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Merck is one of the top 3 pharmaceutical giants in the world. They have made products such as Claritin Zocor (high cholesterol) Nuvaring and even Dr Scholls. In 2005 they were ranked 5th in assets and market value but 1st in profits, earning about $7.33 billion. Merck has been named “The most admired company” by Fortune magazine for seven consecutive years and “The Miracle Company” by Time magazine. Their blockbuster drug vioxx made $2.1 billion in the united states alone in 2001. The real question that will be later answered is how did a Blockbuster drug become a blockbuster disaster. -Christian Avelar
Merck has always been known for helping others and being more than just profits. For example, in 2004 they gave their patent for streptomycin to a university foundation. They also gave away free products to cure third world diseases such as river blindness. George W. Merck stated that “We try never to forget that medicine is for the people. It is not for profits. The Profits follow, and if we have remembered that they never fail to appear. The better we have remembered that, the larger they have been” The company today still believes in this statement -Christian Avelar
Raymond Gilmartin – 2005 CEO He stepped down as CEO right after investigators released documents that Merck had continued to aggressively promote Vioxx, even after they knew about the serious safety concerns Kenneth Frazier took each lawsuit at a time and with respect. He is regarded on of the top 25 most influential people in the world. He continues to emphasize R&D for Merck.
Before a new drug can be sold to the public, manufacturers have to carry out clinical trials to demonstrate both safety and effectiveness. Once the FDA approved the drug, physicians can prescribe it for any purpose.
The PDUFA was passed because In the 1980’s, the drug industry criticized the FDA for being too slow to approve new medicines and patients were concerned that they were not getting new medicines fast enough so drug companies were concerned they were losing sales revenue.
The FDA received around $825 million in fees, so they used these fees to hire 1,000 new employees to shorten the approval time of new drugs from 27 months in 1993 to 14 months in 2001.
Robert franjieh & Christian Avelar
The Blockbusters have been defined by Fortune magazine as “medicines that serve vast swaths of the population and garner billions of dollars in annual revenue.”
When Vioxx and Pfizers Celebrex were competing head to head, sales representatives from the two firms were hard at work promoting their brand to doctors. One rheumatologist commented about the competition between Merck and Pfizer, “We are all aware that there was a great deal of marketing. Like a Coke-Pepsi war.” Robert franjieh
For example, in one ad for Vioxx , Olympic figure skating champion Dorothy Hamill glided gracefully across an outdoor ice rink to tune of “It’s a Beautiful morning” by the sixties pop group The Rascals , telling viewers that she would “ not let arthritis stop me. David Wofsy , the President American college of Rheumatology said When a patient comes in and wants something, there is a desire to serve them.” -Eric Thomason
Merck found a way to block one of the 2 COX enzymes to create Vioxx. Such drugs would be used to benefit patients with severe arthritis or ulcers and as many as 16,500 people died each year in the United Sates from this condition.
At its peak in 2001, Vioxx generated $2.1 Billion in sales in the United States alone, which contributes to almost 10 percent of Mercks total sales revenue worldwide. The price of Vioxx was around $3.00 per pill and it was often covered under a users health insurance, while the over-the-counter drugs were not.
There were doubts about Vioxx before the FDA approved the drug. The scientist even had emails about their concerns of cardiovascular problems that could occur. -After the drug was released Merck decided to do a study between Vioxx and Aleve called VIGOR. Vioxx did end up being better for arthritis but the patients had five times as many heart attacks then Aleve. The FDA then ordered them to reword their warning label, but without any penalties. -Kaiser/Permanente study compared Vioxx and Pfizer’s Celebrex product. That study also showed Vioxx having three times the rate of a heart attack. -The APPROVe study was used by Merck to see if those taking a placebo pill had more strokes and heart attacks then those taking Vioxx. The study was shut down but proved that there was twice the risk of suffering a heart attack -Christian Avelar
Two months earlier, results from a clinical trial conducted for other reasons had suggested such concerns. This study was code-named VIGOR which was completed in 2000 after the drug was already on the market.
At this specific time, the company considered reformulating Vioxx by adding an agent to reduce the CV risk, but dropped the project.
Some experts still argued that Vioxx should stay on the market with a strong warning label and have people judge for themselves, but others thought that the drug should be withdrawn because no one knew why the drug was apparently causing heart attacks. One expert also commented “Merck prides itself on its ethical approach. I couldn’t see Merck saying were going to market a drug with a safety problem.
TABLE OF CONTENTS
3. MERCK, INC
4. THEN AND NOW
6. VISION & MISSION
8. POLITICAL CONTRIBUTION
9. BLOCKBUSTER MODEL
10. RISE TO FAME
11. DTC ADVERTISING
12. SAFETY WARNING
13. WHAT HAPPENED
This case relates to the pharmaceutical industry and is about Merck’s
recalled product Vioxx. The product was very successful in sales, but
very harmful to the consumer. The influence that the pharmaceutical
industry had on capital hill influenced the FDA’s decision to look the
other way. Our question is, should there have been further action on
those responsible for the deaths and damages done to the consumers?
“ We try never to forget that medicine is for the people. It is not
for profits. The Profits follow, and if we have remembered that
they never fail to appear. The better we have remembered that,
the larger they have been”
- George W. Merck
THEN & NOW
R AY M O N D G I L M A R T I N
2 0 0 5 C E O
K E N N E T H F R A Z I E R
2 0 1 1 - P R E S E N T C E O
• Patients and
• Doctors and
• Issue experts
• Suppliers and
VISION & MISSION
V I S I O N S TAT E M E N T
We make a difference in the
lives of people globally
through our innovative
medicines, vaccines, and
consumer health and animal
products. We aspire to be the
best healthcare company in
the world and are dedicated
to providing leading
innovations and solutions for
M I S S I O N
S TAT E M E N T
To provide innovative,
distinctive products and
services that save and
improve lives and satisfy
customer needs, to be
recognized as a great place
to work, and to provide
investors with a superior
rate of return.
The Food and Drug Administration (FDA) is a government agency that
was established in 1906 with the passage of the federal food and drugs
The agency is currently separated into five centers which oversee a
majority of the organizations obligations involving:
• Animal food
• Dietary supplements
• Medical devices
• Biological goods
• Blood products
In 1992, Congress passed the prescription Drug User Fee Act (PDUFA)
that required the pharmaceutical companies to pay fees to review new
• In the 1990’s, 80 percent of growth for big pharmaceutical firms
comes from the “blockbuster” drugs.
• Ideally, a Blockbuster drug is a medicine that could control chronic
but nonfatal conditions that afflicted large amounts of people with
health insurance, which would include medicines for allergies,
cholesterol, arthritis, etc.
• In 2003, Merck spent $422 million to market Vioxx to doctors and
• In 1997 , The FDA for the first time allowed drug companies advertise
directly to consumers.
• The took advantage of the opportunity by placing ads for Drugs like a
Viagra and Nexium in different media outlets.
• In 2004, The Industry spent over $4 billion on such DTC Marketing.
• Merck spent more than $500 million on advertising on Vioxx.
• It is criticized by some because it put pressure on doctors to prescribe
drugs that might not be best for the patient.
RISE TO FAME
• Vioxx, which is the drug at the center of Merck’s legal woes, was
known as a “selective COX-2 Inhibitor.”
• In May of 1999, The FDA finally approved Vioxx for the treatment of
osteoarthritis, acute pain in adults and menstrual symptoms and it
was approved later for rheumatoid arthritis.
• Vioxx became exactly what Merck had hoped: a blockbuster.
• Doubts about Vioxx from their own scientists
• VIGOR Study – 5 times more likely to have a heart attack than Aleve
• Kaiser/Permanente Study – 3 times more likely to have a heart problem
than Pfizer’s Celebrex
• APPROVe Study – Twice the risk of having a heart attack than a Placebo
WHAT HAPPENED? THE RECALL
• The company's top research and marketing executives had a meeting to
consider whether to develop a study to directly test a disturbing
possibility: that the blockbuster drug Vioxx, a painkiller, might pose a
• Privately, Merck was worried about this study. Dr. Edward Scolnick, the
company’s research director said that cardiovascular events were
“clearly there” and that they were a “shame” but he added “there is
always a hazard.”
• On September 27th, 2004, Dr. Peter S Kim. Had suggested to Gilmartin
that Vioxx be withdrawn from the market due to the “unacceptable” risk.
The CEO agreed and the following day Gilmartin notified the board and
the company had contacted the FDA.