What should have Merck & Co, Inc done differently in regards to
river blindness?
Merck & Company, Inc.: Having the Vision to Succeed
by Stephanie Weiss and David Bollier
An Expensive Care for a Poor Market
In 1978, Dr. P. Roy Vagelos, then head of the Merck research
labs, received a provocative memorandum from a senior researcher in
parasitology, Dr. William C. Campbell. Dr. Campbell had made an
intriguing observation while working with ivennectin, a new
antiparasitic compound under investigation for use in
animals.
Campbell thought that ivennectin might be the answer to a
disease called river blindness that plagued millions in the Third
World. But to find out if Campbell's hypothesis had merit, Merck
would have to spend millions of dollars to develop the right
formulation for human use and to conduct the field trials in the
most remote parts of the world. Even if these efforts produced an
effective and safe drug, virtually none of those afflicted with
river blindness could afford to buy it. Vagelos, originally a
university researcher but by then a Merck executive, had to decide
whether to invest in research for a drug that, even if successful,
might never pay for itself.
River Blindness
River blindness, formally known as onchocerciasis, was a
disease labeled by the World Health Organization (WHO) as a public
health and socioeconomic problem of considerable magnitude in over
35 developing countries throughout the Third World. Some 85 million
people in thousands of tiny settlements throughout Africa and parts
of the Middle East and Latin America were thought to be at risk.
The cause: a parasitic worm carried by a tiny black fly that bred
along fast-moving rivers. When the flies bit humans — a single
person could be bitten thousands of times a day — the larvae of a
parasitic worm, Onchocerca volvulus, entered the body.
These worms grew to more than two feet in length, causing
grotesque but relatively innocuous nodules in the skin. The real
harm began when the adult worms reproduced, releasing millions of
microscopic offspring, known as microfilariae, which swarmed
through body tissue. A terrible itching resulted, so bad that some
victims committed suicide. After several years, the microfilariae
caused lesions and depigmentation of the skin. Eventually they
invaded the eyes, often causing blindness.
The World Health Organization estimated in 1978 that some
340,000 people were blind because of onchocerciasis, and that a
million more suffered from varying degrees of visual impairment. At
that time, 18 million or more people were infected with the
parasite, though half did not yet have serious symptoms. In some
villages close to fly-breeding sites, nearly all residents were
infected and a majority of those over age 45 were blind. In such
places, it was said, children believed that severe itching, skin
infections, and blindness were simply part of growing up.
In desperate efforts to escape the flies, entire villages
abandoned fertile areas near rivers, and moved to poorer land. As a
result, food shortages were frequent. Community life disintegrated
as new burdens arose for already impoverished families.
The disease was first identified in 1893 by scientists and in
1926 was found to be related to the black flies. But by the 1970s,
there was still no cure that could safely be used for
community-wide treatment. Two drugs, diethylcarbamazine (DEC) and
Suramin, were useful in killing the parasite, but both had severe
side effects in infected individuals, needed close monitoring, and
had even caused deaths. In 1974, the Onchocerciasis Control Program
was created to be administered by the World Health Organization, in
the hope that the flies could be killed through spraying of
larvacides at breeding sites, but success was slow and uncertain.
The flies in many areas developed resistance to the treatment, and
were also known to disappear and then reinfest areas.
Merck & Co., Inc.—A Summary of Operations
Merck & Co., Inc. was, in 1978, one of the largest
producers of prescription drugs in the world. Headquartered in
Rahway, New Jersey, Merck traced its origins to Germany in 1668
when Friedrich Jacob Merck purchased an apothecary in the city of
Darmstadt. Over three hundred years later, Merck, having become an
American firm, employed over 28,000 people and had operations all
over the world.
In the late 1970s, Merck was coming off a 10-year drought in
terms of new products. For nearly a decade, the company had relied
on two prescription drugs for a significant percentage of its
approximately $2 billion in annual sales: Indocin, a treatment for
rheumatoid arthritis, and Aldomet, a treatment for high blood
pressure. Henry W. Gadsden, Merck's chief executive from 1965 to
1976, along with his successor, John J. Horan, were concerned that
the 17-year patent protection on Merck's two big moneymakers would
soon expire, and began investing an enormous amount in
research.
Merck management spent a great deal of money on research
because it knew that its success ten and twenty years in the future
critically depended upon present investments. The company
deliberately fashioned a corporate culture to nurture the most
creative, fruitful research. Merck scientists were among the
best-paid in the industry, and were given great latitude to pursue
intriguing leads. Moreover, they were inspired to think of their
work as a quest to alleviate human disease and suffering
worid-wide. Within certain proprietary constraints, researchers
were encouraged to publish in academic journals and to share ideas
with their scientific peers. Nearly a billion dollars was spent
between 1975 and 1978, and the investment paid off. In that period,
under the direction of head of research. Dr. P. Roy Vagelos, Merck
introduced Clinoril, a painkiller for arthritis; a general
antibiotic called Mefoxin; a drug for glaucoma named Timoptic; and
Ivomec (ivermectin, MSD), an antiparasitic for cattle.
In 1978, Merck had sales of $1.98 billion and net income of
$307 million. Sales had risen steadily between 1969 and 1978 from
$691 million to almost $2 billion. Income during the same period
rose from $106 million to over $300 million.
At that time, Merck employed 28,700 people, up from 22,200 ten
years earlier. Human and animal health products constituted 84% of
the company's sales, with environmental health products and
services representing an additional 14% of sales. Merck's foreign
sales had grown more rapidly during the 1970s than had domestic
sales, and in 1978 represented 47% of total sales. Much of the
company's research operations were organized separately as the
Merck Sharp & Dohme Research Laboratories, headed by Vagelos.
Other Merck operations included the Merck Sharp & Dohme
Division, the Merck Sharp & Dohme International Division, Keico
Division, Merck Chemical Manufacturing Division, Merck Animal
Health Division, Calgon Corporation, Baltimore Aircoil Company, and
Hubbard Farms.
The company had 24 plants in the United States, including one
in Puerto Rico, and 44 in other countries. Six research
laboratories were located in the United States and four
abroad.
While Merck executives sometimes squirmed when they quoted the
"unbusinesslike language" of George W. Merck, son of the company's
founder and its former chairman, there could be no doubt that Merck
employees found the words inspirational. "We try never to forget
that medicine is for the people," Merck said. "It is not for the
profits. The profits follow, and if we have remembered that, they
have never failed to appear. The better we have remembered it, the
larger they have been." These words formed the basis of Merck's
overall corporate philosophy.
The Drug Investment Decision
Merck invested hundreds of millions of dollars each year in
research. Allocating those funds among various projects, however,
was a rather involved and inexact process. At a company as large as
Merck, there was never a single method by which projects were
approved or money distributed.
Studies showed that, on the average, it took 12 years and $200
million to bring a new drug to market. Thousands of scientists were
continually working on new ideas and following new leads. Drug
development was always a matter of trial and error; with each new
iteration, scientists would close some doors and open others. When
a Merck researcher came across an apparent breakthrough — either in
an unexpected direction, or as a derivative of the original lead —
he or she would conduct preliminary research. If the idea proved
promising, it was brought to the attention of the department
heads.
Every year, Merck's research division held a large review
meeting at which all research programs were examined. Projects were
coordinated and consolidated, established programs were reviewed
and new possibilities were considered. Final approval on research
was not made, however, until the head of research met later with a
committee of scientific advisors. Each potential program was
extensively reviewed, analyzed on the basis of the likelihood of
success, the existing market, competition, potential safety
problems, manufacturing feasibility, and patent status before the
decision was made whether to allocate funds for continued
experimentation.
The Problem of Rare Diseases and Poor Customers
Many potential drugs offered little chance of financial
return. Some diseases were so rare that treatments developed could
never be priced high enough to recoup the investment in research,
while other diseases afflicted only the poor in rural and remote
areas of the Third World. These victims had limited ability to pay
even a small amount for drugs or treatment.
In the United States, Congress sought to encourage drug
companies to conduct research on rare diseases. In 1978,
legislation had been proposed that would grant drug companies tax
benefits and seven-year exclusive marketing rights if they would
manufacture drugs for diseases afflicting fewer than 200,000
Americans. It was expected that this "orphan drug program" would
eventually be passed into law.
There was, however, no U.S. or international program that
would create incentives for companies to develop drugs for diseases
like river blindness, which afflicted millions of me poor in the
Third World. The only hope was that some Third World government,
foundation, or international aid organization might step in and
partially fund the distribution of a drug that had already been
developed.
The Discovery of Ivennectin
The process of investigating promising drug compounds was
always long, laborious and fraught with failure. For every
pharmaceutical compound that became a "product candidate,"
thousands of others failed to meet the most rudimentary
pre-clinical tests for safety and efficacy. With so much room for
failure it became especially important for drug companies to have
sophisticated research managers who could identify the most
productive research strategies.
Merck had long been a pioneer in developing major new
antibiotic compounds, beginnng with penicillin and streptomypin in
the 1940. In the 1970s Merck Sharp & Dohme Research
Laboratories were continuing this tradition. To help investigate
for new microbial agents of potential therapeutic value. Merck
researchers obtained 54 soil samples from the Kitasato Institute of
Japan in 1974. These samples seemed novel and the researchers hoped
they might disclose some naturally occurring antibiotics.
As Merck researchers methodically put the soil through
hundreds of tests, Merck scientists were pleasantly surprised to
detect strong antiparasitic activity in Sample No. OS3153, a scoop
of soil dug up at a golf course near Ito, Japan. The Merck labs
quickly brought together an interdisciplinary team to try to
isolate a pure active ingredient from the microbial culture. The
compound eventually isolated — avermectin — proved to have an
astonishing potency and effectiveness against a wide range of
parasites in cattle, swine, horses, and other animals. Within a
year, the Merck team also began to suspect that a group of related
compounds discovered in the same soil sample could be effective
against many other intestinal worms, mites, ticks, and
insects.
After lexicological tests suggested that ivermectin would be
safer than related compounds, Merck decided to develop the
substance for the animal health market. In 1978, the first
ivermectin-based animal drug, Ivomec, was neanng approval by the U
S Department of Agriculture and foreign regulatory bodies. Many
variations would likely follow: drugs for sheep and pigs, horses,
dogs, and others. Ivomec had the potential to become a major
advance in animal health treatment.
As clinical testing of ivermectin progressed in the late
1970s, Dr. William Campbell's ongoing research brought him
face-to-face with an intriguing hypotheisis. Ivermectin, when
tested in horses, was effective against the microfilanae of an
exotic fairly unimportant gastrointestinal parasite, Onchocerca
cervicahs. This particular worm. while harmless in horses, had
characteristics similar to the insidious human parasite that causes
river blindness, Onchocerca volvulus.
Dr Campbell wondered, could ivermectin be formulated to work
against the human parasite? Could a safe, effective drug suitable
for community-wide treatment of river blindness be developed? Both
Campbell and Vagelos knew that it was very much a gamble that it
would succeed. Furthermore, both knew that even if success were
attained, the economic viability of such a project would be nil. On
the other hand, because such a significant amount of money had
already been invested m the development of the animal drug, the
cost of developing a human formulation would be much less than that
for developing a new compound. It was also widely believed at this
point that ivermectin, though still in its final development
stages, was likely to be very successful.
A decision to proceed would not be without risks. If a new
derivative proved to have any adverse health effects when used on
humans, its reputation as a veterinary drug could be tainted and
sales negatively affected, no matter how irrelevant the experience
with humans. In early tests, ivermectin had had some negative side
effects on some specific species of mammals. Dr. Brian Duke of the
Armed Forces Institute of Pathology in Washington, D.C. said the
cross-species effectiveness of antiparasitic drugs are
unpredictable, and there is "always a worry that some race or
sub-section of the human population might be adversely
affected."
Isolated instances of harm to humans or improper use in Third
World settings might also raise some unsettling questions: Could
drug residues turn up in meat eaten by humans? Would any human
version of ivermectin distributed to the Third World be diverted
into the black market, undercutting sales of the veterinary drug?
Could the drug harm certain animals in unknown ways?
Despite these risks, Vagelos wondered what the impact might be
of turning down Campbell's proposal. Merck had built a research
team dedicated to alleviating human suffering. What would a refusal
to pursue a possible treatment for river blindness do to morale?
Ultimately, it was Dr. Vagelos who had to make the decision whether
or not to fund research toward a treatment for river
blindness.