Case 3 Merck and River Blindness Essay

699 Words Jan 17th, 2015 3 Pages
10/6/2014
Case 3: Merck and River Blindness

1. Why was Merck hesitant about developing a human version of Ivermectin?
Merck considered this opportunity as a high risk investment. The cost of developing the drug was estimated at $100 million. Even if it was successful to cure river blindness the victims were too poor to afford the drug. There was no way to distribute it in these rural areas were the victims were located. In addition, there was a possibility that people would misuse the drugs, which would cause negative side effects and stimulate bad press for Merck. During this time, healthcare costs were on the rise, Medicare and Medicaid reimbursements were limited for companies developing drugs like Merck. Congress was also about to
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After testing is completed, Merck would be required to distribute the drug to victims within the affected rural areas. The distribution cost would be high as there are no distributors already established in these rural areas. There was also a risk that there would not be large enough revenue to regain money spent in the research and development of the drug.
3. Why did Dr. P. Roy Vagelos and his team ultimately decide to develop a human version of Ivermectin?
The case provided motives why Roy and his team decided to develop the drug. After conducting several earnest meetings with his management team, they eventually decided that the benefits that the drug had concerning its effect on river blindness were too significant. Many managers felt Merck was morally obligated to develop the drug despite the cost and slim chance of economic reward. They decided to move forward with the development of Ivermectin in order to contribute to the welfare and interests of society.
4. How do you think Merck’s Investments in the human version of Ivermectin created value for its stakeholders and corporate goodwill?
Upon learning about victims suffering from river blindness, Merck realized that they had a potential cure to the problem. With this knowledge Merck had a corporate social responsibility to develop a drug because they now had an obligation to take action that could possibly contribute to the welfare and interests of society, as well as the organization and

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