Ethics

1
Ethics

• February 23rd

2
Merck Background

• Most admired company in America for 7 straight
  years in the 80s
• Edward M. Scolnick (Brilliant) in charge of Merck
  Research Labs
• Brought 15 unique new drugs to the market in just
  5 years in the 90s
• For two decades Merck published more scientific
  papers and patented more compounds than its
  competitors

3

• Fast Track FDA approval of new drugs
• 13 new drugs approved on average in less than 11
  months
• Vioxx approved in under 6 months
• Pfizer face a review time of over two years
• Culture of arrogance?

4
Fosamax (osteoporosis)

• 280 million sales in first year
• FDA wanted to withdraw from market after it
  learned than it caused erosion of the esophagus
  in some patients
• Scolnick used an aggressive letter writing
  campaign and submitted more info to FDA
• Fosamax re-labeled and allowed to remain on the
  market. (have to sit upright for an hour after
  taking it)
• 2003 sales 2.7 billion

5
block busters

• Cozaar Hypertension 2.5 billion
• Crixivan HIV
• Singulair 2 billion
• Propecia Baldness
• By 1999 the pipeline was empty Harder to
  develop new drugs. Merck came into the new
  millennium facing patent expirations and few
  miracle drugs in the offing

6
Vioxx

• Last of Scolnicks blockbusters
• Discovered in 1994
• Cox-2 inhibitors
• To replace common painkillers like ibuprofen
  which have the side effects of ulcers and
  gastrointestinal bleeding. Some estimated that
  these drugs killed 10,000 people a year due to
  intestinal bleeding
• Direct-to-consumer marketing 500 million 2.5
  billion a year

7
Early warning signs

• Even before FDA approval Pennsylvania study
  Cox-2 inhibitors interfered with enzymes that
  play key roles in warding off cardiovascular
  disease
• Merck felt the evidence was inconclusive
• 2000 own study showed Vioxx 3x more likely than
  Aleve (naproxen)
• Merck argued that data misleading because
  naproxen good for heart

8

• Merck Responsible
• 60 Minutes
• FDA cant protect
• FDA Shares

9
Pfizer

• Celebrex 1 brand of Cox-2
• Also sales Bextra
• Initial studies only showed Vioxx
• Later studies indicated Celebrex and Bextra had
  same problems
• Chose to not recall
• FDA asked them to suspend direct-to-consumers
  marketing

10
Outlook for Merck

• In 2003 work on potential blockbuster drugs for
  depression and diabetes didnt pan out. One
  didnt work in clinical trials and the other was
  linked to cancer
• Zocor (5 billion a year) goes off patent in
  2006.
• Stock price 95 in 2000 is under 30 in February
  2005

11

• VIOXX back
• Future?

12
Questions?

• On balance do you think Merck is an ethical and
  socially responsible company? Pfizer?
• How could the disaster with Vioxx been avoided in
  the first place?
• What is your opinion of pharmaceutical
  advertising?
• Should Merck have recalled Vioxx?

13
How do you respond to the following statements
from consumer advocacy groups?

• The more than 10 billion Merck has hoarded
  attests to the obscene profits these drug
  companies are making at our expense
• The FDA is in the pocket of the drug industry
  What a travesty this is.

14
What can be learned

• Always be ready for the worst scenario
• Be alert to early hints of trouble
• Eagerness to sue should be factored into some
  decisions
• The pharmaceuticals industry needs to improve its
  public image