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Running Head: VIOXX SCANDAL CASE STUDY
Diaz 1
Vioxx Scandal Case Study Lebanon Valley College Hector Diaz
Abstract This case analysis will discuss about the recall of Vioxx pills and what important factors should have been taken from the executive of Merck. The recall of Vioxx showed the
VIOXX SCANDAL CASE STUDY
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importance of Merck’s customers and how the business should have made better decisions. This paper will demonstrate different analytical tools that were used to determine the best alternative of the executive of Merck. The research paper also describes the powers, interest, and coalitions of stakeholders that are affected. The moral responsibility matrix explains the responsibilities that Merck has for their stakeholders. The diagnostic typology tool is used to describe the type of strategy that should have been use for Merck’s stakeholders. Three objectives are stated to propose the situations that occurred in 2000 after the VIGOR report. The consequence/decision matrix will help determine the best alternative to achieve the objectives of the company. Lastly, the suggestive alternative is given and compare to the actual alternative. Keywords: Merck, Vioxx, ethics, customers, pharmaceutical, health, medicines
Vioxx Scandal Case Study Merck was considered to be one of the most successful pharmaceutical companies of the world. The company was also known to be ethical and socially responsible. On the other hand, the Vioxx scandal had damaged the reputation of the company at the time. Vioxx was a non-steroidal anti-inflammatory drug and a prescription painkiller (Vioxx Recall Information). Merck had mislead doctors and patients to buying Vioxx, in order to increase their revenue. Vioxx was considered to be the blockbuster drug, which meant that Merck was gaining large amounts of revenue annually by marketing it successfully to doctors and consumers. Direct-to-Consumer Advertising had increased the sales of Vioxx since it allowed
VIOXX SCANDAL CASE STUDY
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the company to effectively directly to the consumers. The great ments of Vioxx attracted many consumers and doctors to buy the products. The scandal that Merck faced was that Vioxx caused deadly heart attacks and strokes to many consumers. Even before the drug was approved, there were some evidence that cast doubt on the safety of Vioxx. The VIGOR study proved that Vioxx had caused five times as many heart attacks compared to naproxen. The decision is now left to the executive of Merck and the Food and Drug istration (FDA). This paper will demonstrate the objectives and alternatives that the executive of Merck should have developed after the results of the VIGOR report. Problem and Ethical Dilemma The ethical issues that Merck faced in the Vioxx scandal was that they did not communicate the health risks of the pills carefully and effectively to their consumers, but they instead d to gain more revenue. This caused even more consumers to be at risk for dangerous cardiovascular issues. Merck only d that Vioxx did well to the stomach compared to naproxen. Merck was focused on trying to continue the increase of their revenue because they were doing so well. They had financial fears that their sales would have decreased if they had announced that Vioxx caused major health issues. They also feared for their image restoration and legal fears for the company if they would have announced the risks to the public. The ethical issue of the company was that the company was only thinking about themselves. The company did not demonstrate utilitarianism ethics, which was to focus on providing the greatest good for the greatest amount of people (Stanwick & Stanwick, 2014, p.7). There are three questions that Merck should have developed to solving the ethical problems. The following questions should have been:
What can we do to protect or prevent all of our customers who took Vioxx? How can we reduce the risk of heart attacks and strokes of all of our Vioxx patients? How can we effectively communicate to our stakeholders about the health risks of Vioxx?
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These questions should help Merck to make ethical decisions to prevent any issues with their stakeholders and any financial debts that can occur if the executive makes the wrong decision. The lack of transparency and honesty created unethical issues to the stakeholders of the company. The ethical dilemma that Merck had was that they were greedy and did not emphasize the dignity of their stakeholders. They should keep in mind that their business can be greatly affected in the long-run. If the company fails to provide important information of the activities that are happening within the business, then it will cost huge amounts of money from lawsuits and many other expenses. Stakeholder Analysis The stakeholder analysis displays the stakeholders who were impacted, whether they are market or non-market, their power, expectation, and coalition. By looking at these aspects will help determine how important stakeholders are, what their abilities are, and how the company can achieve or exceed their stakeholder’s expectations. This analysis will give a good idea of concerns from the stakeholders and gather information about them to be able to solve the unethical issues that are affecting them. The stakeholders affected by the unethical behaviors made by Merck are the shareholders, customers, and the government. The executive of Merck should have taken a closer look of his or her stakeholders that were impacted by the company’s decisions. Looking over the interests and powers would help the company to recognize and solve the unethical actions that was done. Furthermore, understanding the coalitions of the stakeholders will help to be more familiar with the consequences of decisions. Stakehold ers
Market or NonMarket
Shareholder s
Market stakeholde rs
Power
Voting power- ability to vote on major decisions for Merck.
Expectati on
Coalition
For Merck to have an increase in ROI and enhance the
If unethical behaviors continue, the shareholders and customers will discontinue their involvement and lose
VIOXX SCANDAL CASE STUDY
Customers
Government
Market Economic power-they stakeholde provide the revenues rs of the company. Legal power- ability to bring suits for harmful prescription drugs. Informational powerability to provide of the company, which can be threatening of they are not satisfied with the products of Merck. NonLegal power- the ability Market to enact and enforce stakeholde laws and regulations r about the products that Merck sells.
Diaz 5 reputation of Merck.
interest with the company.
For Merck to provide prescription drugs that will help customer’s certain health issues.
If unethical behaviors continue, the shareholders and customers will discontinue their involvement and lose interest with the company.
For Merck to follow and comply with the laws and regulations.
The customers and shareholders can form a coalition with the government, which can cause the government to enact or regulate new laws and regulations.
Figure 1.1- Merck’s Stakeholder Analysis
The shareholders are considered to be one of the most important stakeholders of any public company. The interest of the shareholders is to receive dividends and capital appreciation. By increasing the return of investment, this will make shareholders satisfy and continue to buy shares of the company. The shareholders have voting powers that influence the pharmaceutical company of Merck. The voting power of the shareholders is that they have the ability to vote on major decisions such as acquisitions or problems that may occur within the company. The customers have economic, legal, and informational powers. Economic powers of the customers are that they provide the revenues to the company. The legal power of customers is the right to bring suit against Merck if the company continue to provide medicines that cause health issues. Informational powers of customers are the ability to provide of the company, which can be threatening if they are not satisfied with the medicines of Merck. Merck can potentially lose more customers, and sales will decline. The company’s core values was to that medicines were for the people and not for the
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profits (Lawrence, 2016, p.475). Their values demonstrated that customers were very important stakeholders. It is significant to note that customers were supposed to be their first priority. However, the company did not have integrity as to put actions to what they were saying. The government is a non-market stakeholder that has legal power. They have the ability to enact and enforce laws and regulations to pharmaceutical companies. The Food and Drug istration (FDA) enforced that drug companies should get their products approved before going out to the market. The drugs must be examined and researched to be able to provide efficient information and warnings about them. The government is a big player for Merck since they have the ability to control and maintain certain actions about pharmaceutical products. If the Merck Company does not comply with the FDA, their business can collapse from unlawful and unethical activities. Certain decisions that is made from Merck can form coalitions between all the stakeholders. For example, if the company continues to ignore the problem of not effectively communicating the risks of Vioxx, then it can later attract the media and influence the behaviors of the stakeholders. Shareholders and the customers will form coalition and can discontinue their involvement within the company. They can also create coalitions with the government, which then can enforce or enact laws and regulations that will impact the business. These decision impact all the stakeholders since shareholders will stop buying stocks, customers will no longer buy from Merck, and the government can change the way the company operates. Moral Responsibility Matrix
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Figure 1.2- Moral Responsibility Matrix
The moral responsibility Matrix demonstrates the economic, legal, ethical, and voluntary/discretionary responsibilities that Merck has for their stakeholders. The stakeholders focused were on the shareholders, customers, and the government. The objectives that come from the moral responsibility matrix are to increase profits, to decrease the risks of health issues from their products, and attract more customers. These objectives were developed based on the moral responsibilities that Merck has for their shareholders, customers, and government. These objectives should be achieved to satisfy all the stakeholders that are examined from the moral responsibility matrix. Diagnostic Typology Tool
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Figure 1.3- Diagnostic Typology Tool of Merck’s Stakeholders
According to the Diagnostic typology tool, Merck’s customers and the government are a mixed blessing (type 4). The executive must use a collaborating strategy to solve issues that relate to these stakeholders. The customers and government are a high threat and have a high cooperation with the organization. For the shareholders of Merck, they represent as being ive stakeholders (type 1). An involving strategy should be used to solve any problems that relate to the shareholders. The shareholders are a low threat to the company, but have a high cooperation with the organization. The executive should develop both a collaborate type and involve type of alternatives. This tool proves that with those types of alternatives can save the company from becoming unethical or immoral. The alternatives developed were to remove Vioxx from the market, reformulate Vioxx, and replace Vioxx with a new drug. Recommended Objectives The three objectives that the executive of Merck should use are to increase the company’s profit, reduce the risks of cardiovascular problems, and attract more customers. These objectives should be achieved by enhancing the integrity and transparency of the
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company. This was created from the moral responsibility matrix. Understanding the responsibilities will help the firm make better decisions in order to achieve their objectives. The first objective is to increase the profit of the firm to at least ten percent. The goal of the company is to become profitable, however it should be done the right way. Merck was so driven into making so much sales of Vioxx that they did not even want to exclusively deliver the bad news about the drug. The company continued to sell and market the product knowing that research proved it was causing cardiovascular problems. Merck compared it to naxproxen, but made it seemed as if Vioxx should be concentrated on only the benefits of arthritis sufferers who were at risk for ulcers. The FDA approved the drug for rheumatoid arthritis. As a result, the company was able to generate billions in sales. In contrast, Merck should make sure that they are gaining it the ethical way by selling safer drugs and being moral (through integrity and honesty) to the stakeholders. The second objective was to reduce the cardiovascular risks that Vioxx caused. This is essential as it prevents to further the health problems of the patients who take Vioxx. All of the stakeholders are impacted by the problem of giving patients cardiovascular issues. For example, if the firm finds a way to reduce the risks then the company will be in good hands and the shareholders will be satisfied. In addition, the government would not have to take any legal actions to the firm either. This is a very important objective since this was the issue that led to the ethical dilemma of the firm. The third objective was to attract more customers. Merck’s purpose of the business is to provide medicine to the people. By attracting more customers, the organization has the opportunity to maximize profits, maintain a good image, and develop innovative products. Bringing in more consumers to the business means more responsibilities to be careful for the health risks caused by the medicines. When the firm attracts more customers, they should always try to keep a positive image. Making the right decisions and following up with should always be implemented to gain competitive advantage and deliver the best products for the customers.
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Appropriate Alternative Solutions The executive must analyze the objectives and alternatives to be able to determine what is best for the company in the long run. The following alternatives proposed in this case was that the company should remove Vioxx entirely from the market, reformulate Vioxx by adding an agent to prevent blood clots, and replace Vioxx with a new drug (after extensive research and approval). In the following consequence/decision matrix, Figure 1.4 shows the objectives and alternatives along with the impact scores and expected consequences. Taking responsibility, being truthful, and fulfilling commitments are examples of reaching a high transparency and integrity for the company. Transparency ensures that all accurate and truthful information of the warnings for any health and safety issues of the products should be told to all stakeholders of the firm (Stanwick & Stanwick, 2014, p.15). The transparency and dignity principle should be followed to become more ethical in their decision making process. This should be done by effectively communicating with the stakeholders and letting them know about what the results of VIGOR report was. Vioxx was too dangerous, and Merck should have realized the harm that it was causing to the patients and how much it will negatively impact the reputation and operations of the company. The executive should have an ethical responsibility to act in an honest manner to be truthful and forthright with their decisions. The company should also take the initiative to be loyal to their stakeholders and avoid the benefits of self-interest. With integrity, the actions of the business will speak louder than words. Merck is responsible for the health of all the patients who took Vioxx and now the firm must make significant decisions on how to improve. Consequence Matrix and Decision Matrix
VIOXX SCANDAL CASE STUDY
Figure 1.4- The consequence/ decision matrix demonstrating the alternatives and objectives.
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Figure 1.5- Actual alternative that Merck.
The consequence decision matrix demonstrates the weighted objectives and alternatives that were suggested. The alternative with the highest weighted score was to replace Vioxx with a new drug (after extensive research and approval). The company should have removed Vioxx from the market and replaced it with a better pill. The problem that Merck did was that they were researching and studying Vioxx while it was still in the market. If the company makes another drug that has been researched and successfully ed with positive results, then they can have a higher chance of achieving the three objectives. In order to do this alternative, the company should first effectively announce the risks of Vioxx in complete details and remove it from the market. Then, plan for a new drug and can make it the new blockbuster drug.
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Compared to the actual alternative that Merck took, it would have been better for them to make a new drug. Merck did not want to announce about the health issues of their products since they thought it would have cause a negative effect to the company’s profit. However, Merck should have realized that in the long run they would be worst off. The weighted average of the actual alternative was .56, which shows how inadequate their decision was. The ethical rationale of developing a new drug and selling it after extensive research is that the company will demonstrate utilitarianism. Utilitarianism will show that the company will provide a medicine for the benefit of the greatest number of people. Merck acted more on pure self-interest to gain profits for the company. By selling a drug that has been extensively researched and approve will let stakeholders know that Merck is focused on providing the good for their customers. This will also act in accordance to virtue by being moral and showing integrity. This alternative will allow the company to reduce the risks of heart issues that Vioxx caused and increase their profits. Conclusion Overall, the most suggestive alternative for the executive of Merck to use is to make a new drug and sell it in the market after it has been extensively researched and approved from scientists. The company must take immediate action before the situation gets worse. During 2000, the company still had the opportunity to implement an alternative but they did nothing about the situation. The company only wanted to continue their profitability. A new drug could have improved the company in the long-run. The moral responsibility matrix demonstrated that the objectives of the company should be focused on what the economic, legal, ethical, and voluntary/discretionary responsibilities of the stakeholders were. The Diagnostic typology helped develop the strategies to determine how to achieve the objectives. Merck solely sought to focus on their patients and not the profit. Conversely, they ended up just fulfilling their self- interest of maintaining a maximum profit in the pharmaceutical industry. Merck demonstrated to have one of the worst recalls in the pharmaceutical industry.
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References Holmes, P. (n.d.). Merck's Vioxx Scandal Highlights Pharma Ethics Issues. Retrieved November 8, 2015, from http://www.holmesreport.com/latest/article/merck's-vioxxscandal-highlights-pharma-ethics-issues Lawrence, A. (2006). Business and Society, Stakeholders, Ethics, Public Policy. (14 Ed.). McGraw-Hill Irwin. Saul, S. (2008, April 15). Merck Wrote Drug Studies for Doctors. Retrieved November 6, 2015, from http://www.nytimes.com/2008/04/16/business/16vioxx.html?_r=0 Stanwick, P., & Stanwick, S. (2014). Understanding business ethics (2nd Ed.). Sage.
VIOXX SCANDAL CASE STUDY Vioxx Recall Information. (n.d.). Retrieved November 8, 2015, from http://www.drugwatch.com/vioxx/recall/
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Vioxx Scandal Case Study Lebanon Valley College Hector Diaz
Abstract This case analysis will discuss about the recall of Vioxx pills and what important factors should have been taken from the executive of Merck. The recall of Vioxx showed the
VIOXX SCANDAL CASE STUDY
Diaz 2
importance of Merck’s customers and how the business should have made better decisions. This paper will demonstrate different analytical tools that were used to determine the best alternative of the executive of Merck. The research paper also describes the powers, interest, and coalitions of stakeholders that are affected. The moral responsibility matrix explains the responsibilities that Merck has for their stakeholders. The diagnostic typology tool is used to describe the type of strategy that should have been use for Merck’s stakeholders. Three objectives are stated to propose the situations that occurred in 2000 after the VIGOR report. The consequence/decision matrix will help determine the best alternative to achieve the objectives of the company. Lastly, the suggestive alternative is given and compare to the actual alternative. Keywords: Merck, Vioxx, ethics, customers, pharmaceutical, health, medicines
Vioxx Scandal Case Study Merck was considered to be one of the most successful pharmaceutical companies of the world. The company was also known to be ethical and socially responsible. On the other hand, the Vioxx scandal had damaged the reputation of the company at the time. Vioxx was a non-steroidal anti-inflammatory drug and a prescription painkiller (Vioxx Recall Information). Merck had mislead doctors and patients to buying Vioxx, in order to increase their revenue. Vioxx was considered to be the blockbuster drug, which meant that Merck was gaining large amounts of revenue annually by marketing it successfully to doctors and consumers. Direct-to-Consumer Advertising had increased the sales of Vioxx since it allowed
VIOXX SCANDAL CASE STUDY
Diaz 3
the company to effectively directly to the consumers. The great ments of Vioxx attracted many consumers and doctors to buy the products. The scandal that Merck faced was that Vioxx caused deadly heart attacks and strokes to many consumers. Even before the drug was approved, there were some evidence that cast doubt on the safety of Vioxx. The VIGOR study proved that Vioxx had caused five times as many heart attacks compared to naproxen. The decision is now left to the executive of Merck and the Food and Drug istration (FDA). This paper will demonstrate the objectives and alternatives that the executive of Merck should have developed after the results of the VIGOR report. Problem and Ethical Dilemma The ethical issues that Merck faced in the Vioxx scandal was that they did not communicate the health risks of the pills carefully and effectively to their consumers, but they instead d to gain more revenue. This caused even more consumers to be at risk for dangerous cardiovascular issues. Merck only d that Vioxx did well to the stomach compared to naproxen. Merck was focused on trying to continue the increase of their revenue because they were doing so well. They had financial fears that their sales would have decreased if they had announced that Vioxx caused major health issues. They also feared for their image restoration and legal fears for the company if they would have announced the risks to the public. The ethical issue of the company was that the company was only thinking about themselves. The company did not demonstrate utilitarianism ethics, which was to focus on providing the greatest good for the greatest amount of people (Stanwick & Stanwick, 2014, p.7). There are three questions that Merck should have developed to solving the ethical problems. The following questions should have been:
What can we do to protect or prevent all of our customers who took Vioxx? How can we reduce the risk of heart attacks and strokes of all of our Vioxx patients? How can we effectively communicate to our stakeholders about the health risks of Vioxx?
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These questions should help Merck to make ethical decisions to prevent any issues with their stakeholders and any financial debts that can occur if the executive makes the wrong decision. The lack of transparency and honesty created unethical issues to the stakeholders of the company. The ethical dilemma that Merck had was that they were greedy and did not emphasize the dignity of their stakeholders. They should keep in mind that their business can be greatly affected in the long-run. If the company fails to provide important information of the activities that are happening within the business, then it will cost huge amounts of money from lawsuits and many other expenses. Stakeholder Analysis The stakeholder analysis displays the stakeholders who were impacted, whether they are market or non-market, their power, expectation, and coalition. By looking at these aspects will help determine how important stakeholders are, what their abilities are, and how the company can achieve or exceed their stakeholder’s expectations. This analysis will give a good idea of concerns from the stakeholders and gather information about them to be able to solve the unethical issues that are affecting them. The stakeholders affected by the unethical behaviors made by Merck are the shareholders, customers, and the government. The executive of Merck should have taken a closer look of his or her stakeholders that were impacted by the company’s decisions. Looking over the interests and powers would help the company to recognize and solve the unethical actions that was done. Furthermore, understanding the coalitions of the stakeholders will help to be more familiar with the consequences of decisions. Stakehold ers
Market or NonMarket
Shareholder s
Market stakeholde rs
Power
Voting power- ability to vote on major decisions for Merck.
Expectati on
Coalition
For Merck to have an increase in ROI and enhance the
If unethical behaviors continue, the shareholders and customers will discontinue their involvement and lose
VIOXX SCANDAL CASE STUDY
Customers
Government
Market Economic power-they stakeholde provide the revenues rs of the company. Legal power- ability to bring suits for harmful prescription drugs. Informational powerability to provide of the company, which can be threatening of they are not satisfied with the products of Merck. NonLegal power- the ability Market to enact and enforce stakeholde laws and regulations r about the products that Merck sells.
Diaz 5 reputation of Merck.
interest with the company.
For Merck to provide prescription drugs that will help customer’s certain health issues.
If unethical behaviors continue, the shareholders and customers will discontinue their involvement and lose interest with the company.
For Merck to follow and comply with the laws and regulations.
The customers and shareholders can form a coalition with the government, which can cause the government to enact or regulate new laws and regulations.
Figure 1.1- Merck’s Stakeholder Analysis
The shareholders are considered to be one of the most important stakeholders of any public company. The interest of the shareholders is to receive dividends and capital appreciation. By increasing the return of investment, this will make shareholders satisfy and continue to buy shares of the company. The shareholders have voting powers that influence the pharmaceutical company of Merck. The voting power of the shareholders is that they have the ability to vote on major decisions such as acquisitions or problems that may occur within the company. The customers have economic, legal, and informational powers. Economic powers of the customers are that they provide the revenues to the company. The legal power of customers is the right to bring suit against Merck if the company continue to provide medicines that cause health issues. Informational powers of customers are the ability to provide of the company, which can be threatening if they are not satisfied with the medicines of Merck. Merck can potentially lose more customers, and sales will decline. The company’s core values was to that medicines were for the people and not for the
VIOXX SCANDAL CASE STUDY
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profits (Lawrence, 2016, p.475). Their values demonstrated that customers were very important stakeholders. It is significant to note that customers were supposed to be their first priority. However, the company did not have integrity as to put actions to what they were saying. The government is a non-market stakeholder that has legal power. They have the ability to enact and enforce laws and regulations to pharmaceutical companies. The Food and Drug istration (FDA) enforced that drug companies should get their products approved before going out to the market. The drugs must be examined and researched to be able to provide efficient information and warnings about them. The government is a big player for Merck since they have the ability to control and maintain certain actions about pharmaceutical products. If the Merck Company does not comply with the FDA, their business can collapse from unlawful and unethical activities. Certain decisions that is made from Merck can form coalitions between all the stakeholders. For example, if the company continues to ignore the problem of not effectively communicating the risks of Vioxx, then it can later attract the media and influence the behaviors of the stakeholders. Shareholders and the customers will form coalition and can discontinue their involvement within the company. They can also create coalitions with the government, which then can enforce or enact laws and regulations that will impact the business. These decision impact all the stakeholders since shareholders will stop buying stocks, customers will no longer buy from Merck, and the government can change the way the company operates. Moral Responsibility Matrix
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Figure 1.2- Moral Responsibility Matrix
The moral responsibility Matrix demonstrates the economic, legal, ethical, and voluntary/discretionary responsibilities that Merck has for their stakeholders. The stakeholders focused were on the shareholders, customers, and the government. The objectives that come from the moral responsibility matrix are to increase profits, to decrease the risks of health issues from their products, and attract more customers. These objectives were developed based on the moral responsibilities that Merck has for their shareholders, customers, and government. These objectives should be achieved to satisfy all the stakeholders that are examined from the moral responsibility matrix. Diagnostic Typology Tool
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Figure 1.3- Diagnostic Typology Tool of Merck’s Stakeholders
According to the Diagnostic typology tool, Merck’s customers and the government are a mixed blessing (type 4). The executive must use a collaborating strategy to solve issues that relate to these stakeholders. The customers and government are a high threat and have a high cooperation with the organization. For the shareholders of Merck, they represent as being ive stakeholders (type 1). An involving strategy should be used to solve any problems that relate to the shareholders. The shareholders are a low threat to the company, but have a high cooperation with the organization. The executive should develop both a collaborate type and involve type of alternatives. This tool proves that with those types of alternatives can save the company from becoming unethical or immoral. The alternatives developed were to remove Vioxx from the market, reformulate Vioxx, and replace Vioxx with a new drug. Recommended Objectives The three objectives that the executive of Merck should use are to increase the company’s profit, reduce the risks of cardiovascular problems, and attract more customers. These objectives should be achieved by enhancing the integrity and transparency of the
VIOXX SCANDAL CASE STUDY
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company. This was created from the moral responsibility matrix. Understanding the responsibilities will help the firm make better decisions in order to achieve their objectives. The first objective is to increase the profit of the firm to at least ten percent. The goal of the company is to become profitable, however it should be done the right way. Merck was so driven into making so much sales of Vioxx that they did not even want to exclusively deliver the bad news about the drug. The company continued to sell and market the product knowing that research proved it was causing cardiovascular problems. Merck compared it to naxproxen, but made it seemed as if Vioxx should be concentrated on only the benefits of arthritis sufferers who were at risk for ulcers. The FDA approved the drug for rheumatoid arthritis. As a result, the company was able to generate billions in sales. In contrast, Merck should make sure that they are gaining it the ethical way by selling safer drugs and being moral (through integrity and honesty) to the stakeholders. The second objective was to reduce the cardiovascular risks that Vioxx caused. This is essential as it prevents to further the health problems of the patients who take Vioxx. All of the stakeholders are impacted by the problem of giving patients cardiovascular issues. For example, if the firm finds a way to reduce the risks then the company will be in good hands and the shareholders will be satisfied. In addition, the government would not have to take any legal actions to the firm either. This is a very important objective since this was the issue that led to the ethical dilemma of the firm. The third objective was to attract more customers. Merck’s purpose of the business is to provide medicine to the people. By attracting more customers, the organization has the opportunity to maximize profits, maintain a good image, and develop innovative products. Bringing in more consumers to the business means more responsibilities to be careful for the health risks caused by the medicines. When the firm attracts more customers, they should always try to keep a positive image. Making the right decisions and following up with should always be implemented to gain competitive advantage and deliver the best products for the customers.
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Appropriate Alternative Solutions The executive must analyze the objectives and alternatives to be able to determine what is best for the company in the long run. The following alternatives proposed in this case was that the company should remove Vioxx entirely from the market, reformulate Vioxx by adding an agent to prevent blood clots, and replace Vioxx with a new drug (after extensive research and approval). In the following consequence/decision matrix, Figure 1.4 shows the objectives and alternatives along with the impact scores and expected consequences. Taking responsibility, being truthful, and fulfilling commitments are examples of reaching a high transparency and integrity for the company. Transparency ensures that all accurate and truthful information of the warnings for any health and safety issues of the products should be told to all stakeholders of the firm (Stanwick & Stanwick, 2014, p.15). The transparency and dignity principle should be followed to become more ethical in their decision making process. This should be done by effectively communicating with the stakeholders and letting them know about what the results of VIGOR report was. Vioxx was too dangerous, and Merck should have realized the harm that it was causing to the patients and how much it will negatively impact the reputation and operations of the company. The executive should have an ethical responsibility to act in an honest manner to be truthful and forthright with their decisions. The company should also take the initiative to be loyal to their stakeholders and avoid the benefits of self-interest. With integrity, the actions of the business will speak louder than words. Merck is responsible for the health of all the patients who took Vioxx and now the firm must make significant decisions on how to improve. Consequence Matrix and Decision Matrix
VIOXX SCANDAL CASE STUDY
Figure 1.4- The consequence/ decision matrix demonstrating the alternatives and objectives.
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VIOXX SCANDAL CASE STUDY
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Figure 1.5- Actual alternative that Merck.
The consequence decision matrix demonstrates the weighted objectives and alternatives that were suggested. The alternative with the highest weighted score was to replace Vioxx with a new drug (after extensive research and approval). The company should have removed Vioxx from the market and replaced it with a better pill. The problem that Merck did was that they were researching and studying Vioxx while it was still in the market. If the company makes another drug that has been researched and successfully ed with positive results, then they can have a higher chance of achieving the three objectives. In order to do this alternative, the company should first effectively announce the risks of Vioxx in complete details and remove it from the market. Then, plan for a new drug and can make it the new blockbuster drug.
VIOXX SCANDAL CASE STUDY
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Compared to the actual alternative that Merck took, it would have been better for them to make a new drug. Merck did not want to announce about the health issues of their products since they thought it would have cause a negative effect to the company’s profit. However, Merck should have realized that in the long run they would be worst off. The weighted average of the actual alternative was .56, which shows how inadequate their decision was. The ethical rationale of developing a new drug and selling it after extensive research is that the company will demonstrate utilitarianism. Utilitarianism will show that the company will provide a medicine for the benefit of the greatest number of people. Merck acted more on pure self-interest to gain profits for the company. By selling a drug that has been extensively researched and approve will let stakeholders know that Merck is focused on providing the good for their customers. This will also act in accordance to virtue by being moral and showing integrity. This alternative will allow the company to reduce the risks of heart issues that Vioxx caused and increase their profits. Conclusion Overall, the most suggestive alternative for the executive of Merck to use is to make a new drug and sell it in the market after it has been extensively researched and approved from scientists. The company must take immediate action before the situation gets worse. During 2000, the company still had the opportunity to implement an alternative but they did nothing about the situation. The company only wanted to continue their profitability. A new drug could have improved the company in the long-run. The moral responsibility matrix demonstrated that the objectives of the company should be focused on what the economic, legal, ethical, and voluntary/discretionary responsibilities of the stakeholders were. The Diagnostic typology helped develop the strategies to determine how to achieve the objectives. Merck solely sought to focus on their patients and not the profit. Conversely, they ended up just fulfilling their self- interest of maintaining a maximum profit in the pharmaceutical industry. Merck demonstrated to have one of the worst recalls in the pharmaceutical industry.
VIOXX SCANDAL CASE STUDY
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References Holmes, P. (n.d.). Merck's Vioxx Scandal Highlights Pharma Ethics Issues. Retrieved November 8, 2015, from http://www.holmesreport.com/latest/article/merck's-vioxxscandal-highlights-pharma-ethics-issues Lawrence, A. (2006). Business and Society, Stakeholders, Ethics, Public Policy. (14 Ed.). McGraw-Hill Irwin. Saul, S. (2008, April 15). Merck Wrote Drug Studies for Doctors. Retrieved November 6, 2015, from http://www.nytimes.com/2008/04/16/business/16vioxx.html?_r=0 Stanwick, P., & Stanwick, S. (2014). Understanding business ethics (2nd Ed.). Sage.
VIOXX SCANDAL CASE STUDY Vioxx Recall Information. (n.d.). Retrieved November 8, 2015, from http://www.drugwatch.com/vioxx/recall/
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