication planning. The concept of growing in this world of medical treatment, and will result in a greater demand for quality information.…

    • 326 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Vioxx (Rofecoxib) medication is a class of drug called nonsteroidal and inflammatory drugs (NSAIDs). Vioxx was introduced on May 20, 1999 by Merck & Co. It has been used by over 20 million Americans since it was put on the market. Vioxx works by reducing substances that cause inflammation, pain and fever in the body. Vioxx is used to reduce pain, inflammation, and stiffness cause by osteoarthritis, rheumatoid arthritis and certain forms of juvenile rheumatoid arthritis. Also vioxx is used to treat acute pain in adults, treat migraines, and menstrual pain. Vioxx was available on prescription in both tablets and as an oral suspension. At the hospitals it was also available in injection. Vioxx was prescribed worldwide to up to 80 million people at some time. Vioxx belongs to a class of…

    • 830 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    PharmaCare essay

    • 3754 Words
    • 16 Pages

    The Food and Drug Administration relaxed the regulations regarding the need to advertise the side-effects of prescription drugs in 1997. (FDA) The relaxed regulation allows for direct-to-consumer advertising and this change the marketing strategies. There is now an influx of pharmaceutical advertising using infomercials. Gary Humphreys informs us in his article, “Direct-to-Consumer Advertising Under Fire”, that pharmaceutical companies “spent just under $5 billion last year alone” (576) on this type of advertising. The infomercials somehow make consumers believe that there is a need for them to have the drug and therefore create an increase in its sales. Because consumers have a desire to take control of their health they are now going in the doctor’s office and telling the doctor’s about the infomercial and the drug that they would like to try.…

    • 3754 Words
    • 16 Pages
    Powerful Essays
  • Satisfactory Essays

    Gardasil is a vaccine for the prevention of genital warts and cervical cancer caused by certain types of human papillomar virus (HPV). It was developed as the result of more than twenty-five years of research by various universities and institutes. However, it was Georgetown University medical center that was awarded the dominant patent. In 1995, Merck entered into a licensed agreement and collaboration to hold the rights to market Gardisil in all countries accept Australia and New Zealand.…

    • 432 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    References: Carl, H. T., Lee-Ing Tong, & James, E. T. (2009). The vioxx recall case and comments. Competitiveness Review, 19(2), 114-118. doi: http://dx.doi.org/10.1108/10595420910942289…

    • 1377 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    Unit 1 Homework

    • 900 Words
    • 3 Pages

    1, What would be your view of what Merck has done: economically, legally, and ethically? Assume that all this has occurred before September 2004, when the senior executives at Merck removed Vioxx from the market, and while the risks of Vioxx were still not public knowledge. Would you approve, or disapprove, of the continued sale of the drug by your firm?…

    • 900 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    References: 1. Blake, Hannah. “A history of Merck & Co”. Pharmaphorum. May 30, 2013. Retrieved from http://www.pharmaphorum.com/articles/a-history-of-merck-co…

    • 1517 Words
    • 7 Pages
    Powerful Essays
  • Better Essays

    In Deontological ethics, morality of an action is based upon the particular action’s adherence to moral laws independent of their consequences (DeGeorge 62). Direct-to-consumer marketing of pharmaceuticals has had heated debate with logical arguments from those for, and for those against allowing such practices to exist. I do not believe the marketing of the prescription medication to be solely unethical but more of as a shade of grey in-between ethical and unethical moral standards dependent upon the actions of the individual pharmaceutical companies. Advertising to the general public can be ethical if the medication truly benefits those in society because of the ability to disseminate information quickly, reaching the widest audience, but it could also present a danger to an uniformed public if not careful.…

    • 1357 Words
    • 6 Pages
    Better Essays
  • Good Essays

    Cited: Waymor, Damion. Rhetorical and Critical Approached to Public Relations Edition 2. March 19, 2009…

    • 672 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Case Study Merck

    • 707 Words
    • 3 Pages

    Think about the definition of stakeholders—any parties with a stake in the organizations actions or performance. Who are the stakeholders in this situation? How many can you list? On what basis would you rank them in importance?…

    • 707 Words
    • 3 Pages
    Satisfactory Essays