Lessons from Merck’s approach to Vioxx
“Stop doing the minimum to put your drug on the market.” – Derrick Chizer
“They needed to be held accountable for putting a drug out there that shouldn’t be out there.” – Stacy Smith
“I want them to listen.” – Marsha Robbins
These are some of the comments from the jurors on the recently concluded trial in the Vioxx recall case against Merck. I have been in countless conference rooms where technologists and marketing folks have strategized how they could get away without disclosing something to the customer. Most of the time they get away with it but as this case shows, once they get caught, the end is near for that business.
Indeed, customers don’t need to know everything. Carol Ernst does not need to know that the perfume she paid 50 bucks for has a chemical that cost less than a buck and is packaged in a bottle that cost pennies. But a customer has a right to know each and every (known) risk about a drug, for instance. And it is simply not true that just because a risk is high for something consumers will not buy it. People take many other drugs that have serious side effects. Gastric bypass surgery that has a very high rate of death is one of the fastest growing plastic surgery procedures. I have seen a few (unscientific) surveys that say that if Vioxx or Bextra were to return, people will take them. Sales for Celebrex, which now has a black box warning, are up too.
So what does it mean for you?
Short-term gain can often mean long-term problems. While the executives had expected for an additional $229 million in sales if it delayed putting a warning on the label, we now estimate that Merck’s Vioxx liability to be $65 billion.
Indeed, vast majority of consumers are not as smart as a company’s employees, and neither they should be nor they want to be. If I would be expected to know each and everything about each product I consume, I will go insane. Therefore, a company that truly believes in building strong bonds with its customers and wants to create shareholder value, will be more honest and direct with its customers.
Do not destroy your brand. I got mistreated by Best Buy only once – I have not returned there.
Recommended articles: Lessons from recall of Vioxx – Merck has destroyed enormous shareholder value – Risk management for pharma companies while managing product recalls
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