Let me say at the outset that I admire Mr. Gilmartin. I do. Lately, he’s been writing a blog at the Harvard Business Review — and one of his central themes is that CEOs need to “think differently” (posthumous credit: Steve Jobs!). I concur — on that score.
In today’s installment, though, I think he leaves much ambiguity unclarified about when (and how) Vioxx® was actually withdrawn in late 2004. Read the bolded portions below, in context:
. . . .When I was Merck’s CEO, a Friday telephone call from our head of research started a chain of events that put to test the conviction in our core beliefs. He told me that our long-term safety study of Vioxx was showing an increased risk of cardiovascular events compared to placebo, and the trial was being discontinued. We agreed that whatever course of action we decided to take would be based on what we believed the science said about what was in the best interests of patients.
After analyzing the data further and consulting with outside experts, the Merck scientists recommended that we voluntarily withdraw the drug. They said that it might be possible to go to the FDA, add warnings to the label, and keep Vioxx on the market, but they believed that the most responsible course of action in the interests of the patient was to voluntarily withdraw the drug. I, along with the rest of my management team and the board, agreed with the recommendation, and the drug was withdrawn.
One of the follow-on decisions was what actions we should take, if any, to compensate for the loss of approximately $2.5 billion in revenues. Should we restructure the organization to lower costs and at least partially offset the loss of revenue? We had done a restructuring in 2001 with a significant number of layoffs. At that time, we had major drugs about to go off patent, which would lead to a rapid decline in revenue, and we also had lost drugs in late stages of development that we were counting on for future growth. We viewed restructuring as a last resort. But given those circumstances, we believed it was necessary to lower costs quickly to insure our ability to continue to invest in research to replenish the pipeline.
In 2004, the circumstances were different. We had important new drugs and vaccines that we expected to bring to market over the next few years. In our view, it was important to maintain the organizational capability and the research expenditures to bring these new drugs and vaccines to market successfully. On the other hand, analysts were skeptical of the pipeline, and some were calling for new leadership of the company. Furthermore, analysts were anticipating cost cutting and had built that expectation into their earnings projections for 2005.
We decided against restructuring and reductions in research expenditures. . . .
It may just be me, but it looks to me like he is asking the reader to make a back-handed (and inaccurate) inference that the Vioxx recall occured well before 2004. It didn’t. He separates his contrasting statements by a few paragraphs, and then throws the “things were different” line in, connecting it to 2004. Odd.
See here to read about what was “knowable,” and when — about Vioxx CV risks. Somewhere along the line, as AERs were being turned in, between 2000 through 2003, it seems fair, as Yale’s Dr. Harlan Krumholz has suggested, to think it could have been pulled earlier. This matters, because — if so — it (allegedly) took Merck quite a while to do the right thing here.
And it has paid over $4.9 billion, now due in large part to those delays. Just to keep it straight.