1. United States Securities and Exchange Commission. Form 10-Q: quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 Note 7 to consolidated financial statements (http://phx.corporate-ir.net/phoenix.zhtml?c=73184&p=irol-SECText&TEXT=aHR0cDovL2NjYm4uMTBrd2l6YXJkLmNvbS94bWwvZmlsaW5nLnhtbD9yZXBvPXRlbmsmaXBhZ2U9NDMxNDgxMiZkb2M9MSZudW09MTI=
2. Merck. Vioxx (rofecoxib): frequently asked questions. www.vioxx.com/rofecoxib/vioxx/consumer/faq.jsp
3. Morrison BW. Memo to Alan Nies, Barry Gertz, Beth Seidenberg. Letter to Ken Lasseter; manuscript draft for protocol 023. 18 Feb, 1998. Merck. Bates Nos MRK-NJ0017794 to MRK-NJ0017822. www.vioxxdocuments.com/Documents/Krumholz_Vioxx/Morrison1998.pdf
4. Food and Drug Administration, Division of Anti-Inflammatory, Analgesic, and Ophthalmic Drug Products. HFD-550, medical officer review. Vioxx (rofecoxib), NDA 21-042/052. Washington, DC: FDA, 1999.
5. Food and Drug Administration. FDA advisory committee briefing document NDA 21-042, s007: VIOXX gastrointestinal safety. Washington, DC: 2001.
6. Merck. Vioxx. In response to your questions: cardiovascular system, clinical profile in osteoarthritis studies. Whitehouse Station NJ: Merck, 2000. www.vioxxdocuments.com/Documents/Krumholz_Vioxx/Merck2000CVcard.pdf
7. Waxman HA. Merck documents show aggressive marketing of Vioxx after studies indicated riskwww.democrats.reform.house.gov/story.asp?ID=848&Issue=Prescription+Drugs
8. Waxman HA. Memo re: the marketing of Vioxx to physicians. Washington, DC: US House of Representatives, 2005.
9. Weinblatt M. Memo to Drs. Bjorkman, Neaton, Shapiro, Silman, and Sturrock re: Interim non-endpoint safety analysis of VIGOR—unblinded minutes. November 18, 1999. Found in sNDA S-007: P088C: Appendix 3.9.2 at p.2939-2946 (Bates No. MRK-00420015464-MRK-00420015471. www.vioxxdocuments.com/Documents/Krumholz_Vioxx/VigorDSMB.pdf
10. Merck. Medical affairs procedures and policies. Procedure 23: collaborative research efforts and megatrials. Appendix 2: Merck guidelines for data and safety monitoring boards. 29 Feb, 1999. Bates Nos MRK-AFK0047772 to AFK0047791. www.vioxxdocuments.com/Documents/Krumholz_Vioxx/Merck1999guidelines.pdf
11. Reicin AS. Letter re: financial disclosure for Merck and Co, Inc sponsored protocol entitled: “A double-blind, randomized, stratified, parallel-group study to assess the incidence of PUBs during chronic treatment with MK-0966 or naproxen in patients with rheumatoid arthritis (VIGOR).” 4 Feb, 2000. Merck. Bates Nos MRK-MEW00012 to MRK-MEW00014. www.vioxxdocuments.com/Documents/Krumholz_Vioxx/ReicinWeinblatt2000.pdf
12. Merck and Co. Multidisciplinary strategic advisory board for cox-2 inhibitors, consulting agreement. February 29, 2000. Bates Nos MRK-STI0037747 to STI0037751. www.vioxxdocuments.com/Documents/Krumholz_Vioxx/WeinblattContract.pdf
13. Scolnick EM. Email communication to Deborah Shapiro, Alise Reicin, and Alan Nies re: Vigor. 9 Mar, 2000. Bates No MRK-ABH0016219. www.vioxxdocuments.com/Documents/Krumholz_Vioxx/Scolnick2000.pdf
14. Drazen JM. Hidden data counfounds medical journal editors. Wall Street Journal 2006. May 19:A11.
15. Cannon CP, Curtis SP, FitzGerald GA, Krum H, Kaur A, Bolognese JA, et al. Cardiovascular outcomes with etoricoxib and diclofenac in patients with osteoarthritis and rheumatoid arthritis in the multinational etoricoxib and diclofenac arthritis long-term (MEDAL) programme: a randomised comparison. Lancet 2006;368:1771-81. [PubMed]
16. Fries JF. Letter to Raymond Gilmartin re: physician intimidation. 9 Jan, 2001. Merck. Bates No MRK-ABH0002204 to MRK-ABH0002207. www.vioxxdocuments.com/Documents/Krumholz_Vioxx/Fries2001.pdf
17. Morrison BW. Email communication to Rhonda Sperling, Alise Reicin, Deborah Shapiro, et al. re: fw: for review [peer]: 2001-ms-2470 (full paper) - due date Monday, 27 August 2001. 17 Aug, 2001. Bates Nos MRK-ACF0005697 to MRK-ACF0005699. www.vioxxdocuments.com/Documents/Krumholz_Vioxx/Morrison2001.pdf
18. Meier B, Kolata G, Pollack A. Medicine fueled by marketing intensified trouble for pain pills. New York Times 2004. Dec 19:A1.
19. Meier B, Saul S. Marketing of Vioxx: how Merck played game of catch-up. New York Times 2005. Feb 11:A1.
20. Berenson A, Harris G, Meier B, Pollack A. Dangerous data—retracing a medical trail. New York Times 2004. Nov 14:A1.
21. IMS Health. National prescription audit plus time period 1999 to September 2004, extracted 2004. Plymouth Meeting, PA: IMS Health, 2004.
22. Targum SL. Review of cardiovascular safety database, rofecoxib. NDA 21-042, S-007. Washington, DC: FDA, 2001. www.fda.gov/ohrms/dockets/ac/01/briefing/3677b2_06_cardio.pdf
Drug discovery and approval is a lengthy and costly process. Once discovered in the laboratory, and if the drug is considered worthy of additional testing, it is subjected to animal trials. Then comes human clinical trials and finally the drug is submitted to the FDA for approval.
Human trials involve at least four phases. Pre Clinical trials take place in the laboratory using test tubes or involving animals. Three phases follow Pre-clinical trials. In Phase I, the drug is tested for safety and tolerability in humans. Phase II testing involves a larger group numbering between 30-300 subjects. Here the drug is tested for efficacy, how well the drug works. Often drug failure occurs after this phase when it does not perform as expected or it proves to have toxic side effects. Phase III, the last step, involves a much larger human trial usually between 300-3,000 patients and usually carried out in several sites or centers. Phase III is the most difficult, most costly, and lengthy in the trial process.
From discovery to approval the entire process can take ten years with an average cost of $1 billion.
Approval of Merck ‘s Vioxx
In May 1999 the FDA approved Merck’s Vioxx, a class of drugs referred to as Cox-2 inhibitors, found to be more effective in relieving arthritis pain than other nonprescription drugs. But, in addition to pain relief it was also found to reduce gastrointestinal bleeding and ulcers, a common side-effect of other medications targeting the same condition. The FDA based their approval on the data collected from approximately 5,000 patients used to test the drug during extensive clinical trials.
In 2000 the prestigious New England Journal of Medicine published a scientific paper in which Merck was accused of having misrepresented the clinical trial data. The article contended that the risks from taking Vioxx were greater than had been disclosed. The study reported in the Journal, led by a team from the prestigious Cleveland Clinic, concluded that those taking Vioxx had a five times greater risk of suffering from a heart attack. Adding to these concerns over the safety of its drug, the Journal of the American Medical Association (AMA), in 2001, followed with a paper finding that Vioxx was over five times more likely to cause a heart attack than a commonly used over-the-counter anti-inflammatory drug, Naproxen, and sold under the name Aleve.
Responding to these accusations, Merck reluctantly revised the label in 2002 to reflect the added risks for those taking the drug.
Merck, however defended the drug, insisting that the studies described in the medical journals were based on “flawed” studies. (Topol, NYT, October 2, 2004). Meanwhile, they continued to promote the Vioxx. According to an editorial in the NYT on August 23, 2005, sales continued even though internal e-mails and documents suggested the higher levels of cardiovascular risk.
Then in September 2004, the evidence became too strong to ignore. Merck had just undertaken a separate study focusing on the effectiveness of Vioxx in preventing colon polyps. What they discovered was that those taking the drug were much more likely to suffer a heart attack.
Ignoring the evidence became more and more difficult.
By this time the sales of Vioxx had grown to blockbuster proportions with revenues of $2.5 billion in 2003. It was used by more than 20 million people (Editorial, NYT, August 23, 2005). Indeed, Vioxx represented a significant component of Merck’s revenue stream.
Merck Suffers the Consequences
Shortly after the study for Colon Polyps was completed and the data analyzed, and after three years of denying that the drug could induce heart attacks, Merck pulled Vioxx from the shelves (Topol, NYT October 2, 2004).
Unfortunately, the damage had already been done, both in human suffering and to Merck’s reputation. With significant media attention focusing on the alleged misrepresentation of the drug trials, legal action by those who felt they had suffered its consequences was swift. Over 27,000 claims, representing about 47,000 plaintiff groups, were filed against the company. Nearly everyone who had suffered a heart attack or stroke while taking the drug felt entitled to legal action. The total liability from these lawsuits was estimated to be between $10 and $25 billion. Some even suggested that this could bring Merck to the brink of bankruptcy.
Soon, court trails replaced medical trials. In August 2005 a jury in Arlington Texas found Merck guilty and awarded $253.5 million on behalf of Carol Ernst whose husband, Robert, died after taking Vioxx for less than one year. In March 2007 a New Jersey state jury, ruled unanimously that Merck committed consumer fraud by intentionally suppressing, concealing, or omitting information regarding the risks of Vioxx. Further, the jury concluded that Vioxx was linked to strokes and heart attacks during clinical trials and that this data was not made available in the review process.
Throughout the litigation process Merck’s strategy was to avoid settling cases early but take each case to trial. In each of these trials Merck defended itself aggressively and exposed the weakness in the arguments presented by the prosecution. Some could not prove that they had taken the drug and others had several other risk factors such as overweight and smoking that made it difficult to attribute the cause of cardiovascular disease or fatal heart attacks to Vioxx.
The outcome of these trials was mixed, and not all were decided against Merck. In 2006 and 2007 Merck won cases in California, New Jersey, Illinois and Louisiana.
Then on November 9, 2007, three years after withdrawing Vioxx from the market, Merck announced that they had reached an agreement with lawyers who represented most of the 27,000 lawsuits that had been filed against the company. They offered to pay $4.85 billion to people who contend that they or their family members had suffered injury or death by taking the drug. The exact payment to each of those represented in the lawsuits would depend upon the severity of damage suffered y the drug.
After spending more than $1.2 billion to defend itself against earlier lawsuits, Merck’s liability would now be limited to another $4.85 billion therefore putting an end to speculation that these lawsuits might bankrupt the company (Berenson, A. Merck Agrees to Pay 44.85 Billion for Vioxx Claims, NYT, November, 9, 2007).
Many lessons can be taken from this failed project. First, it raises the issue of project ethics. When it is suspected that the outcome of the project may impose harmful consequences on its end-users or customers, to what extent are those involved in the project ethically bound to revise their “roadmap” and contemplate making the kinds of decisions that favor the end-user not the company or the project? To what extent is it necessary for those who feel there is an ethical violation to speak up? To what extent is it necessary to listen to those who do speak up?
Systematic biases can obscure the response to ethical dilemmas and drive a project down the wrong path. In this case the “Sunk Cost” bias did both and as a result derailed Merck’s ethical compass.
A sunk cost bias occurs when decision makers must make the next in a series of decisions but are unwilling to ignore costs that have already been incurred. In this case decision makers were unwilling to ignore the costs already incurred in the development and introduction of Vioxx. They had already spent billions and where determined to enjoy additional revenue from a project that had taken years to receive FDA approval.
If they abandoned the project, all of this effort would have been “wasted.” What they could not accept was that the funds and time devoted to the project were sunk costs. They could never be recovered and as such these costs needed to be ignored when the decision to continue or abandon the project was considered.
Is this a common reaction? The answer is yes! Terminating a project that has already incurred substantial expense is unlikely to advance anyone’s career. With Vioxx achieving blockbuster sales, with more than a billion dollars already spent on the project, and with a significant portion of future revenues tied to this drug, no one was willing to pull-the-plug.
A third lesson can be related to what decision psychologists call the “Conservatism” bias. This is the situation where individuals minimize, or ignore, new information. They are unwilling to revise their prior beliefs based on the arrival of new information especially if that new information would substantially change their views. There is a fascinating story that illustrates this lesson.
In 1904 James Michael Curley was elected to the Board of Alderman in Boston. He was the kind of politician who was devoted to his constituents and willing to stick his neck out to help the poor man. But here is where he ran into trouble. Curley and an associate, Thomas Curley (no relation) took a civil service exam for two men in their district to help them get the jobs with the federal government. Unfortunately he was caught, arrested and sent to jail. But, he was so loved by his constituents that they reelected him while he was serving his sentence. Years later he was elected as the Mayor of Boston.
To his constituents the news of his unlawful activities was ignored. Conservatism bias!
<< Back to Project Failures