Running Head: MERCK, THE FDA, AND THE VIOXX RECALL CASE STUDY 1

Merck, the FDA, and the Vioxx Recall Case Study

Thomas N. Bailey

Kaplan University

Graduate School of Business and Management Student Name

GB590-02N

Professor Skip Deskin

February 7, 2012

MERCK, THE FDA, AND THE VIOXX RECALL CASE STUDY 2

Merck, the FDA, and the Vioxx Recall Case Study

Introduction

Prior to September 2004, Merck, one of the world’s leading pharmaceutical firms, was

known for its reputation as one of the most ethical and socially responsible of the major drug

companies. Merck was named America’s most admired corporation by Fortune magazine for

seven consecutive years during the late 80s and early 90s. Merck earned kudos for its social

responsibility by donating river blindness drugs to African nations that could not afford them.

Merck believes that it is its responsibilities as a corporation to extend beyond making profits.

“The company’s philanthropy was legendary” (Lawrence & Weber, 2011, p. 480).

The recall of Vioxx, Merck’s best-selling prescription arthritis painkiller, in September

2004 sent Merck into Corporate Socially Responsibility crisis. Merck’s reputation took a huge

hit, as well as the company’s stock price, as medical experts suggested that Merck personnel

knew of Vioxx’s dangers well before the recall (Holmes, 2005). The problem faces by Merck

highlighted the ethical questions about the development and marketing of Vioxx, as well as what

did Merck management know and when did they know it.

Drug Development & Testing

Merck was renowned for its research labs that had long record of achievements. Merck

was described as “intense, driven, loyal, scientifically brilliant, collegial, and arrogant”

organization (Lawrence & Weber, 2011, p. 481). In early 2000, Merck devoted over $3 billion

in annual research and development programs, reflecting the company’s ongoing commitment to

basic research and clinical research. The drug development process is highly regulated in the

U.S. The Food and Drug Administration (FDA) is responsible to monitor the development and

MERCK, THE FDA, AND THE VIOXX RECALL CASE STUDY 3

testing of the drugs, as well as evaluating and approving the drugs for both prescription and non-

prescription uses.

According to the company’s website posting, before the drug is approved for use, it

undergoes rigorous and systematic testing known as clinical research. Clinical research has

several purposes: to answer certain research questions, to collect data in support of new drug

application and to ensure the drug is safe. Each phase of the clinical trial serves a different

purpose in the development of a medicine. In Phase I, the medicine is tested on healthy

volunteer subjects to determine the medicine’s safety profile, including side effects associated

with increasing doses and early evidence of the effectiveness of the drug. In Phase II, the

medicine is tested on small samples of volunteer patients with the target disease. The goal is to

evaluate the effectiveness of the drug in treating the disease, as well as the drug safety to include

short-term side effects and risks associated with the drug. In Phase III, the longest phase, the

medicine is tested in large samples of volunteer patients to obtain data to evaluate the risks and

benefits associated with the drug. Even after the drug is approved, ongoing studies continue over

a longer period of time to further determine its safety and effectiveness (“The drive for

innovative medicines and vaccines,” Merck, n.d.).

In 1999, the FDA approved Vioxx for arthritis pain, much faster than the average new

drugs. Lawrence and Weber (2011) pointed out that the average approval time for new drugs

was 14 months in 2001, but Vioxx won approval less than a year.

Merck’s website posting identifies its core values driven by “a desire to improve human

life, achieve scientific excellence, operate with the highest standards of integrity, expand access

to our products and employ a diverse workforce that values collaboration” (“Our Values,”

Merck, n.d.). Merck seemed to follow the industry’s standards for development and testing of

MERCK, THE FDA, AND THE VIOXX RECALL CASE STUDY 4

new drugs. However, Merck’s approach to dealing with regulatory approval process was not as

ethical, as it tried to submit fastidious supporting documentation for the new drugs it asked the

FDA to approve.

Marketing and Advertising

Historically, pharmaceutical companies focused most of their marketing efforts at doctors

and hospitals. However, the FDA’s rule changes in 1997 allowed the drug companies, for the

first time, to market and advertise directly to the consumers (Lawrence & Weber, 2011). This

direct-to-consumer (DTC) marketing and advertising probably drove Merck into aggressive

marketing of Vioxx despite evidence that the drug was unsafe. The DTC advertising also

allowed the drug companies to reduce the required amount of information in ads on television, in

magazines and newspapers about a drug’s adverse effects (Green, 2007).

According to Lawrence and Weber (2011), Merck’s DTC advertising for Vioxx was very

effective and put a lot of pressure on doctors to prescribe the medicine that might not be safe for

some patients. It has been suggested that DTC advertising clouded the judgment of Merck’s

executives into a series of poor decision-making in hope of scoring a blockbuster drug that

would garner maximizing profits for shareholders (Green, 2007).

Relationships with Government Regulators and Policy Makers

In 1992, Congress passed the Prescription Drug User Fee Act (PDUFA) to help FDA

staffed up to shorten the approval time for new drugs. The intent was for the pharmaceutical

companies to pay user fees to the FDA for reviewing and approving new medicines. The

PDUFA created conflicting priorities within FDA, because “the same agency that was

responsible for approval of drug licensing and labeling would also be committed to actively seek

evidence to prove itself wrong” (Lawrence & Weber, 2011, p. 482-283).

MERCK, THE FDA, AND THE VIOXX RECALL CASE STUDY 5

Additionally, the relentless desire of the pharmaceutical companies to get new drugs to

market and to fulfill the main purpose of maximizing returns to the shareholders put undue

pressure on the FDA to approve new medicines faster that the FDA did not adequately monitor

and assess the safety of a drug. Lawrence and Weber (2011) wrote that “the percentage of drugs

recalled following approval increased from 1.56% for 1993-1996 to 5.35% for 1997-2001” (p.

483). The FDA should resist the relentless pressure to approve new drugs faster, especially

when data from clinical trials were suspected.

The pharmaceutical industry has a strong lobbying presence in Washington, D.C. The

companies are also big donors to both political parties to gain favors. Even after Congress

banned soft money contributions in 2003, the industry continued its practice to buy political

favors through the Political Action Committees (PACs). Another practice that was not unique to

the pharmaceutical industry was the revolving door, where the industry hired a former politician

to lobby for them. The strong lobbying and the active political donations have proven successful

for the industry over the years, as pharmaceutical industry has highly successful record of

promoting its political agenda (Lawrence & Weber, 2011). The successful record of promoting

its political agenda also bolded the industry’s executives to act unethically and thought they can

get away with it.

Handling Recall

Even before Vioxx was approved in 1999, several studies concluded that the drug might

not be safe. As early as 1997, internal company emails revealed that Merck scientists expressed

great concern the possibility of heart attacks and strokes associated with Vioxx. To quiet the

Merck’s alarmists, Merck sponsored the Vioxx Gastrointestinal Outcomes Research (VIGOR)

that was completed in March 2000, after the drug was already on market, in hope of

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demonstrating Vioxx’s minimal gastrointestinal side effects. The study found that Vioxx was

easier on the stomach but also had nearly five times as many heart attacks. Merck was worried

but Merck’s scientists led by the research director, Dr. Edward Scolnick, defended the study and

provided persuasive various explanations of the VIGOR test data to the members of the Board of

Directors (Lawrence & Weber, 2011).

Merck’s management, confidence that Vioxx was safe, redoubled efforts to market Vioxx

and to quell concerns about the drug’s safety. However, the FDA was concerned enough to

require Merck to add additional warning language to the drug’s label. Such warnings could

badly damage Vioxx’s DTC campaign. To stop the doubt once and for all and to better assess

Vioxx’s risks, Merck sponsored the Adenomatous Polyp Prevention on Vioxx (APPROVe) trial.

The trial was abruptly stopped in 2004 when a data safety monitoring board found a significantly

increased risk for heart attack and stroke (Green, 2007). In August 2004, a scientist at the FDA

reported the results of a study involving 1.4 million patients in the Kaiser Permanente that also

revealed high cardiovascular events in patients on high doses of Vioxx (Lawrence & Weber,

2011). Under all of these evidence and more than four years after the VIGOR trial results were

first known, Merck voluntarily withdrew Vioxx from the worldwide market and has not

reintroduced it.

Merck’s voluntary recalled of Vioxx was admirable, except it was four years too late. It

exposed the unethical behaviors of Merck’s management in hiding or down-played relevant data

from its scientists and internal sponsored trials. It also exposed the unethical behaviors of the

research director as he tried to spin the test results in Vioxx’s favor, even in the face of

overwhelming test data that the drug was unsafe. Having said that, Merck should be credited for

conducting several studies to investigate the drug’s effectiveness in other areas; what it should

MERCK, THE FDA, AND THE VIOXX RECALL CASE STUDY 7

have done was to conduct a study on the cardiovascular effects at the first report of the potential

problem in 1997.

Recommendations For Improvement

The recovery of market share, reputation, trust and brand image for Merck will take a

long time and at a great cost to Merck. There were plenty of blames to go around in the case of

Vioxx’s recall. How Merck and the FDA learn from this incident moving forward will

determine how fast Merck can rebuild trust and its brand image. Some recommendations for

improvement are:

1. Provide FDA with more tools and sharper teeth. Currently, the FDA can recall a drug

or order the manufacturer to change the drug’s label. The FDA needs to be able to

suspend the sales of the drug for some period of time in order to have time reviewing

the drug’s safety data or conducting additional testing.

2. Do thorough research and testing. Do not allow management to pressure into taking

shortcuts, shorten testing time or hiding unfavorable test results.

3. Train everyone at Merck, including management the important of ethics and the

company’s values.

4. Take the result of every study seriously. Do not “cook the book.”

5. Take politics out of drug approval process. Drug approval process should base only

on concrete test data.

6. DTC advertising should include all relevant information, especially the drug’s

adverse effects.

7. Provide an environment and conduit for dissent scientists to voice their findings

without pressure from the research director or management to suppress concerns.

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Summary

The highly competitive environment of the pharmaceutical industry and the relentless

pressure to turn R&D cost into profits have led otherwise reputable company down the slippery

slope of unethical practices, as illustrated by the case study. The cozy relationship between

politicians and industry highlighted the need for reform so that industry cannot influence

lawmakers and protecting the public. Adherence to high ethical standards is very important in

the business world, especially when the products have life and death aspects, and the real

damage to a company when ethical misconduct comes to life. Honesty is still the best policy.

MERCK, THE FDA, AND THE VIOXX RECALL CASE STUDY 9

References

Green, R. M. (2007). Direct-to-customer advertising and pharmaceutical ethics: the case of

Voxx. HOFSTRA LAW REVIEW, 35, 749-759. Retrieved from

http://law.hofstra.edu/pdf/lrv_issues_v35n02_b06.pdf

Holmes, P. (2005, January 1). Merck's Vioxx scandal highlights pharma ethics issues. The

Holmes Report. Retrieved from

http://www.holmesreport.com/opinion-info/4488/Mercks-Vioxx-Scandal-Highlights-

Pharma-Ethics-Issues.aspx

Lawrence, A. T. (2011). Merck, the FDA, and the Vioxx recall. In Lawrence, A. T. & Weber, J.

(13th ed.), Business and Society: Stakeholders, Ethics, Public Policy (pp.480-489). New

York: McGraw-Hill/Irvin.

Merck. (n.d.). Retrieved from

http://www.merck.com/research/discovery-and-development/home.html