Merck has moved rather swiftly and decisively in its withdrawal of Vioxx from the marketplace. The stock took a big hit yesterday, but experts are praising the company's response, according to this article in today's WSJ:
The pharmaceuticals giant responded 'almost in a paragon way,' said Gerald C. Meyers, a University of Michigan business professor of organization and management. 'They're being very open about what they know. They're bringing in top people to lend veracity,' he said. Faced with a major crisis, 'most companies fail because they're not prepared.'
But the Merck crisis could linger for a long time, as its management struggles to quell anxiety among patients, employees and investors. The manufacturer withdrew its popular painkiller after a trial showed increased risk for heart attacks or strokes. The move sent its stock falling nearly 27%.
Merck also may face more criticism for having strenuously denied for several years suggestions by outside researchers that use of Vioxx led to heart problems. The company even published its own studies suggesting the drug wasn't causing harm.
To maintain faith in its crisis management, specialists say, Merck will need to make prompt disclosures of any additional information about Vioxx, good or bad, through national advertising campaigns, direct patient contact and meetings with their physicians. Merck officials should assure the public that 'we will make sure you know day by day what we know' about the drug's problems, said Harry M. Jansen Kraemer Jr., former chairman and CEO of Baxter International Inc. 'This is a matter of life and death.'
My take: Merck's response is due to a real threat from trial lawyers. If they dragged their feet while more and more evidence accumulated, the company would face a barrage of suits from families of heart attack victims. Now, it is possible that the added risk of heart attack from taking Vioxx is not fully established. I'm certainly no expert on that. But assuming the link is real, the threat from trial lawyers motivates appropriate behavior from Merck, and is thus saving people's lives.