Although the Sept. 30 withdrawal of arthritis drug Vioxx caused
Merck shares to shed 42 percent of their value, Chief Executive
Officer Raymond Gilmartin maintains the voluntary move bolstered
the company’s moral capital.
Internal research now shown that patients who used Vioxx were at
a greater risk of experiencing heart problems. The drug accounts
for $2.5 billion of Merck’s annual revenues.
Gilmartin, 63, discussed the decision to withdraw the drug
yesterday in a lecture at the Ross School of Business.
Amid estimated legal liabilities at upwards of $12 billion and a
Moody’s Investor Services credit downgrade on Merck’s
long-term debt, Gilmartin is in a tough spot.
But Gilmartin said the decision to recall Vioxx was a
“I told my people that the only benchmark they were to use
in evaluating this decision was patient safety,” he said. He
said the order freed his scientific teams to look at the data in an
Gilmartin said he was shocked when he was informed of the
drug’s side effects. “This was totally out of the
He said that although some Merck insiders urged him to inform
the FDA of the findings and keep Vioxx on the market, he acted
decisively, withdrawing the drug within a week.
Gilmartin said Merck is proud of its history of high ethical
standards. “George W. Merck said medicines are for people,
not profit — and the more we focus on that, the more the
profit will roll in.”
After taking the reins in 1994, Gilmartin said within a year he
had established the company’s first ethics office. He said
Merck had established numerous ethics systems during his tenure
— including a confidential phone number employees can call
for advice concerning their ethical dilemmas.
Merck’s commitment to ethical behavior goes beyond
complying with U.S. and international laws, he said. “As
Plato put it, good people do not need laws to tell them how to
behave responsibly; bad people always find a way around the
Gilmartin said Merck’s code of ethics is displayed in 25
different languages at company headquarters in Trenton, New Jersey.
“Over time, ethical behavior turns into a competitive
advantage,” he said.
At the lecture’s end, Gilmartin fielded questions from the
audience. “Don’t hold back — it’s not often
that you have a pharmaceutical CEO in your crosshairs, so to
speak,” he said.
One of the audience members alleged the Vioxx-related death toll
numbers in excess of 100,000 and likened that number to
“warfare, not medicine.”
Although his face reddened visibly, Gilmartin said the
man’s numbers were wrong, calling them “absurd.”
He reiterated that Vioxx was withdrawn within a week after the new
studies became available.
Business School student Rob Schneider said, “I’m
impressed with how he responded to that question.” Schneider
said Gilmartin was “an excellent speaker.”
The capacity audience, mostly Business School students, treated
Gilmartin to a loud and spirited ovation after he concluded