Since merck yanked its anti-inflammatory drug Vioxx (rofecoxib) from the market, the action has been called a corporate disaster, a regulatory failure, a crisis
in public health, and even a death blow to the blockbuster model. Is it?
Pharm Exec spoke with a range of experts—an investment analyst, life science consultant, plaintiff's attorney, physicians, former FDAers,
and authorities on drug safety, pharmacoeconomics, and pharmacovigilance—to find out. David Wofsy, MD, president of the American
College of Rheumatology, believes "there are lessons in the Vioxx recall for everyone," and Lou Morris, PhD, past acting director
of FDA's Division of Drug Marketing, Advertising, and Communications and president of Louis A. Morris & Associates, says "people
will be studying it for a long time."
With and without Vioxx Merks Estimated 2004 & 2007 Strategic Performance
So, let's begin.
"Momentous, shocking," is how Barbara Ryan, managing director and pharmaceutical analyst with Deutsche Bank Securities, describes
the Vioxx recall. Albert Wertheimer, PhD, founding director of the Center for Pharmaceutical Health Services Research at Temple
University School of Pharmacy, is more sanguine: "These things happen, unfortunately, now and then," he says. And according
to Morris, there have been about a dozen withdrawals in the last 12 years.
We didn't think, even before Vioxx got pulled, that Arcoxia would ever get approved because we thought it had cardiovascular
signals—and because of the debate over Vioxx for the last five years. Now, unequivocally, we don't believe it will be approved.
Barbara Ryan, pharmaceutical analyst, Deutsche Bank Securities
Still, the Vioxx recall stands out. The largest ever by sales, it also clearly "couldn't have come at a worse time for Merck,"
Wertheimer says. But it could also be said that Vioxx is less than the disaster that's been depicted, precisely because the
company has been faltering. While surely a blow to Merck's earnings and prestige, it is far from a stunning reversal. It's
also been years since the company was most admired. Jim Hall, president of the life sciences practice at consultancy Wood
Mackenzie, says it was already losing its preeminence as a science-driven pharmaceutical company. Adds Ryan: "Merck hasn't
grown its earnings for the last four years, and is not likely to for the next several." The implication is that investors
who dumped the stock overreacted, as investors frequently do. An analysis by Tracer Analytics (see below) bears this out.
Merck's prospects, either way, are not much changed.
The withdrawal of Vioxx, however, makes Merck's road to recovery steeper. Most obviously, Ryan says, it puts management "in
a very precarious position." But she doesn't blame CEO Ray Gilmartin for the Vioxx mess, saying, "I think the company did
the right thing." And Wertheimer says, "This was a pretty tough call. You can't just blame it all on Merck." Indeed, Morris
offers praise. "How many companies," he asks, "would sacrifice a $2.5 billion product without trying to keep it on the market?
It's consistent with Merck's history, taking that kind of perspective on healthcare. From what I can tell so far, they've
been incredibly decisive and responsible."
But Ryan reminds us that the recall "follows a lot of other disappointments associated with management decisions," and Hall
says there's a real question "whether Gilmartin's the right person to pull them through this." Gilmartin, he thinks, "is going
to go. He announced he's retiring in 2006, so he has between zero and 12 months left now. From a patient-customer point of
view there are enough questions about Merck and its leadership that announcing a new leader would help restore confidence."