Corporate Responsibility at Merck

TO: Dr. Roy Vagelos, Chairman and CEO Merck Corporation. January, 1991.

The decision to move forward with the program to donate the new drug Mectizan on a large scale to the affected population in the Third World needs to be systematically analyzed. There are two especially important angles from which this decision needs to be considered. The first concern that needs to be taken into account is that of the stockholders and investors in this company, whose interests you are ultimately charged with representing. The second concern deals with the extent and limits of Merck's social responsibilities. These two issues are not necessarily incongruent with each other. As an advisor to this Office, I recommend Merck to proceed with the program to donate Mectizan on a large scale to the affected population. My arguments that support this decision are outlined in the following paragraphs, and are based on precepts and writings on corporate social responsibility and ethics.

The decision to approve further research and a clinical investigation on the lead that ivermectin could be used as a base for a human medication for the treatment of the river blindness scourge based on sound arguments regarding what is in the best interest for Merck. Rejecting this investigation could have had a serious impact on the morale of Merck employees, who are "inspired to think of their work as a quest to alleviate human disease and suffering world-wide". Along the same lines, the approval for the 3 stages of clinical trials was also a decision based on Merck's overall corporate philosophy. A possible way in which the situation could have been improved at this stage would have been to start exploring a strategic partnership with a third party international entity or government, in order to increase the likelihood of achieving a future deal that would allow Merck to recoup some of the funds invested in this project, if a viable medication was ever produced.

In the book 'The Market for Virtue', Mr. Vogel concludes that "corporate social responsibility does make business sense for some firms in specific circumstances". This is the case for Merck in pursuing the Mectizan donation program. On one side, it is hard to argue against the millions of lives that Merck would change for the better in following this program. Very few firms have the opportunity to make such an impact on a worldwide scale, in a short timeframe. What needs to be explored in more detail is how this course of action would benefit Merck in a business sense.

The most visible way in which Merck could benefit