Post on 04-Jun-2018
transcript
8/13/2019 BA401 Merck
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The Story of Merck and the
Recall of Vioxx
Emma S. 5202930151, Lalipat F. 4902640194,Natthathida T. 4902640715
Ethical
Case
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Alternatives RecommendationsEthics
Business Ethics
VIOXX CaseCompany
Overview Problems
ethics /ks/1. a system of moral principles
2. the rules of conduct recognized in respect to a particular class of
human actions or a particular group, culture, etc.
Business ethics
examines ethical principles or ethical problems that arise in abusiness environment.
conduct of individuals and business organizations as a whole
pressure from consumers
formulating codes of conduct and operating principles
translate into action
Utilitarianism Kantian EgoismVirtue
8/13/2019 BA401 Merck
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Alternatives RecommendationsEthics
Utilitarianism Kantian EgoismVirtue
VIOXX CaseCompany
Overview Problems
Virtue Theory
the foundation of morality is the development of good character
traits or virtues, rather than follow rules or focus on consequences
Typical virtues include courage, temperance, justice, prudence,fortitude, liberality, and truthfulness
A person with a certain character can be relied upon to act consistently
over a time Aristotleancient Greek philosopher
Business Ethics
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Alternatives RecommendationsEthics VIOXX CaseCompany
Overview Problems
Act Utilitarianism
the right act is the one which produces "the greatest good for the
greatest number of people"
"the greatest happiness principle", or the principle of utility
when faced with a choice, we must first consider the likelyconsequences of potential actions and, from that, choose to do what
we believe will generate most pleasure to the society as a whole.
Jeremy Bentham
an English philosopher in18thcentury
Utilitarianism Kantian EgoismVirtueBusiness Ethics
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Alternatives RecommendationsEthics VIOXX CaseCompany
Overview Problems
Kantian Ethic
a moral action is one that is performed out of a sense of duty
the concept of motive is the most important factor in determiningwhat is ethical
a moral action is not based upon feelings or pity. Nor is it is not basedon the possibility of reward. Instead, a moral action is one based on a
sense of good-in-itself
Immanuel Kant(17241804)
Utilitarianism Kantian EgoismVirtueBusiness Ethics
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Alternatives RecommendationsEthics VIOXX CaseCompany
Overview Problems
Ethical Egoism
moral agents ought to do what is in their own self-interest
Ethical egoism does not require moral agents to harm the interests andwell-being of others when making moral deliberation
Utilitarianism Kantian EgoismVirtueBusiness Ethics
8/13/2019 BA401 Merck
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Company
Overview
About Merck Stakeholders
Ethics Alternatives RecommendationsVIOXX Case Problems
What
happened?
Sixth-largest pharmaceutical firm in the US
Gold standard of pharmaceutical industryand blue-chip company
Concentrate on developing blockbuster drugs
100 Best Corporate Citizens for the fifthconsecutive year
Develop core competence in
drug research
Do very thorough clinical
studies
Seek to gain speedy regulation
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Company
Overview
About Merck Stakeholders
CEO BODHead of
ResearchPersonnel
Ethics Alternatives RecommendationsVIOXX Case Problems
Within the firm
Edward Scolnick
Member of BOD
Retired in 2003
Peter KimTook over after
Scolnick
Ray Gilmartin
Responsibility to
align the company
with the strategic
vision
Oversight of theprocess of regula-
tory approval
59,000 employeesin 2004
Code of conduct
Our values and
standards
Sales people
Commision?Research personnel
High competence
Well-respected
Oversee theactivities of the
firm
Represent the
shareholders
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Company
Overview
About Merck Stakeholders
Shareholders Customers Creditors FDA The Society
Ethics Alternatives RecommendationsVIOXX Case Problems
Outside the firm
80 millionpeople
estimated to
have taken
Vioxx
105 million
US
prescriptionsWish for safe
and efficient
medicines
4.4 billion inlong-term
debt
Independentoversight &
protect public
interest
User fees
from drug
companies
Financialinterests in
the drug
DevelopingCountries
Low-income
Medicare
beneficiaries
Expiringpatents and
cancelations
new drugs
trial affect
stock price
negatively
Experiencedgreat loss in
Market Cap
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About Merck Stakeholders
Ethics Alternatives RecommendationsCompany Overview Problems
What happened? Key Decisions Ethical Dilemmas
Discoveredin lab in
1994
Study firstindicated
risk of CV in1997
Applicationin Nov. 1998
andapproved in
May. 1999
In 2000another study
showedsimilar results,informed FDA
and began
APPROVestudy
In Apr. 2002instructedby the FDAto amend
the label
Summer2004 FDA-sponsored
studyshowed
similar result,
Merckdisagreed
In Sep. 2004accepted
similarresult of
APPROVe
7 days later,Vioxx
recalled
Timeline of information about Vioxx
Vioxx Case
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About Merck Stakeholders
Ethics Alternatives RecommendationsCompany Overview Problems
What happened? Key Decisions Ethical Dilemmas
Vioxx Case
1 First findings of Vioxx higher-than-average risk of cardiovascular events and strokes
Stakeholders What is done What should have been doneResearch Head:
Edward M. Scolnick Conducted the trial to stresson the benefits of nostomach bleedings
Avoided presenting the
increasing risk
Report the increased risk to
CEO
Directly report to BOD ifignored
Conduct another larger trials
to confirm the result
Kill the drug if there is higher
riskPersonnel in R&D Discussed and wrote e-mails
and memos regarding the risk No further report to the
higher level of management
Report the increased risk to
CEO Directly report to BOD if
ignored
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About Merck Stakeholders
Ethics Alternatives RecommendationsCompany Overview Problems
What happened? Key Decisions Ethical Dilemmas
Vioxx Case
2 FDA Approval of Vioxx
Research Head:
Edward M. Scolnick Presented Vioxx as thepainkillers drug with nostomach bleeding
Not mentioned the higherrisk
Won FDA Approval
Conducted 8,000-person
clinical trial
Delay the application
Conduct another larger trials
to confirm the result
Kill the drug if there is higherrisk
CEO Not confirmed the researchresult Investigate the drug beforethe approval
FDA Approved Vioxx in 6 months Review the documents morethoroughly
Consider the effect of the
drug in every perspective, not
only its submitted properties
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About Merck Stakeholders
Ethics Alternatives RecommendationsCompany Overview Problems
What happened? Key Decisions Ethical Dilemmas
Vioxx Case
3 Before the Vioxx Recall
Research Head:
Edward M. Scolnick
(resigned in 2003)
Peter Kim
Received the confirmation of
higher risk from the 8,000-person
clinical trial
Put out press release in 2000describing Vioxx-Naproxen
results
Informed FDA regarding the
higher risk
No further investigation
Voluntarily inform doctors
using Vioxx
Change the labels specifically
inform users of the potentialrisk
Investigate the VioxxMarketing Head Launched aggressive direct-
to-customers pro-Vioxx
campaign
Distort the Vioxx risk by
advertising that Vioxx lacked
cardio-protective property
Advertise the fact not the
phrases that mislead
consumers
Focus on consumers rather
than only the bottom line
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About Merck Stakeholders
Ethics Alternatives RecommendationsCompany Overview Problems
What happened? Key Decisions Ethical Dilemmas
Vioxx Case
3 Before the Vioxx Recall
CEO No follow up of Researchaction after the risk is
confirmed
Allow the offensive combatwith academic researchers
who were questioning the
safety of Vioxx
Ignore the presentation of
the academic researchers
regarding the potential risk of
Vioxx
Publicly communicate with
the shareholders and
consumers regarding the
confirmed risk Investigate the problems
raised by academic
researchers
Cooperate with the academic
researchers to get outside
review of the Vioxx
Open for the critics that help
the company improve the
product
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About Merck Stakeholders
Ethics Alternatives RecommendationsCompany Overview Problems
What happened? Key Decisions Ethical Dilemmas
Vioxx Case
3 Before the Vioxx Recall
BOD No follow up of Researchaction after the risk is
confirmed
No actions in spite of tons ofexternal warning signs of
Vioxx
Review or request the action
plan from CEO regarding the
confirmed risk
Publicly communicate withthe shareholders and
consumers regarding the
confirmed risk, if the action is
not done by CEOFDA Loosened regulations on how
pharmaceutical companies
could advertise to general
audience
Discuss concerns in 2001
about potential risk of Vioxx
1 year after the notification
by Merck
Strengthen the regulations
for companies who can
advertise to public audience
Immediately investigate the
Vioxx case
Review Vioxx comment by
academic researchers
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About Merck Stakeholders
Ethics Alternatives RecommendationsCompany Overview Problems
What happened? Key Decisions Ethical Dilemmas
Vioxx Case
4 The Vioxx Recall
Head of Research:
Peter Kim Informed CEO the result after4 and a half years studyCEO Approve the product recall Review other options that
would maximize the benefitsof the shareholders
1. Immediately inform doctors
of the above-average risks of
Vioxx
2. Seek FDA approval to amend
the warning label on VioxxBOD Approve the product recall Request the CEO to provide
the options that wouldmaximize the benefits of the
shareholders
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About Merck Stakeholders
Ethics Alternatives RecommendationsCompany Overview Problems
What happened? Key Decisions Ethical Dilemmas
Vioxx Case
Utilitarianism
Each stakeholder
should have acted
in the way thatbenefits all
stakeholders the
most
Kantian
Each stakeholder
should have
performed theirduty
Egoism
Each stakeholder
should have acted
in the way thatserve their own
self-interest
Virtue
Each stakeholder
should have acted
as good peopleregardless of the
pressure from their
superiors
Salesperson
- Dodge Ball Vioxx
Research Head
- Thorough Vioxxstudy
BOD
- Protect theshareholders
CEO
- Maximize theprofit
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Ethics Alternatives RecommendationsCompany Overview Vioxx Case
Problem Statement Rationales
How can Merck regain its reputation and
stakeholders trust after the Vioxxscandal?
Problems
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Ethics Alternatives RecommendationsCompany Overview Vioxx CaseProblems
Problem Statement Rationales
How can Merck regain its reputation and stakeholders trust after the Vioxx scandal?
The Shareholders
To be able to raise funds in the future
and to handle the litigation costs
FDA and Government
To continue to get speedy approval
and to keep regulations down
Customers
To prevent sharp sales erosion
when the patent expires
The Art of the Industry
The importance to have great
credibility when producing products
affecting human lives
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Ethics Problems RecommendationsCompany Overview Vioxx Case
Ten Alternatives
Offer internal training for employees-ethical guidelines and discussions
Advertising campaign focusing on regaining
credibility
Hire a trustworthy consulting company tooversee the companys operations
Sue the FDA to share some responsibilities
Introduce new code of conducts of thecompany
Sell the company to Pfizer
Operate under new brand name
Emphasize more on corporate socialresponsibility
Replace management and board
Create channels to communicate withMercks stakeholders regarding the Vioxx
scandal
Alternatives
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Ethics Problems RecommendationsCompany Overview Vioxx Case
Ten Alternatives
Alternatives
Offer internal training for employees-ethical guidelines and discussions
Advertising campaign focusing on regaining
credibility
Hire a trustworthy consulting company tooversee the companys operations
Sue the FDA to share some responsibilities
Introduce new code of conducts of thecompany
Sell the company to Pfizer
Operate under new brand name
Emphasize more on corporate socialresponsibility
Replace management and board
Create channels to communicate withMercks stakeholders regarding the Vioxx
scandal
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Ethics Problems AlternativesCompany Overview Vioxx Case
ImplementationFirst Recommendation Rationales
Recommen-
dations
Replace
management
and board
1 Management conflicting value with corporatevalue
BOD absence of fiduciary duty
Create a new internal ethical environment
Communicate the change to the shareholders
and the public
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Ethics Problems AlternativesCompany Overview Vioxx Case
ImplementationFirst Recommendation Rationales
Recommen-
dations
Replace
management
and board
11. Fire CEO, Head
of Research andBoard of Directors
2.Replace themwith ethical caring
people
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Ethics Problems AlternativesCompany Overview Vioxx Case
ImplementationSecond Recommendation Rationales
Recommen-
dations
Create
channels tocommunicate
with Mercks
stakeholders
regarding the
Vioxx scandal
2 To clarify the story about Vioxx tostakeholders
To reduce an effect of possible misleading
interpretation by competitors and media
Merck may incur more creditability loss if it is
unreachable for comments and information
To create a feeling of Merck taking
responsibility of what it has done
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Ethics Problems AlternativesCompany Overview Vioxx Case
ImplementationSecond Recommendation Rationales
Recommen-
dations
Create
channels tocommunicate
with Mercks
stakeholders
regarding the
Vioxx scandal
2 Vioxx info site Updated information
FAQs Contact
Vioxx info line
Train the staffs on how to handle the questions
To make sure of same understanding and updatedinformation
Scientific and
research info
Merck statements
and responses
Lawsuit info
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Thank you dear Board of Directors,Shareholders
and
Ajarn James
Please ask us some tricky questions now
Emma S. 5202930151, Lalipat F. 4902640194,Natthathida T. 4902640715
The End or maybe rather to
be continued