Corporate Social Responsibility and Business Ethics
1.Do you believe that Merck acted in a socially responsible manner with regard to the development and testing of Vioxx? Explain why and/or why not.
2.Do you believe that Merck acted in a socially responsible manner with regard to Vioxx in its relations with customers and shareholders? Explain why and/or why not.
3.Do you believe that Merck acted in a socially responsible manner with regard to the marketing and advertising of Vioxx? Explain why and/or why not.
4.Do you believe that Merck acted in a socially responsible manner with regard to Vioxx in its relationships with government policy makers and regulators? Explain why and/or why not.
5.Do you believe that Merck’s voluntary public recall of Vioxx was an act of corporate social responsibility? Explain why and/or why not.
Corporate Social Responsibility is a significant element in the subject of Business Ethics. This topic is required to study in the very first instance while initiating any corporate activity. A corporation as well every other business structure works in a society and owns some duties and responsibility thereof (financierworldwide 2018). Products and services that a corporate serves to the society must be of a qualitative nature. In conjunction with, apart from products and services, other activities of a corporation also must be ethical.
In the subject of Business Ethics, the meaning of ethical and moral is well defined. Every business run by some individuals and works for the benefit of them and this is the reason that Corporate Social Responsibility has developed as it explains the expectations of society from a corporate (Beal 2). As the name implies Corporate Social Responsibility is a policy of an organization that focuses on different activities such as follow up of law, ethical behavior, and sustainable development (Ferrell, Fraedrich, and Ferrell 39). The organization, especially corporates adopt this policy as they have to work in a society and to work in a long-term it is necessary to taking care of every element of society. Being a corporate, a business cannot escape from his/her liability. The health of consumers is also an important factor in that an organization must do focus and take the same into care
1.In early 1990, scientist after a long research has declared that majorly two types of enzymes were there. One was COX 1 and another was COX 2. COX 1 enzyme was relatively beneficial for the health as in addition to other features it could protect the stomach lining. Whereas on the other side, COX 2 was a harmful enzyme and it was negatively affecting the health of people who were using it for years (ScienceDaily 2012). COX 2 caused pain and inflammation to people. Many of the drug companies including Merck started thinking to develop a drug or medicine that will only include the COX 1 so that patients will get the only benefit of OCX 1 and would not get suffered by the harms and negative impacts of COX 2. After several research in this area, In May 1999, Merck finally received approval from the Food and Drug Administration in respect of Vioxx. Vioxx got approval as the useful medicine for the hospitalization of menstrual symptoms, osteoarthritis, and acute pain in mature people.
Vioxx: The Case Study
According to an internal estimated cost review, Merck spent around $800 million on the development of Vioxx (Lawrence and Weber 480). One can easily evaluate that Merck has spent most of the money on research and development. Further, after the launch of Vioxx in the market, Merck has financed a research named VIGOR in that comparison was made between the rheumatoid arthritis patients who were taking Vioxx and other comparative product “Naproxen”. In this research, it has held that there was a risk of heart attacks more than 5 times in those patients who were taking Vioxx in comparison to those who were taking naproxen. Although Merck has spread the message, in the market that naproxen can be good for the heart but Vioxx is not adverse for the same; somewhere Merck had believed that the result of study i.e. negative impacts of Vioxx were correct in finding. Later on, Merck had planned another study named “APPROVe” in order to know the accurate impacts of Vioxx. It can observe by a number of acts that Merck was certainly aware in the development and testing procedure of Vioxx and has spent $3 billion annually on research (Hill and Jones C405).
As earlier stated that Merck took all the responsible steps to make the Vioxx a good medicine without having any adverse feature, it is to state that Merck acted in a socially responsible manner in development and testing of Vioxx. In a scenario where manufacturer companies of medicines do not take any liability, Merck, by conducting several types of research on Vioxx performed, it is duty well and in a responsible manner.
2.According to Exhibit A, in the year 2005 Merck was on the fourth position in terms of sale and in terms of assets market value, it was on fifth grade. In addition to this, this company was in the first position when it came to profits. It is very general that only that company which considers the interest of all stakeholders can earn as much profit. For the seven consecutive years i.e. from 1987 to 1993, Merck has marked as most social and responsible drug company.
Vioxx was one of the lead products of Merck. This product received approval in the year 1999 and in the year 2001, it becomes a blockbuster. It increased the sale of Merck by 10% across the globe and generated a profit worth $2.1 billion in United State only (McDougall and Popat 897). As Merck has spent billions of dollars on research and testing of Vioxx, the ultimate retail price per pill of Vioxx was $ 3.00 per pill that was so high in comparison to other pills (Lawrence and Weber 480). Although it was providing partial insurance of patients health, yet this amount was somewhere high for the poor people. Apart from this as investors of a company always remain interested in the profits of the company; Merck was paying a handsome amount of profits, as the dividend to it is investors.
Merck’s Act in Relation to Vioxx
In reply of the asked investigation, it is to state that yes, Merck acted in a responsible manner in relation to Vioxx with customers and shareholders as this company maintained a good balance in all the necessary factors such as cost, income, profits, and distribution
3.In the year 1997, Food and drug association had allowed the drug industry to publish direct to customer advertisement (Ventola 670). Merck has advertised Vioxx at a very large level and published the advertisement in various newspapers and magazines. This company also advertised this product on television. All these advertisements advised the customers that Vioxx is very good medicine and the same delivers end number of benefits to the users. These ads contain the fact that Vioxx works amazingly and protect those people from arthritis who use this medicine. In one of the TV advertisement, Merck has featured one of the Olympic champions promoting Vioxx. All these activities lead the customers to use Vioxx. In aggregate, the total expenditure that Merck did on the advertising activities of Vioxx was $500 million (Gibson 414).
These drug companies stand in favour of direct to customer advertisement (hereinafter referred as DTC) and mentioned that these advertisements are necessary in order to aware customers. As earlier stated that Merck has not mentioned anything about the negative impacts of Vioxx in said advertisement, somewhere this company was not acting in a responsible manner by doing this. Many of the times, it has noted that DTC often encourages unethical practices. An end user consumer cannot have an idea about the efficiency of a particular kind of medicine. By providing only benefits and concealing negative impacts of Vioxx, Merck was not developing it are sales and marketing policies ethically. Providing false information is one of the major issues in the marketing area. This is to mention that concealing the correct information is equivalent to providing false information about a product. Further, David Wofsy who was president of American College of Rheumatology stated that whenever a patients visit a doctor, the doctor gives him/her the medicines that they want to serve instead of the medicine, which is actually useful for the patient (Hill and Jones C407).
DTC advertisements attract unsocial and unethical issues as these directly address to consumers. It is very general that a seller always shows the fancy side of the coin to the purchaser, similarly in this case Vioxx, Merck had only shown the benefits and did not inform the consumers that this medicine also has it is negative impacts and this can increase the chances of heart attacks. In the case of DTC, consumer prevents to take medical prescription and starts using subjective medicine as a general medicine. Merck knew that DTC advertisements of Vioxx will increase it is use and people will take this medicine on regular basis, yet this company has not mentioned any warning signs while publishing advertisements on print as well as electronic media. In order to conclude it can say that Merck did not act in a socially responsible manner with regard to the marketing and advertising of Vioxx as it concealed the actual impacts of this medicine that was it is a social duty.
Ethical Concerns of Marketing and Advertising in the Pharmaceutical Industry
4.In the United States, it is necessary to take prior approval of the Food and Drug Administration before launching any prescribed medicine in the market (U.S. Food and Drug administration 2018). In order to meet this requirement, Merck also applied this authority to get approval in relation to Vioxx. By taking approval of authority, Merck has fulfilled it is the statutory duty. This authority was not only there to provide prior approval but the same was also continuously monitoring all the medicines that were in the market. Later on, it has come into light that the said authority was not so much possessive about the checking of the efficiency of medicines. The staff member of this authority said that now these days’ Food and Drug Administration, is not so much worried about the quality of approved medicines. Further, in the year 2002, one of the agency scientist surveys found that there were only 13% of the medicines in the market that was completely safe (Ullman 2010). It means although the rest 87% of medicines approved by the Food and Drug Administration yet were not completely safe. Only taking approval for Vioxx was not the liability of Merck, being a manufacturer of one of the lead medicine, it was also the duty of the company to develop an in-house testing procedure.
In addition to the above, even before the approval of Vioxx, Merck had reason to believe that this can also cause harm, this company did not take any safety measure. According to an e-mail delivered in the year 1997, scientists of Merck were worried that this medicine can have a cardiovascular risk (History Commons 2018). In the year 2000, a study named “VIGOR” has done. This was a significant study in the history of Vioxx. This study stated that Vioxx had the possibility of heart attack approx. 5 times more than the other medicine named “Naproxen” in the same area (Leveson 241). The Food and Drug Administration became worried about the situation and mentioned that Merck must have a statutory warning label on the packets of Vioxx. After the lengthy conversations and debates with the authority, Merck finally started to mark the said labels in the year 2002. In the year 2004, one of the scientists of Food and Drug Administration reported that according to a study of records, people who use Vioxx had 3 times more possibilities to have heart attacks. Despite this result, Merck declared this finding less reliable and initiated it is own research on the quality of Vioxx (Richards-Kortum 388).
As Merck had believed that Vioxx could cause heart attacks it is users yet the same had not taken any steps to prevent the use of this medicine. Although this company took the prior approval of respective authority, the same has failed to comply with other legal and statutory requirements; hence, it can conclude that Merck had not acted in a socially responsible manner with regard to Vioxx in its relationships with government policymakers and regulators
5.After the VIGOR and APPROVe study, Merck became sure that the production and sale of Vioxx must be stopped as this medicine was increasing the chances of heart attack to 5 times (Prakash and Valentine 2007). Food and Drug Administration advised Merck to show warning labels on the packet of Vioxx but despite doing this, the company has withdrawn this product from the market in the year 2004 (drugwatch 2018). This decision of Merck was relatively correct somewhere. It was the duty of Merck, being a manufacturer and developer of prescription medicine to provide an effective medicine to patients. However, the action of recall and withdrawn of Vioxx from the market has negative impacts o it is investors certainly. It was also the duty of Merck to cherish it is investors with a good amount of return. However, in the scenario given, by recalling the Vioxx, Merck had taken a good initiative and this company worked in a socially responsible manner. As earlier stated that Vioxx causes heart attacks among the users, it was a good decision that Merck had taken in this situation. Providing security warnings could not have an impact on the people who were addicted to have the medicine hence the only best option that left with Merck was withdraw of the medicine that Merck has done. In order to provide an answer to the asked question, it is to mention that decision of voluntary public recall leaded other companies to work in a socially responsible manner. Therefore, it will not be wrong to state that this act of Merck was an activity of Corporate Social responsibility.
Conclusion
In conclusion, it is to say that overall Merck has behaved in a social responsible manner. Some of the acts were ethical of this company whereas some were not. Merck has taken all the reasonable care before introducing Vioxx into market and when this company later one had come to know that this medicine is causing harm to users and increasing risk of heart attacks to them then the same has withdrawn this product. Therefore there is a reason to believe that except few of the tasks, Merck has performed it is duty well and in fulfill the applicable corporate social responsibly.
References
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