Walk the Ethical Talk Case Analysis
Introduction and situational analysis: In the late 1970’s a disease known as onchocerciasis was running rampant throughout much of Africa and parts of Latin and South America. Onchocerciasis which is also known as “river blindness”, an insect-borne disease, caused by a nematode worm , Onchocerca volvulus affecting both a person’s skin and eyes and is transmitted to humans by the bite of blackflies. Symptoms of this disease range from irritating and intense itching, to disfiguring dermatitis and skin and eye lesions, and ultimately can lead to sight impairment and blindness. Onchocerciasis has been classified as the “second leading cause of infectious blindness” (Water Related Diseases, 2011). During the development of the veterinary drug ivermectin, research scientist William C. Campbell, speculated on the potential the drug would have for human application; ivermectin was being developed to combat parasitic worms in livestock which are very similar to the worms that caused onchocerciasis. Campbell wrote a letter to the head of Merck’s research laboratories, who at the time was P. Roy Vagelos, requesting development of ivermectin for human use. Campbell's request causes a dilemma, the only viable uses for the drug would be for people who living in some of the poorest countries in the world; how could Merck underwrite the development of such a product for which there would most likely be of no economic value? On average it takes 12 years of research and development to bring a drug to market and costs in the neighborhood of $200 million. Merck would likely never recoup this investment cost and it would never be a profitable product. However, there would not be a lack of beneficiaries should the drug were to be developed; the greatest issue Vagelos faced; the people who need the drug the most are the ones who cannot pay for it. There were two side regarding the decision Vagelos’ was facing, one side dealt with authorization for development of ivermectin and committing the company and its shareholders to a potential financial catastrophe. The other, had to do with respect for human life; at the time of Campbell’s request, approximately 18 million people were infected with the disease and 270,000 were blind from ocular complications (Thylfors, 2001). Development and distribution of ivermectin to the millions in need, might have economic pitfalls, however, developing it and helping so many infected people would be the socially responsible thing to do.

Stakeholder analysis: There where multiple stakeholders to be considered when Vagelos was deciding whether to pursue development of ivermectin. First off there were millions infected and hundreds of millions at risk of infection. Should Merck pursue ivermectin development, their suffering or fear of suffering would be virtually eliminated. Those infected would be cured, and suffer no further symptoms of the disease. However, should Vagelos and Merck no pursue the drugs development, more people would definitely be infected and most likely succumb to blindness. In addition to the infected, the employees, family members of employees, the communities where Merck employs workers would be affected by this decision. Simply put, development of the drug would potentially jeopardize jobs. Should Merck develop ivermectin and there is no economic gain, jobs of its employees are at risk. If any of these employees were to lose his or her job, they could then not adequately support their families. The communities in which they live would in turn suffer; now there would be less money to be spent in local economy in turn having an adverse effect on local businesses. Finally, there are the shareholders to think about. These are the people who have invested in the company because the believe in what the company does, and the company will be profitable in turn making them money. The potential for financial failure is always a risk when investing in any company and it is that companies responsibility to its shareholders not to take unnecessary risks that will cause financial uncertainties. Should Merck be successful in developing this drug and distributing this drug they could see returns on this investment based on the positive image of the company this act would portray. This would show a value for life and their other drugs, because of the Merck name would become more profitable and increasing the company’s market value. This would intern make shareholders more money, since now the company is worth more. There is a reverse effect to this situation, should the investment in ivermectin fail; now the company’s stock price could fall due to reporting of reduced profits, thereby making the company less valuable and reducing shareholder value in the company.

Analysis based on ethical theories: In considering decisions, especially in matters such as this, various perspective approaches need to be evaluated, for instance, the deontological approach which deals with duty (Trevino and Nelson, 2011, p 42). In evaluating this approach, Merck must look at where their duties lie. Most obviously, their first duty is to their shareholders and employees. The company could not continue to exist without either of these two stakeholders. So, how does the decision facing Merck management affect the company? First we can look at it from a financial standpoint. Should Merck decide to pursue development of ivermectin, they will pour millions of dollars into research and development. These millions must come from somewhere, such as from the revenue Merck currently brings in. Because management knows the likelihood of this drug turning a profit is very slim to none, these millions of dollars now will not be replaced. Merck would continue to develop other drugs, ones that would be profitable, but now these profits have to cover not only the costs of their development, but also the costs of ivermectin development. This would mean less money for Merck to reinvest into the company or into its people. The second effect on these two stakeholders could be lost jobs for employees and loss of stock value for shareholders. Developing a drug in and of itself is a risky business. Millions are spent researching, developing, and testing and there is no guarantee the drug will work. However, if it is successful, it can now be marketed and sold, covering the costs of development and turning a nice profit at the same time. If the drug fails or there are major issues in its effects or performance, these could lead to disastrous consequences for the company. An example of this effect was in Merck's arthritis medication Vioxx. According to an Food and Drug Administration study, from 1999 to 2003 over 27,000 heart attacks and cardiac deaths were reportedly caused by Vioxx. Due to this report, voluntarily Merck recalled the drug (Report: Vioxx linked to thousands of deaths, 2004). This example shows what can happen when products do not perform as expected or anticipated. As a result of the Vioxx debacle, Merck & Co, Inc. stock declined over $16 a share in 2004. This decline resulted in a decline in market value and thereby directly affected Merck shareholders. What about Merck's duty as a pharmaceutical company? According to their values on the company website, “Our business is preserving and improving human life. We also work to improve animal health. We are committed to the highest standards of ethics and integrity. We are dedicated to the highest level of scientific excellence and commit our research to improving human and animal health and the quality of life. We expect profits, but only from work that satisfies customer needs and benefits humanity. Our ability to excel depends on the integrity, knowledge, imagination, skill, diversity and teamwork of our employees” (Our Values, 2010). Review of their values tells us they have an obligation or duty to develop ivermectin because there is a benefit to humanity. This duty not only extends to the development of the drug, it also extends to its distribution. As their value statement says, they are in the business to preserving and improving human life as well as dedicated to commitment of research to the improvement of human life. This statement clearly defines a duty to the development of ivermectin for the improvement of life for the people infected by river blindness. The utilitarian perspective should also be evaluated. This approach should evaluate the decision, and how it maximizes benefits and minimizes harms to society. It's relevance to Merck is, would it have been important for Merck to predict whether researching the drug further, or playing it safe with other research, would produce the greatest benefit for the largest number of people. Various arguments can be made when looking at this dilemma from a utilitarian perspective. The argument that because river blindness patients are poor and cannot adequately pay for treatment development of ivermectin would be of great benefit to those infected (and their families/communities), and therefore the research and development of ivermectin is warranted. On the other hand, one could argue that it would be of equal or greater benefit to research medications for more common diseases where patients can afford the medication and Merck could still make money. These same people could argue, should the company take a serious financial loss, with no method of recovery as a result of the ivermectin research, more people would be harmed from the loss. Employees could lose jobs if Merck had to implement cost cutting measures. The resources used in the research of ivermectin are now exhausted and cannot be used in research for other drugs and medications. The argument is also that other potential widespread benefit drugs were not researched due to the research conducted and resources utilized on the ivermectin project. We also need to look at this dilemma from a virtue ethics approach. Ultimately, Merck did choose to gamble and research ivermectin. Then didn't do it for the profits, they didn't do it to boost their public image, they did it because it was the right thing to do. This goes back to the companies values. How the approached the decision is based on their character and integrity. The decision to develop ivermectin was based on the desire to help those in need and worry about the consequences later.
Conclusion and recommendations. Up to now, we have been analyzing and comparing the options available to Vagelos and Merck. Additionally, we have been looking at if it would be in the company’s best interest to research ivermectin. In looking at this dilemma, they had to look at more than just financial consequences; they had to address the human factor. Is it right to allow millions to suffer from such a debilitating disease when the potential cure is already being developed? Is it right to invest millions into a product with no profitable return, potentially impacting the company, employees, and shareholders? These were some of the questions facing P. Roy Vagelos after research scientist William Campbell's proposal to development of ivermectin for human use. Should Vagelos approve and follow through with Campbell's request, the company could potentially hold the cure and prevention of a disease that has infected millions and puts hundreds of millions more at risk. Based on the limited profit potential and return on investment, if Vagelos decides it is not in the best interest to Merck to pursue further research on ivermectin, millions upon millions will most likely be infected by onchocerciasis. These infections will ultimately lead to hundreds of thousands more going blind due to ocular complications. In deciding how to proceed they had to evaluate the situation as well as the consequences of each decision. There were several perspective approaches to be considered, deontological, what is their duty; utilitarian, which decision maximizes benefits to and minimizes harms; virtue ethics, what the motivations, intentions, and character of the company. Based on Merck's values they follow the deontological approach but also the utilitarian; as the first line of values states “Our business is preserving and improving human life” (Our Values, 2010). Ultimately Vagelos made the decision to develop ivermectin for human use. This was the right decision, not only from an economic standpoint but also from a moral and ethical one. Merck had the resources and means to develop the drug. In addition, because they had been developing ivermectin as a veterinary drug, they had performed tests which were successful in killing a parasitic worm very similar to the one that caused onchocerciasis. This was the beginning of a cure for river blindness. This decision proved successful to all stakeholders involved. The people infected by onchocerciasis had a cure and preventive measure to protect them from the disease. Merck showed the world and investors they had moral integrity and lived up to the values on which the company was built. In addition, Merck's public image was enhanced, this benefited shareholders, as it helped raise Merck's market value. P. Roy Vagelos, William Campbell, and Merck did everything they should have. They evaluated the benefits and consequences of each possible decision, and made the right decision. There are not to many more recommendations that can be made on how they handled the dilemma. If Merck is ever faced with another dilemma of a similar nature I would recommend they use this case as a basis for evaluating their decision processes.
References
Merck MECTIZAN Donation Program. (2010, March 03). Retrieved April 11, 2011, from Merck: Corporate Responsibility: http://www.merck.com/corporate-responsibility/access/access- developing-emerging/mectizan-donation-riverblindness/performance.html

Our Values. (2010). Retrieved April 16, 2011, from Merck: http://www.merck.com/about/our- values/home.html

Report: Vioxx linked to thousands of deaths. (2004, October 06). Retrieved April 15, 2011, from MSNBC: http://www.msnbc.msn.com/id/6192603/ns/health-arthritis/

Thylfors, B. (2001). Onchocerciasis: Impact of Interventions. Community Eye Health, 14(38), 17-19. Retrieved from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1705922/.

Trevino, L., & Nelson, K. (2011). Managing Business Ethics. Hoboken: John Wiley & Sons, Inc.

Water Related Diseases. (2011). Retrieved April 11, 2011, from World Heath Organization: http://www.who.int/water_sanitation_health/diseases/oncho/en/