The Facts of the Case
The Merck & Co Inc is one of the largest pharmaceutical companies in the world. It has its headquarters in Whitehouse station in New Jersey. It has a huge employee base that goes up to 70,000 workers and it sells its products all over the world to approximately 150 countries. In the late seventies, due to its scientific research, Merck was able to find out a drug that would potentially cure river blindness also known as known Onchocerciasis. The disease infects an individual due to a bite of a vector known as the black fly found in the rivers in Africa and Latin America. However, to prove that the drug was not only effective but safe, it required to under clinical trials. The research was promising especially to people living in Africa, Middle East, and Latin America. According to a research conducted by the Center for Disease Control (CDC), the river blindness disease had rendered more than 300,000 people blind with a further 18 million people infected. At this time, only two drugs were known to kill the parasite, both of which had severe side effects. After finding the cure for the drug, Merck was faced with a dilemma known as the “orphan” drug dilemma. In this scenario, despite the fact that there are enough reasons to justify the research, the only problem is that the people potentially requiring the cure cannot afford the drugs hence debunking any prospect of profits by the company. Schwartz and Saiia (2012) intimated that the company, therefore, faced a moral dilemma of whether they should sacrifice their profits to cure a disease affecting millions or they should focus on the core objective which is to make profits.
The Company’s Ethical Quandary
One of the most important factors to take not is that drug research is a complex process that takes a lot of resources and time to bring to fruition. It takes approximately $200 million and 12 years period for an average drug to be researched and brought to the market. Therefore, because funds are finite in big pharmaceutical companies such as Merck, there is always a need to continue making money to ensure sustainability that will ensure that it continues to play its primary role of alleviating human suffering. However, when it comes to a delicate infection such as river blindness, the case is different. Therefore, as earlier intimated, the ethical dilemma facing the company was that there were a considerable number of people with the disease who justified the research. However, the downside of the matter was that most of the affected people emanated from impoverished economic regions that could not pay for the medication (Schwartz, & Saiia, 2012). In 1978, Merck embarked on a process of testing for the drug using animals and found out that it could effectively be used in killing parasites and worms. The hallmark of Merck’s dilemma emerged when the scientists backed the research urging the company to continue pursuing the research and evaluate if it could be used safely in humans. However, the company held that it was never going to be a profitable endeavor.
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The Company’s Stakeholders
Stakeholders are an essential part of any serious business. They influence the decisions and risks that the company plans on taking. In the case of the Merck pharmaceutical company, there were many stakeholders among them the patients that suffered from river blindness disease. They became stakeholders because they needed the company to undertake the research that would ultimately lead to the cure drug. Other critical stakeholders included the owners and employees working in Merck. The employees played a vital role in conducting research that would lead to the drug. The shareholders of Merck also formed one of the stakeholders because they funded the program with their activities in buying and selling of the stocks. The stockholders are a pillar in the decision making processes of the company because they want nothing less than profits from their stock. Other possible stakeholders in Merck could be the government and nongovernmental health organizations including safety agencies that could influence the company through regulations and limitations. Merck customers are also possible stakeholders who could have been affected had the company changed the prices of products to cover for the losses it incurred as a result of the river blindness drug. Other stakeholders include the competitors who could have been influenced by either the success or failure of the company. Others include the media whose actions could have made or broken Merck's reputation and also the family members of the patients who act as secondary stakeholders.
Stakeholders and Their Stakes
The Merck river blindness case involved several stakeholders that included shareholders, competitors, customers, and interest groups among others. Each of these groups had various stakes with regards to how the decision of Merck could have impacted them. The stakes vary and could have existed in multiple forms including property interests, moral, and legal obligations. Each group had its different interest, and not single stakeholder could be regarded as insignificant. Johnson (2017) noted that the shareholder stakes lies with how the decision taken by the company would affect their return on investment and profits. One of the primary interests is to see the company make gains and attain financial stability. There was always a possibility that the decision taken by Merck would reduce the profit margins and subsequently discourage the shareholders from investing in the company's stocks. On the other hand, if the drug turned out to be successful, it would have assisted customers in the society hence improving its public image. The impact would be that Merck would, in turn, attract more investors who would find it favorable in investing in a company with positive corporate social responsibility. Important to note is that companies are part and parcel of the society and are therefore expected to give back to the community which also plays a role in sustaining the business.
On their part, most of the employees would claim their stake in the prospect of job security and company's image. Johnson (2017) asserted that most of their concerns are linked to the success of the company. Therefore, if the decision leads to the development of the drug successfully, then it's evident that the image of the company would grow. Furthermore, the success of the company means the success of the employees. Vital to appreciate is that just like stakeholders and investors, employees have vested interest in their company because they have invested energy and skills in the prosperity of the company, an essential aspect of their professional growth. Employees identify themselves with the company and therefore any decision ultimately made by the company will jeopardize them in one way or the other. The stakes of the customers are tied to whether the drug developed by Merck would be effective. If the company invests in more research that would successfully come up with a solution to the river blindness disease, the needs of the customer will have been met. The perception that existed with regards to Merck is that it put the interest of the community first and therefore taking an approach that contradicts this would conflict the reason why the company existed in the first place. Donors and grantors on the other hand risk feeling that their money was misused in case Merck is unable to produce the best cure for the disease. Lastly, competitors will also have a stake because they stand to benefit or lose depending on the success or failure of Merck.
Opportunities from the Stakeholders
Arnold (2014) noted that the river blindness patients provide Merck & Co a chance to make a milestone regarding patient treatment. Developing the drug would mean that the company would save millions of people who are potentially losing their eyesight. Those infected with the disease will not only be cured but will live a happier life full of health. Donors and grantors both from the governmental and non-governmental sides present Merck with an opportunity to attain funding that would facilitate research and ensure that there is development in curing the sick. The media on their side provide Merck with a chance to gain widespread media attention for helping millions of people across the globe, a factor that would build on its reputation and competitive advantage. Furthermore, being that it is a leader in producing the pharmaceutical products, it would further develop a reputable image through the lenses of the society. The company’s president, shareholders, and employees would take the chance to showcase that they are indeed after putting the interest of the people first rather than seeking profit.
Challenges
First, it remains apparent that the shareholders of the company were in search of profit that comes with the business. However, Arnold (2014) illustrated that such a scenario also puts pressure to Merck not to remain faithful to its mission and diverting its attention solely to caring about losing profits as opposed to helping humanity. Merck is on the verge of losing a lot of money if the drugs do not live up to their investment. However, the shareholders are strictly after profits, none of them would look forward to incurring any losses. Therefore, Merck has to face the challenge of considering cost rather than benefit when deciding whether or not to produce the contentious drug. What remains apparent is that those suffering from river blindness are primarily from low economic regions and thus, the chances of returning its money and making profits looked slim. Therefore, it remained hard for the company to engage in research which it had the least faith in, business-wise.
The Corporate Social Responsibility
Caramela (2016) asserted that corporate social responsibility (CSR) means all the business practices that act to benefit the society. Some of the tactics that CSR can employ include the legal, economic, ethical, and philanthropic responsibilities that are not only good for the company but the society as a whole. Caramela (2016) further illustrated that economic responsibility is regarded the basic foundation of CSR because, without financial viability, the company automatically fails to meet its responsibilities. Merck has a duty of operating profitably to ensure that it meets shareholder obligations and at the same time, it needs to take care of its customers and profit the community at large. It remains vital to note that Merck has an economic responsibility to stay profitable for its shareholders, owners, and investors. They also need the profit to continue paying its workers and to carry research effectively. Also, to stay economically responsible, the company must produce commodities that are wanted by the customers by keeping the prices affordable. Although going ahead to deliver the drug that would cure river blindness gives Merck mileage and positive reputation, it is vital to remember that it does not have a legal responsibility to do so. No law whatsoever would compel Merck to produce a particular type of drug.
Manufacturers of drugs have a duty to test drugs and medicine appropriately before releasing them to the market as provided by the United States Food and Drug Administration (FDA) criteria and regulations. Therefore, the only legal obligation that the company must show abidance to is that given by FDA. Ethical responsibilities on their part aim at making decisions that aim at doing the right thing that would ultimately avoid harm. One of the most significant ethical responsibilities that the company has is to put the interest of its customers above its needs of making profits. If it only focuses on the profit at the expense of the societal welfare, then it risks damaging its reputation. As such, following this path would likely lead to its failure as a company. Their CSR can also be viewed through the lenses of philanthropy. In achieving its philanthropic duties, they should first make decisions in the best interest of the society and volunteer without the prospect of gaining (Trevino, & Nelson, 2016).
Ethical Decision
Companies face many challenges that require a moral reason to get the most appropriate solutions. Merck & Co has two options at their disposal in solving their dilemma. First, it can choose to develop the drug and cure river blindness or instead chose not to produce it and evade the risk of incurring losses. However, in complying with ethical and moral standards, the company must pursue the research and produce the drugs that would stop suffering in the society. The benefits that they will achieve in curing the people outweigh the negative impacts of not doing so. However, Merck must also ensure that the prices of the drug are maintained at lower costs in providing that the sick access it. It is evident that the company will face massive losses because the sales would not match the vast sums of money used in research and production. In this regard, the company must ask for support from governmental and non-governmental grants. The media attention will build their reputation and subsequently their competitive advantage as leaders in championing for the interest of the people.
References
Arnold, D. G. (2014). Ethical theory and business . T. L. Beauchamp & N. E. Bowie (Eds.). Pearson.
Johnson, C. E. (2017). Meeting the ethical challenges of leadership: Casting light or shadow . Sage Publications.
Schwartz, M. S., & Saiia, D. (2012). Should firms go “beyond profits”? Milton Friedman versus broad CSR. Business and Society Review , 117 (1), 1-31.
Trevino, L. K., & Nelson, K. A. (2016). Managing business ethics: Straight talk about how to do it right . John Wiley & Sons.
Caramela, S. (2016, June 27). What is Corporate Social Responsibility? Business News Daily. Retrieved from http://www.businessnewsdaily.com/4679-corporate social-responsibility.html
