from a normal 'human' to a Dilbert style 'manager' is complete. I was stunned by my own thinking the other day in my Corporate Strategy class. We were discussing corporate governance and ethics and we looked at Vioxx, the failed drug from Merck.
Most of us know that Pharma is a peculiar industry. The big players spend so much on R&D (Pfizer alone spent close to $7 billion last year) that they only make money on a few drugs called 'blockbusters'. These are drugs that do more than a billion dollars of sales a year and are heavily patent protected. Pharma companies would like to have atleast half a dozen blockbusters at any given time. The moment the patent expires on these drugs, the generic drug makers take over and the profits of the big players plummet.
Merck (one of the giants) was in serious trouble. A lot of patents were about to expire and Merck had no good 'blockbuster' in the pipeline. The only drug with the potential to be a blockbuster was Vioxx - a prescription pain killer used specially to treat arthritis. It was under advanced user trials and Merck got it approved by the FDA. There are indications that Merck knew that 0.74% of the population undergoing trials showed adverse effects to Vioxx. And there were enough indications that Vioxx could cause cardio problems in people. But Merck decided to release it and market it effectively.
Tens of thousands of people died or suffered permanent damage in the U.S and Europe due to cardiac arrests and stroke caused by Vioxx. There was a huge uproar and finally Merck decided to withdraw the drug and compensate the victims (compensation runs into billions of dollars). The question was - 'Was Merck right in releasing the drug in spite of knowing that less than one percent of the control group suffered from adverse effects?'
I started thinking... "Okay, less than one percent of the control group showed adverse effects. The possible gain is $2.5 billion in first year sales. Merck does not have another alternative to Vioxx, thats the only blockbuster it have. Does Merck have a choice? Keep aside some amount for possible compensation, go ahead and release the drug". Ater a moment, I looked at my own decision with disbelief. The 'less than one percent' amounted to tens of thousands of dead people. And for their families, no amount of money would 'compensate' the loss.
Statistics can be helpful, but is not an end in itself. I learnt that it is also necessary to look at actual numbers and interpret these numbers in order to make a financially and morally sound decision. This lesson will stay with me all my life.
(Disclaimer: This posting is not about Merck and its management decisions. The case has been condensed, some details might have been left out.)
4 comments:
As you must be aware that Vioxx was launched by Merck in 1999, so I presume the information you've provided in para 3 is inadvertantly printed.
Now coming to the issue of ethics in drug marketing. I would like to point out that a pharma company has to adhere to a stringent set of guidelines and procedures before it can launch a new chemical entity into market. FDA is considered a gold standard when it comes to drug review. Merck had to submit authentic clinical data about Vioxx to FDA to get its approval. Since the data provided by Merck (at that point of time) showed that the drug potentially provided a significant therapeutic advantage over existing approved drugs, therefore, FDA approved Vioxx in May 1999. "The original safety database for this product included approximately 5,000 patients on Vioxx and did not show an increased risk of heart attack or stroke."
Post-Vioxx launch, Merck conducted The VIGOR study (8,000-patient)which was designed to evaluate the GI safety of Vioxx as compared to naproxen. This study was done in a rheumatoid arthritis population who typically require a higher dose (50 mg was used) of anti-inflammatory medication. "In April 2002, FDA approved extensive labeling changes to reflect the findings from the VIGOR study.... The new label provided additional information to the Clinical Studies, Precautions, Drug Interactions and Dosage and Administration sections to reflect all that was known at the time about the potential risk of cardiovascular effects with Vioxx. These labeling changes included detailed information about the increase in risk of cardiovascular events relative to naproxen, including heart attack.... The new labeling change also noted that Vioxx 50 mg was not recommended for chronic use".
Now the quotes are from http://www.fda.gov/ola/2004/vioxx1118.html and indicate that Merck alone could not have manipulated information about its product. But why Merck alone is being accused (by NEJM, Lancet and a host of other reputed medical journals) for concealing vital information about their drug's potential side-effects.
My viewpoint:--
- If Merck is guilty of obfuscation of facts then it must be made to pay the price. But if Merck went by the rule of the book then it cannot be held solely responsible for this unhappy turn of events.
- It is not for the first time that an extensively prescribed allopathic drug has been shown to cause serious side-effects forcing its withdrawl from the market. Merck, according to FDA, voluntarily withdrew Vioxx from the worldwide market and was not forced to do so.
- The checks and balances enforced by regulatory bodies like FDA ensure that pharmaceuticals firms are not allowed to operate only under the economic principles of maximising returns to the shareholder. What to do when the regulators fumble and falter?
- Vioxx, for that matter Merck, are dispensable, but it would be very sad to see public faith being eroded in insitutions like FDA.
With the pending court cases against Vioxx in the US, it's a matter of time before the truth emerges out of this murky affair.
Woah! Thanks for the data Gaurav and yes, Vioxx was withdrawn in 2004 (according a website I visited, I forgot which one) and I got the launch screwed up. Apologise for the error.
But I guess you missed the gist of the post. Did you see my disclaimer at the bottom? The post was about me and not about Merck! ;-)
Thanks for the information anyways...
Cheers,
AK.
Sir, I did understand the import of your managerial dilemma. Though many today are blaming Merck of hiding info about possible side-effects of Vioxx, but at the time of launch nobody (including FDA, managers, Doctors) was so sure if they existed or not. So, your comment in the penultimate para, is not wholly true in my opinion. This amounts to ascribing motive to action, which in this case is still not clear.
The real intent of my long-winding comment was to highlight that many a time we face situations when we are not sure of the possible repercussions of our decision. Circumspection is the only resort in such times but we ought not be stuck in Hamletian quagmire of our ethical conundrums.
Merck is distant to me....you are close. Hence I shared my thoughts keeping you in mind and not the pharma giant.
The risk population percentage sounds so low...but when we look at real people dying...thats when the truth hits home. Merck was morally wrong to release the drug. But usually such decisions are made considering the possibility of a court case. This is usualy built into the risk scenario of the product, and consequently the returns expected will go up. So even if Merck did this and still decided to go ahead.....well then they were immoral and incompetent.
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