Merck’s Lack of Social Responsibility Exposed
If ever there was any doubt of the impact of employee behaviour and poor corporate response has on an organisation, take a look at the beating Merck is getting in courtrooms and media outlets worldwide. Watching the Vioxx drama unfold has been an almost surreal experience.
Now I’m not one of those pharma-bashing conspiracy theorists who think all drug companies, or all big business is bad. As one who is dependent upon life-saving prescription drugs, I derive enormous (obvious) personal benefit from the science, the effort, and the millions of dollars risked by pharmaceutical companies that it takes to get a drug through FDA and other governmental approvals. The pharmaceutical industry is not an easy one by any measurement.
But as discussed in the book (shameless plug) Repuation at Risk, the what in what you do is not nearly as important as the how. How we do business; how our employees conduct themselves; how we respond to complaints or mistakes; how we sell our products; how we communicate with our customers and the market – these are the critical ingredients that define who we are as a company. They define the relationship we have with customers and regulators, the price premium we can charge – or not. These “hows” build, or break, our reputation.
A pharmaceutical company deals in life and death. It can determine a higher quality of life, or destroy it. It is in some sense, a higher calling – to make drugs that save people’s lives – but with that calling comes a need for a higher standard of conduct. It is trading on public trust. It holds the lives of many millions in its hands.
Merck is going to take a blow for this one. Even if they win in the courts, they have lost on the playing field. Yes, monetarily, it could be perceived as a hard call. Here was a product achieving sales worth USD $2.5 billion a year when it was withdrawn from sale. Not a bad ROI on $100 million spent in marketing.
But Merck’s website newsroom now shows a company fighting court cases worth hundreds of millions of dollars in damages claims in multiple countries simultaneously; a company dealing with consistently negative headlines daily, worldwide.
The total cost in lost sales of this drug, related and future drugs, in legal fees, in the diversion of resources directed at fighting the good fight, in crisis communications consultants fees, the loss of talented staff and once loyal customers, is immeasurable. Where’s the ROI for that?
It is now common knowledge that adverse findings were at first hidden, then admitted to but excused and downplayed while marketing efforts ramped up. With now public emails and other incriminating documents, it is common knowledge that efficacy studies were allegedly fabricated, worrying data about increased incidence of heart attacks and strokes, left out or minimised.
While this is a poster story for our Sin & Spin section, I have placed it in the CSR & Sustainability section for good reason. Corporate social responsibility (CSR) is not defined by how much money a company gives to charity. A company is not more socially responsible today than yesterday because it now supports a specific cause. Social responsibility is not made real when the company creates a CSR department, or publishes a sustainability report. CSR is the very fabric of an organisation’s operations. It is either socially responsible in how it does business, or it isn’t. There is nothing vague or obscure in that determination. And so too can it be measured in hard economic terms.
Just ask Merck, which seems to have revealed itself to be lacking the basic depth and breadth of social responsibility expected – demanded – of its industry.
Writing on the 12th of October, 2004, in USA Today, Rita Rubin asked, How did Vioxx debacle happen? This is how:
Sen. Chuck Grassley, R-Iowa, says the FDA was worse than passive. Investigators for the Senate Finance Committee, which Grassley chairs, met Thursday with FDA researcher David Graham, lead scientist on a study presented in August at a medical meeting in France.
The study, an analysis of a database of 1.4 million Kaiser Permanente members, found that those who took Vioxx were more likely to suffer a heart attack or sudden cardiac death than those who took Celebrex, Vioxx’s main rival. Based on their findings, Graham and his collaborators linked Vioxx to more than 27,000 heart attacks or sudden cardiac deaths nationwide from the time it came on the market in 1999 through 2003.
Graham told the finance committee investigators that the FDA was trying to block publication of his findings, Grassley said in a statement. “Dr. Graham described an environment where he was ‘ostracized,’ ’subjected to veiled threats’ and ‘intimidation,’ ” Grassley said. Graham gave Grassley copies of e-mail that appear to support his claims that his superiors suggested watering down his conclusions.
In The Australian newspaper, April 9th, 2009, Milanda Rout reported that scientists were allegedly recruited by Merck to put their names on research already done by the drug company, to promote the safety of its anti-arthritis drug Vioxx.
Doctors signed Merck’s Vioxx studies
The Federal Court has heard that Merck & Co “prepared and gathered” doctors and academics to write the company’s own research on Vioxx, which was then published in prestigious medical journals as independent studies.The drug company also allegedly produced an entire journal — called The Australasian Journal of Bone and Joint Medicine — and passed it off as an independent peer review publication. These claims were put by lawyers acting for Graeme Peterson, who is suing Merck & Co and its Australian subsidiary Merck, Sharpe and Dohme for compensation.
The 58-year-old — along with more than 1000 other Australians — claim Vioxx caused their heart attack or stroke.
The drug was launched in 1999 and at its height of popularity was used by 80 million people worldwide because it did not cause stomach problems, as did traditional anti-inflammatory drugs.
Last year, Merck settled thousands of lawsuits in the US to the value of USD $4.85 billion but made no admission of guilt. It continues to fight other cases, and appears to win more than it loses in some jurisdictions because plaintiffs are not able to prove specific causation of death by Vioxx.
Rout’s colleague, Peter Wilson, followed up with a story in The Australian on May 7th, 2009.
Medical publisheer admits magazine was a marketing ploy
The world’s largest medical publisher, Elsevier, has expressed embarrassment at its role in a deceptive marketing ploy by the giant drug company Merck after it was revealed in a Melbourne court.Elsevier said it had failed to meet its own “high standards for disclosure” when it produced a magazine that pretended to be an independent scientific journal but was actually a marketing front for Merck’s anti-inflammatory drug Vioxx.
The Amsterdam-based publisher is part of the Reed Elsevier group, which produces the Lancet, the authoritative medical journal that has accused Merck of selling Vioxx after it became aware of the drug’s heart risks.
Between 2003 and 2005, Elsevier produced several issues of a magazine called The Australasian Journal of Bone and Joint Medicine, which carried articles about Merck’s medicines Fosamax and Vioxx without any disclosure it was funded by Merck.
…”While the lack of disclaimers is not acceptable, this all took place several years ago and these publications were discontinued.”
Elsevier’s admission came as it was revealed that Merck lobbied British government ministers to head off legal action in Britain similar to the case mounted in Australia.
Documents obtained under Freedom of Information legislation show Merck persuaded British Health Minister Ivan Lewis to abandon a promise to support a compensation campaign by former users of Vioxx.
Read the rest of the story here.
Writing on The Scientiest.com April 30th, 2009, Bob Grant reported further:
“I’ve seen no shortage of creativity emanating from the marketing departments of drug companies,” Peter Lurie, deputy director of the public health research group at the consumer advocacy nonprofit Public Citizen, said, after reviewing two issues of the publication obtained by The Scientist. “But even for someone as jaded as me, this is a new wrinkle.”
The Australasian Journal of Bone and Joint Medicine, which was published by Exerpta Medica, a division of scientific publishing juggernaut Elsevier, is not indexed in the MEDLINE database, and has no website (not even a defunct one). The Scientist obtained two issues of the journal: Volume 2, Issues 1 and 2, both dated 2003. The issues contained little in the way of advertisements apart from ads for Fosamax, a Merck drug for osteoporosis, and Vioxx.
In testimony provided at the trial last week, which was obtained by The Scientist, George Jelinek, an Australian physician and long-time member of the World Association of Medical Editors, reviewed four issues of the journal that were published from 2003-2004. An “average reader” (presumably a doctor) could easily mistake the publication for a “genuine” peer reviewed medical journal, he said in his testimony. “Only close inspection of the journals, along with knowledge of medical journals and publishing conventions, enabled me to determine that the Journal was not, in fact, a peer reviewed medical journal, but instead a marketing publication for MSD[A].”
He also stated that four of the 21 articles featured in the first issue he reviewed referred to Fosamax. In the second issue, nine of the 29 articles related to Vioxx, and another 12 to Fosamax. All of these articles presented positive conclusions regarding the MSDA drugs. “I can understand why a pharmaceutical company would collect a number of research papers with results favourable to their products and make these available to doctors,” Jelinek said at the trial. “This is straightforward marketing.”
It is not that Merck made a flawed drug. It is the apparently deliberate deception and misinformation of doctors and consumers in the pursuit of sales and marketshare, while knowing that drug caused cardiac arrests where its rivals’ drugs didn’t, that form the basis of guilt here.
What were they thinking? If the allegations are true, this is irresponsible, unsustainable and dare I say, criminal behaviour by Merck.
Australian law now puts company directors on the line for occupational health and safety breaches. In the Bond Univesity Faculty of Law Corporate Governance eJournal 2008, Paul Harpur writes about the criminal penalties for directors.
Occupational Health and Safety Issues and the Boardroom: Criminal Penalties for Directors for Company’s Lack of Safety
The board of directors provides overall strategic direction for the company. Generally directors are not required to become involved in the day-to-day management of corporations. With the recent amendments to occupational health and safety (OHS) laws, directors’ duties have been expanded. Directors now
have statutory duties to ensure their companies do not breach OHS standards.If their companies fail to discharge their OHS duties, then directors can face fines. If a person is killed because of their company’s safety breach, then directors can face jail sentences up to 20 years. The imposition of these substantial penalties upon directors is aimed at increasing corporate compliance with OHS
standards.
Gee, what we have to do just to get people to do the right thing! What is the legal position with regard to consumer deaths as a direct result of Merck’s release of Vioxx and accompanying behaviour I wonder?
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Category: CSR & Sustainability, Reputation Management
