SOCIAL RESPONSIBILITY 345 iliar names K AND RIVER BLINDNESS d in New Jersey. Mer
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SOCIAL RESPONSIBILITY 345 iliar names K AND RIVER BLINDNESS d in New Jersey. Merck & Co. is one of the largest pharmaceutical world. In 1978, Merck was about to lose patent protection on its two ion drugs. These medications had provided a significant part of annual sales. Because of imminent loss, Merck decided to pour ecs into research to develop new medications. During just three years in the y invested over $1 billion in research and was rewarded with the of four powerful medications. Profits, however, were never all that Merck oIn 1950, George W. Merck, then chairman of the company his father in s ling prescription kerck's $2 billion in e. Good unity,92 about. said. "We try never to forget that medicine is for people. It is not for the fits. The profits follow, and if we have remembered that, they have never failed to bility The better we have remembered that, the larger they have been." This phy was at the core of Merck & Co.'s value system es of RIVER BLINDNESS The disease onchocerciasis, known as river blindness, is caused by parasitic worms that ive in the small black flies that breed in and about fast-moving rivers in developing countries in the Middle East, Africa, and Latin America. When a person is bitten by a fly (and some people are bitten thousands of times a day), the larvae of the worm can enter the person's body. The worms can grow to almost two feet long and can cause grotesque growths on an infected person. The real trouble comes, however, when the worms begin to reproduce and release millions of microscopic baby worms into a The itching is so intense that some infected persons have committed suicide. As time passes, the larvae continue to cause severe problems, including blindness person's system In 1978, the World Health Organization estimated that more than 300,000 people were blind because of the disease, and another 18 million were infected. In 1978, the disease had no safe cure. Only two drugs could kill the parasite, but both had serious even fatal, side effects. The only measure being taken to combat river blindness wa spraying of infected rivers with insecticides in the hope of killing the flies. However even this wasn't effective since the flies had built up immunity to the chemicals. MERCK'S ETHICAL QUANDARY Since it takes $200 million in research and ~12 years to bring the average drug t market, the decision to pursue research is a complex one. Resources are finit dollars and time have to go to projects that hold the most promise in terms of making money to ensure the company continues to exist a suffering. This is an especially delicate issue when it comes to rare diseases drug company's in people who would buy the drug is so small. The problem with developing a drug t combat river blindness was the flip side of the "orphan" drug dilemma. There were s well as of alleviating human vestment could probably never be recouped because the number of p oExplanation / Answer
There are many, including employees, stockholders, people with river blindness, the communities where those people live, those with other diseases, governments, the media, perhaps competitors, etc.
The potential to discover a drug for this terrible disease certainly exists and the company’s research scientists think it is possible. The outcomes for those with the disease would be very positive and there could also be very positive media attention and reputational effects. But, there is also the potential to invest years and millions of dollars, and come up empty handed. Employee morale is a potential cost or benefit. Scientists are extremely important to pharmaceutical companies and Merck’s research scientists wanted to pursue this. Allowing them to do so, might make them feel good about themselves and their work. Finally, there are opportunity costs. What drugs might “not” get discovered, because scientists were working on this one.
Merck is clear on its website about its commitment to corporate social responsibility and to philanthropy. So, investors have the opportunity to freely decide, whether they wish to invest in a company with these values or not. Companies do not justify every investment to shareholders, so we are not convinced that they would need to justify this one. But, they certainly would not be able to justify it in terms of the financial bottom line. They would have to justify it in terms of goodwill, or some other more difficult to measure criterion.
some shareholders are very interested in CSR. Are we talking about those, or about day traders who have little interest in the company, other than whether they can make a short term gain? One of us heard a representative of the Business Roundtable refer to the fact that we no longer have shareholders. We have share “renters.” These are people with only short-term financial interest in the company. So, we think companies will need to look beyond these shareholders, if they wish to think about the long-term greater good of the firm and society.
A pharmaceutical company’s scientists are one of its most important resources, Of course, they know that they are working for a for-profit company. But, they are also highly trained scientists with advanced degrees, who probably have humanistic values about helping people and curing disease. So, this is an important consideration.
This is tough to predict. The media may or may not even be aware of this. As noted earlier, Merck has not “promoted” itself in this way. It is possible that a media outlet would pick up the story and run with it. But, in our view, this is not a good reason to do it or not do it. A decision like this must be based upon deeply held values.
This is mostly a question of philanthropy. The other questions raised here are difficult to answer, because, when the decision must be made, we know very little about the chances of success. But, the case does raise an important ethical question that seems to affect some companies more than others. For example, if a company has information that no other person or company has and it could help people with that information, does the company have an ethical duty or obligation to act? Remember that this drug was based upon an existing Merck veterinary drug. So, we feel quite sure that Merck would not be interested in sharing its proprietary information. That leaves it with an ethical dilemma. Does it have an obligation to pursue this, because it alone has the information to do so?
Merck’s value system is very important here. If a company says that it values people over profits, it should act that way. Otherwise, it is just going to create a lot of cynical employees. If you do not mean it (your values, that is), do not say it! That goes for individuals too!
It is important know that Merck decided to pursue the research. After about a decade and many millions of dollars, the company succeeded. They came up with a wonder drug (Mectizan) that could kill the worms on the inside and the insects biting on the outside, with seemingly few side effects. The next challenge was finding someone to buy the drug. The company had all sorts of ideas for who might help. But, there were no takers -- not the US, the UN, the World Health Organization – they all had their own priorities – and the countries and people where river blindness was rampant had no resources. So, Merck had another ethical dilemma – what to do now that they had the drug available but no one to buy it. The company made an extraordinary decision – to distribute the drug for free (to give it away) to all who needed it forever or until river blindness was eradicated! That was not the end of it though. The company had to decide how to get the drug to the distant villages where river blindness was a problem, addressing issues of poor or no transportation over terrible roads to places with no health professionals. So, the company partnered with others, to arrange for the logistics of transporting the drug to the people who needed it. Rather than provide all the details here, we direct you to read more about this story and other Merck social responsibility efforts on the Merck Company’s website. Their philanthropy program is over twenty years old, has been very successful and a model that other companies have followed. Merck remains one of the most philanthropic companies in the US. There is another notable outcome – when AIDS became a worldwide health problem, the company’s experience with the distribution of Mectizan in Africa helped. Although AIDS drugs were more complicated, the company could call on its experience to inform these new efforts.
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