Former pharmaceutical CEO questions industry practices

Roy Vagelos

Times have changed in the pharmaceutical industry since Roy Vagelos, MD, retired as CEO and Chairman at Merck & Co. in 1994, and in a talk Monday at Fairchild Auditorium he summed up ones of the differences in two quick anecdotes.

First, Vagelos recalled how when he was at the helm of Merck, a researcher pointed out that a drug made by Merck that was commonly used to treat heartworm in dogs and other animals could eradicate a debilitating disease called river blindness that was common in many poor nations. Merck soon began working with the World Health Organization and other groups able to distribute the drug. In 1987 alone, the company donated 60 million doses of the drug to treat both river blindness and another disease, elephantitis.

Cut to the late 1990s, when the AIDS epidemic was ravaging Africa. "So what happened with HIV drugs?" Vagelos asked. At first pharmaceutical companies resisted losing profits in order to help poor countries, he said. Only after an international outcry did the companies relent.

"Now they have each introduced HIV programs that are terrific," he said. "The problem is that they have a tremendous black eye." The companies, he added, are now throwing money into public relations to cover for their early mistakes.

"It's a little sick," he said.

The stories were part of Vagelos' talk, "The changing pharmaceutical industry," in which he added his voice to the many experts, not to mention the public at large, who have become critical of big pharma's practices. What made this talk particularly unusual is that the company Vagelos once ran has become something of a poster child for the problems in the pharmaceutical industry after it pulled the painkiller Vioxx from the market late last year because it caused heart attacks in some patients.

Vagelos has shied from speaking out about the problems at his former company but his talk highlighted the growing role of sales and marketing. He recalled, for instance, that he had reduced the sales budget during his tenure to force innovation in how sales teams did business. Now, he said, the number of sales teams has doubled and the companies also rely heavily on direct-to -consumer marketing.

"There's got to be a different way of educating doctors," he said.

Despite some reservations about how pharmaceutical companies do business, Vagelos said he's an optimist, particularly about the health-care system improving how it monitors drugs for safety. He said that with the government paying for Medicaid it will have ample data to screen for potential drug side effects, getting harmful drugs off the shelves faster. This could prevent problems like the one with Vioxx.

Vagelos added that with progress in genomics and molecular targeting the pharmaceutical companies will identify new drug targets at an even faster rate. "The past 50 years have been exciting, but I think when you look back 50 years from now this past phase will look stagnant," he said.