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Business & Professional Ethics 7th Edition by Leonard Brooks,Paul Dunn
Edition 7ISBN: 978-1285182223Business & Professional Ethics 7th Edition by Leonard Brooks,Paul Dunn
Edition 7ISBN: 978-1285182223 Exercise 2
On September 30, 2004, Merck voluntarily withdrew its rheumatoid arthritis drug (Vioxx) from the market, due to severe adverse effects observed in many of its users (Exhibit 1). As a result, Merck's share price fell $11.48 (27%) in one day, translating to a market-cap loss of $25.6 billion. On August 19, 2005, the day a Texas jury found Merck liable for the death of a Vioxx user, the company's market cap fell another $5 billion. During this trial it became apparent that Merck had been profiting from Vioxx during the time it knew Vioxx had serious adverse effects.
Merck had obtained approval from the US Food and Drug Administration (FDA) for its drug Vioxx on May 20, 1999. By 2003 Vioxx was available in more than 80 countries and sales had soared to over $2.5 billion per year. Concurrently, increasing evidence (including data from Merck's own studies) suggested that those taking Vioxx were at an increased risk of cardiac arrest and stroke. Yet the drug remained on the market until September 2004.
The impact of the withdrawal on Merck's shareholders, management, patients,FDAand other stakeholders was dramatic. Public confidence and trust in Merck and other pharmaceutical companies were eroded. Currently, there are more than 9600 lawsuits from more than 18,200 plaintiffs pending against Merck. The company recently announced that it is setting $970 million aside to deal with these lawsuits, although some estimates are that Vioxx could cost Merck more than $20-$25 billion.
The FDA has been following the Vioxx case with interest, and has created a website page to provide information and updates at http://www.fda.gov/cder/drug/infopage/COX2 /default.htm. Significant information is contained in the FDA's Public Health Advisory on Vioxx as its manufacturer voluntarily withdraws the product (FDA News (9/30/2004) that is reproduced below as Exhibit 1) and in the FDA Vioxx Questions and Answers (9/30/2004) webpage at http:// www.fda.gov/cder/drug/infopage/vioxx/vioxx QA.htm. Two journal references are also provided.
In order to protect the public more fully, what should the FDA do given the Vioxx lessons?
Merck had obtained approval from the US Food and Drug Administration (FDA) for its drug Vioxx on May 20, 1999. By 2003 Vioxx was available in more than 80 countries and sales had soared to over $2.5 billion per year. Concurrently, increasing evidence (including data from Merck's own studies) suggested that those taking Vioxx were at an increased risk of cardiac arrest and stroke. Yet the drug remained on the market until September 2004.
The impact of the withdrawal on Merck's shareholders, management, patients,FDAand other stakeholders was dramatic. Public confidence and trust in Merck and other pharmaceutical companies were eroded. Currently, there are more than 9600 lawsuits from more than 18,200 plaintiffs pending against Merck. The company recently announced that it is setting $970 million aside to deal with these lawsuits, although some estimates are that Vioxx could cost Merck more than $20-$25 billion.
The FDA has been following the Vioxx case with interest, and has created a website page to provide information and updates at http://www.fda.gov/cder/drug/infopage/COX2 /default.htm. Significant information is contained in the FDA's Public Health Advisory on Vioxx as its manufacturer voluntarily withdraws the product (FDA News (9/30/2004) that is reproduced below as Exhibit 1) and in the FDA Vioxx Questions and Answers (9/30/2004) webpage at http:// www.fda.gov/cder/drug/infopage/vioxx/vioxx QA.htm. Two journal references are also provided.
In order to protect the public more fully, what should the FDA do given the Vioxx lessons?
Explanation
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In order to better protect the public, t...
Business & Professional Ethics 7th Edition by Leonard Brooks,Paul Dunn
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