Merck - BYU Ethics

Merck and River Blindness
Should our For-Profit Public Company Spend
the Money to Develop a Drug that is Unlikely
to be Profitable, but has a High Probability of
Curing a Large Population of a Terrible
• 18 Million People affected by River Blindness, 300,000
• These populations are all poor – live in Africa and South
• Merck has a drug that the scientists believe has a high
probability of curing River Blindness
• Merck is a large pharmaceutical company ($2 billion in
annual revenue) with promising new drugs, but also with
drugs that are losing their patents
• Typical drug costs $200 million and 12 years to develop
• Merck spends approximately $333 million on Research
and Development per year
Ethical Issue Definition
• Should a for-profit pharmaceutical
company spend money developing a
promising drug for a disease when it is
unlikely to make a profit from it?
• Should a for-profit company live up to its
mission statement and values when this is
not likely to lead to profits?
• What responsibility does a company have
to society when it has a unique resource
that would be helpful to society?
• Current and Future Merck Shareholders
• People with River Blindness and those
who will get it in the future
• Merck Employees
• Merck Scientists
• Merck Customers
• Governments
• People with other diseases
Develop Alternatives
• Develop the drug yourself
• Get money from government or
• Share the data with other pharmaceutical
companies or universities, making them as
responsible as you
• Other solutions? Test the drug in the
affected areas, making it less expensive
• Do cause marketing (i.e. Have your
current customers pay for it)
Utilitarian Reasoning
• Potential benefits of Developing Drug
– Great Improvement in life for 18 million people
• Probability of success (%), value of the lives helped ___?
– PR benefits (typical pharmaceutical company spends
approximately 30% of revenue per year on Sales,
Marketing, and Advertising – for Merck = $600 million
per year) Research shows that 1 page of PR is worth
10 pages of advertising
– Employee morale at Merck
– Merck’s ability to hire scientists (core competency,
and very expensive to find and replace)
– Merck lives up to its mission and values, encouraging
people who share its values to invest their resources
(financial, human, etc.) in the company
– Build good relationships with countries where you one
day might be able to make money
Utilitarian Reasoning
• Potential Costs of Developing Drug
– Shareholders lose up to $200 million of their money
– Losing the benefit of other drugs that could have been
developed (opportunity cost)
• Potential cure for something else, probability of success and
value of lives improved
– If shareholders see companies spending money on
charity instead of making profits they will no longer
invest in companies, greatly hurting the economic
• Is it fair to spend 95% of Merck’s R&D budget on
products that will hopefully lead to profit and 5%
of Merck’s R&D budget on people who won’t
make profit for the company
• Is it fair to a spend a small amount of
shareholders’ money (most of whom are at least
moderately wealthy primarily because of where
they live), on poor people (primarily because of
where they live, but who haven’t contributed
anything to the company) who have a horrific
disease? Think of Rawl’s original position and
the Veil of Ignorance.
Rights (see also duties)
• Shareholders? (legal right to have management try to
make money for them and/or moral right to have the
company live according to its stated values?)
• Employees? (moral right to have the company live
according to its stated values?)
• Scientists? (moral right to have the company live
according to its stated values?)
• People with Disease? (moral right to healthcare?)
• Managers? (what level of discretionary rights do the top
managers have?)
• What duties does management have to its
shareholders? (legal and moral duties)
– Maximize shareholder wealth
– Do what the shareholders would want them to do
– Live up to the mission and values it has provided to
• What duty does a company have when it has
unique scientific knowledge that will help
people? (moral duty)
– Duty to share that information?
– Duty to develop the drug based on that information?
• If you are a shareholder, what would you
want the company to do? ??
• If you are affected by the disease, what
would you want the company to do?
Develop the Drug
Universalizability (Policy)
• If a company has a unique ability to help
people, they should do so to the extent
that the cost is not more than 5% of net
income, or their shareholders would agree
to do so (potential policy)
• How would society react if they learn 10 years
after the decision that our very large profitable
company had a potential cure for a vicious
disease but chose not to develop it because it
would take 5% of our R&D budget and wouldn’t
make a profit for the company
• How would they react if they understood that the
development cost would have been equal to 2%
of what we spend on sales and advertising
• Do I feel like a hero if I go to the shareholders and tell
them that we have chosen to spend 1% of our revenue
(their money) to try and cure a terrible disease (do they
feel like heroes?)
• Do I feel like the person I aspire to be if I go home and
tell my family that I have chosen not to follow our
company’s values and spend a small amount of our
shareholders’ money to try and cure a disease afflicting
many poor people
• Can I sleep well tonight thinking about the people who
want to kill themselves because they are itching so badly
and I could have helped them?
• Can I sleep well tonight knowing that I have spent a
small amount of our shareholders’ money on a project
that is not likely to lead to a financial return for them?

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