Merck

Conclusion

• Market failure was caused by the actions of the FDA.

• You have arthritis.
• This is keeping you from doing what you love, marathons.
• Your doctor has prescribed you Vioxx.

• The government acted unethically, causing information to be withheld from the consumer.

• Even though the FDA contributed to market failure, consumers would be less informed without the government agency.

• The free market can still choose the best drug, but all the options should be safe.

Values

• Integrity

• Responsibility

• Honesty

• Respect

• Selflessness

Government Failure

Government Failure into Market Failure

• Consumers did not have the information to make rational decisions

• The free market could not regulate itself

• FDA accredited scientist performed extensive research.

• Top FDA management suppressed his findings.

What would Milton Friedman say?

Opposition

• This case reflects the outcome of the market scenario if the FDA did not exist.

• Without the FDA, there would be no reason for Merck to keep testing the drug.

• There needs to be some entity to ensure that consumers receive all information possible.

• Today, the FDA, when performing properly, is the entity that bridges the information gap between companies and consumers.

• The FDA should not exist.

• The free market would have adjusted the supply and demand of Vioxx.

Overview

• In 1999, Vioxx (created by Merck) was FDA approved for relieving pain and inflammation.

• Later, a study done by a FDA scientist found that the drug increased the risk of heart attack and stroke in both low and high doses.

• The FDA prevented the publication of the scientific findings to Merck and consumers.

• Eventually, Merck voluntarily pulled the drug from the market, because of the new found side effects.