Sunday, March 22, 2009

Form of email

Subj: Vioxx case and business ethics

Dear _________________,

I am writing this email to you because I recently read Mr. Tom Nesi's book Poison Pills: The Untold Story of the Vioxx Scandal, and you are mentioned in the book.

I contend that corporate wrongdoing is conceived, designed and implemented by individual corporate officers, employees, agents, and others, and that ethical business conduct is fostered by holding those individuals accountable. I further contend that the country's civil liability system undermines business ethics because it distracts attention and diverts economic resources away from establishing clear guidelines governing actions on behalf of a corporation and holding officers, employees and others individually accountable under those guidelines. My contentions are set forth at length in this article: Does the Law Undermine Business Ethics?

In my article, I use the Vioxx case as an example and I say this:

Let us start with all the shareholders who purchased Merck stock in the
weeks leading up to the Vioxx announcement and who suffered an immediate 30% or so decline in value following the announcement. Profits that Merck made from
Vioxx did not accrue to those shareholders, and they are entirely innocent of
whatever wrongdoing Merck committed regarding Vioxx; nonetheless the legal
liability system that is entrenched will give no consideration to those factors
and results in that 30% being taken from them and contributed to the recovery
that the plaintiffs eventually make.

Next consider, if Merck is guilty of wrongdoing, whether any officer or
employee of Merck will be personally punished for his participation in the
wrongdoing. There has been no indication that this is going to happen.

Next consider the hundreds of millions of dollars that plaintiffs’
attorneys will receive in the Merck litigation. Think how those sums might be
alternatively expended in order to pay for programs and activities that would
concretely advance protective and preventive objectives related to drugs such as
Vioxx. These might include: greater FDA funding for post-drug approval
monitoring and studies to detect adverse drug effects; design and implementation
of better safeguards at the physician and patient level relative to decisions
for a drug to be prescribed in a particular case; development of concrete
protocols and guidelines for testing of drugs that drug companies could follow
that would protect them against subsequent liability; development of concrete
“conflict of interest” rules for researchers and physicians involved in testing
or promoting a drug and punitive enforcement of the rules against researchers
and physicians individually.

Ultimately, there is a question of what exactly the wrongdoing of Merck was,
articulated with sufficient specificity, that Merck and other drug companies can
have advance notice of such specifics so they can avoid “wrongdoing” in the
future. For all the billions of dollars that might wind up getting paid in the
Vioxx litigation, no such concrete guidance may be forthcoming at all from the
litigation, and, if that is so, all that happens is effectively a huge transfer
from one set of parties without fault to other parties who have suffered a harm
not caused by any wrongdoing of the first parties.

Mr. Nesi's book strongly reinforced in my mind my article's contentions.

Based on your knowledge and involvement with the Vioxx case, would you care to comment on my contentions that, if society wants to be effective in fostering ethical business conduct, the law and economic resources need to be more focused on the individuals who are responsible for corporate wrongdoing and not so distracted and diverted in going after the collective "deep pockets" of thousands and millions of individuals who are innocent and not responsible for the wrongdoing?

Thank you.

Robert Shattuck

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