Reference no: EM132169692

Merck and the Cure for River Blindness

Introduction

Merck is a large pharmaceutical company located in Whitehouse Station, New Jersey. The company is primarily known for the productivity of its research and development effort. Literally thousands of prescription drugs have been conceived by their scientist, formulated in their labs, improved through first animal and human testing, guided through governmental approval, and eventually manufactured and marketed worldwide. The result has been excellent financial performance; profits for the company in 1994, the year of this case, was slightly over $2 billion for the year. The company, however, proposed to spend 100 million ofthat to produce and distribute while was called an “orphan drug” for the prevention and cure of a tropical disease known as River Blindness.

The Case Facts

“Orphan drugs” are pharmaceutical prescriptions with little or no commercial potential.Unfortunately they occur very frequently in medical research – usually they treat very rare diseases for which the market size is too small or the insurance coverage too limited to enable the firm to recover its costs of development/testing/approval/manufacturing/marketing. Most pharmaceutical companies simply discard orphan drugs at the outset, usually whilst they are still in the concept stage. In this regard, Merck has been an unusual operator; it would, upon occasion, complete the full process from conception through to distribution. This matter of operation has led to a great deal of controversy between the company and its powerfulstakeholder groups; many shareholders have been angry in the past at the money “wasted”by Merck in their production of orphan drugs, and have successfully used their power to terminate CEOs based on their decisions to fund their production and distribution. Similarly, powerful consumer lobby groups have been successful in criticising the company (when it has chosen not to develop potentially beneficial orphan drugs) and raised enough public pressureto cause Merck’s business customers to boycott their products for extended periods. These boycotts have reflected poorly on the incumbent CEOs in the past, at least two have resigned as a direct result of this pressure.

One occasion where Merck was considering whether or not to develop an orphan drug was for the River Blindness disease, which affected large numbers of people in desperately poor regions of the world; neither the patients nor governments in those regions could afford to pay for the drug – it would have to be given away, at no charge. River Blindness is a disease that afflicts some 18 million people in the mountainous areas of Central Africa and Central Asia Is caused by the bite of a tiny black fly the breeds only in fast-moving rivers and streams; that is the reason for the restriction of the illness to hilly or mountainous terrain with substantial rainfall. There is also the reason for the lack of effectiveness of the most common form of disease control in the tropics: aerial spraying. It is almost impossible to maintain adequate pesticide strength in the rapidly flowing waters of Mount Brooks and streams to kill the black fly larvae. Mosquitoes, which transmit malaria to humans in a similar fashion by drawing blood, are much easier to control through an aerial spraying program, because a breed in stagnant ponds and swamps where pesticide strength can be kept much higher for a much longer period of time. When the black fly bites a human being to draw blood, it frequently enables the larvae of a small parasitic worm carried by the flight into the human bloodstream. The parasitic worm it by itself is not overtly harmful, but when those worms reach maturity they release millions of microscopic offspring, known as microfilariae, which swarm throughout the body tissue. They tend to cluster in the skin, with a cause terrible itching and eventually lead to lesions, infections and disfigurement. The thing is so severe that many victims resort to suicide; after several years of torment the microfilariae invade the eyes and the patient becomes blind.

River Blindness is a loathsome disease – until the 1990s, there was no cure and not even much hope of finding one. The nations in Central Africa and Central Asia afflicted by the disease are all third world countries, without the financial resources to support any type of pharmaceutical research. The people is infected with the River Blindness within those countries are all desperately poor – partially as a result of the debilitating disease – and lack the money to pay for medical treatment. Further, it is scientifically difficult to devise a drug that will kill the parasitic worms in the bloodstream and the microfilariae offspring and the body tissues without killing or severely harming the patient.

In the mid-1980s, researchers in the veterinarian drug unit of Merck were working with a range of cultures in an attempt to develop a treatment for the parasitic worms that affect cattle, hogs, horses, and other farm animals in the United States. One of the new cultures, code-named Mectizan, had been written off as a failure; it seemed have no potential as a cure for any major animal diseases, but was remarkably effective when used against the microfilariae of an exotic and relatively harmless gastro-intestinal parasite found in horses. One of the researchers, Dr William Campbell, noted a significant genetic similarity between the microfilariae found in horses that seem to cause little damage, and the microfilariae that in humans that led to River Blindness. Dr Campbell decided to take advantage of a scientific freedom policy at Merck that enabled him to spend up to half $500,000 of company funds and invest up to a year of his own time to pursue a prescription drug concept before any formal evaluation of the commercial potential of the drug would be required. He quickly, within a few months, was able to show that the new culture, Mectizan, worked well on the River Blindness microfilariae growing in a tissue culture derived from human beings. There was, however, no guarantee that it would work equally well on the parasites crying an actual human being without adversely affecting the health of the human being.

It was necessary to find and animal species, preferably a mouse or rat, for health impact rather than target impact testing on humans. Many people object, on humanitarian grounds, to the use of intelligent and affectionate domestic animals such as dogs and cats for medical research. Dr Campbell was able to create, by genetic modification, a mouse that could be infected with the microfilariae responsible for River Blindness. Mectizan worked remarkably well upon these microfilariae without apparently harming the mice. Perhaps a cure for River Blindness which, once again, affected 18 million people worldwide, was possible. But, the review for commercial potential, required at the end of the experimental stage for each new drug, quickly confirm what everyone, including Dr Campbell, already knew. These people and the nations they inhabited were too poor to pay for the cure – and in some cases, the lack of infrastructure meant it would be impossible for some victims to get access to the drug at all. Despite the lack of commercial potential, and the range of other difficulties in the distribution to those that needed it, the Board of Directors of Merck voted to go ahead with human testing.

There are both moral and financial problems with the human testing of Mectizan. Only volunteers were to be used, of course, but in this instance it was not clear that non-literate tribes-people from Central Africa and Central Asia would fully be able to understand the risks of their agreeing to participate in the tests. They would hope to be cured, and that was indeed a possibility; they expect not to be harmed, though that was unfortunately also a possibility. And to ensure the scientific validity of the test process, approximately half of the volunteers would need to be given a non-effective substitute for the drug-a placebo-to ensure that was truly the drug, and not some other factor in the environment, the generated the cures. It would further be necessary to supervise the tests very closely, on site. It was clearly not possible, given there was no knowledge of possible adverse reactions, the research is to simply go to one of the affected areas, pass out an equal number of Mectizan pills andineffective placebos and say, “So long, we’ll see you again in three months from now, if you’re still alive.” Physicians and nurses had to be there to judge the reactions, to measure theresults, to treat the reactions, and to reassure the patients. Those physicians and nurses would be at considerable risk of contracting the disease themselves. Air-tight and air- conditioned dormitories and treatment centres would need to be built, at very considerable expense to protect the medical personnel against the black fly that carry the disease. Transportation to remote areas where the disease was prevalent would add further risks and expenses to the operation; the financial cost of these preliminary human tests alone were estimated to be approximately $50 million.

Merck went ahead with investment for the preliminary human tests; the company recruited medical and scientific personnel from within, and from various religious and relief organisations. The tests were outstandingly successful; next the drug had to be approved by the governmental licensing agency, which required a totally new series of tests under the supervision of an agency. Merck selected the French Directorate of Pharmacy and Drugs to supervise the new tests, rather than the United States Food and Drug Administration, because findings of the French government were more highly valued by African and Asian officials and physicians than equivalent findings of the U.S. government. France was a colonial power in the mountainous regions of central Africa and Central Asia primarily affected by River Blindness disease, and the French had left a legacy of at least partial respect for the medical personnel. The French Directorate, however, provided no funding - the financial cost of thenew regulatory tests and another $50 million to Merck’s investments.

Again, the tests were outstandingly successful, and government approval was quickly granted by the French, and gradually recognised by the Americans. Now the international marketing Department of Merck was drawn into the planning phase, and a further confirm what everyone had long known: there was no conventional market for the drug. The victims were too poor, and the countries in which they live were far too undeveloped; also unfortunate for the sufferers of River Blindness, there was little interest shown by the international community.

The CEO of Merck approached the U.S. government; the State Department said that it approved wholeheartedly of the effort, but claimed that distribution of the drug was the responsibility of the U.S. Agency for International Development, a division of the Treasury Department that made grants and loans for Third World development projects. This agency also expressed admiration for the proposal, but explained that its budget was committed for the next 10 years to capital improvement projects for roads, railways, and dams. The CEO of Merck then approached the World Health Organisation, a division of the United Nations headquartered in Geneva, Switzerland. That agency, in essence, replied that it would accept donations of the drug but would pay nothing to offset its development and manufacturing expenses, and it would arrange for distribution only to the extent of shipping the materials, once received free of charge, to the governments of the nations involved. This was totally unacceptable to Merck; company executives feared that the government officials in the developing nations of central Africa and Central Asia would, despite the clear poverty of the victims, sell the drugs for whatever property or labour could be obtained in return. And, company executives believed that the distribution had to be supervised by trained medical personnel. It was thought that victims of the disease, tormented by the itching and frightenedof the blindness, would take an overdose on the basis that, “If one is good, two or even 10 would be much better.”

Members of the Board of Directors at Merck were faced with the possibility that the orphan drug they had developed and tested (at a cost of approximately $100 million) would not be made available to the estimated 18 million people who needed it very badly. They voted in additional $100 million per year to ensure its distribution and use. At this point, there were murmurs of dissent from many of the financial analysts associated with the brokerage firms, investment banks, and mutual funds on Wall Street. None of them said publicly that Merck should halt the distribution of the drug, as the disease was too awful, the victims too poor, and the need too great for open opposition to be voiced. According to many analysts, the ongoing $100 million expense to be paid every year for the foreseeable future (Mectizan did not provide immunity to the disease, but rather just a cure that had to be retaken every time a person was infected) was too large for the company and its shareholders to reasonably bear. Some analyst claimed that Merck’s first duty was to its shareholders, and that the companyshould delay distribution until governmental and international funding became available. There were numerous letters into financial journal saying, in essence, that business firms were not charitable organisations and should not act as if they were one. Nonetheless, possessing a cure for the River Blindness disease and not using it would attract considerable condemnation from community groups, who have, in the past, proven to have a powerful influence in the market.

Adapted from: Trevino, LK & Nelson, KA 1995. Managing Business Ethics: Straight talk about how to do it right. New York, Wiley & Sons.

1. Describe the facts you feel underpinned the ‘Merck and the Cure for River Blindness’ case.

2. Who was the decision-maker in the case, and what conflicting demands did they have to accommodate?

3. What was the initial ethical dilemma faced by the decision-maker in this case?

4. Using the Utilitarian, Kantian, Rights, and Distributive Justice approaches to ethical decision-making, provide an analysis of the initial ethical dilemma you identified in the case.

5. Present and justify the final recommendation you would have made to the decision-maker in this case had they asked you for advice on how to resolve their initial ethical dilemma.