Ethics and Business
This chapter presents an introduction to the basic principles of ethics in general and shows
how these principles are relevant to businesses. It begins with a case study of Merck and
Company, discussing how they dealt with the problem of developing a drug that was
potentially life-saving but which presented them with little, if any, chance of earning a return
on their investment.
The drug was Ivermectin, one of their best-selling animal drugs. The potential market for the
drug was those suffering from river blindness an agonizing disease afflicting about 18 million
impoverished individuals in Africa and Latin America. The disease is particularly horrendous:
worms as long as two feet curl up in nodules under an infected person's skin, slowly sending
out offspring that cause intense itching, lesions, blindness, and ultimately death (though many
sufferers actually commit suicide before the final stage of the disease).
The need for the drug was clear. However, the victims of river blindness are almost
exclusively poor. It seemed unlikely that Merck would ever recoup the estimated $100 million
it would cost to develop the human version of the drug. Moreover, if there proved to be
adverse human side effects, this might affect sales of the very profitable animal version that
were $300 million of Merck’s $2 billion annual sales. Finally, Congress was getting ready to
pass the Drug Regulation Act, which would intensify competition in the drug industry by
allowing competitors to more quickly copy and market drugs originally developed by other
Questions: Was Merck morally obligated to develop this drug?
Their managers felt, ultimately, that they were. They even went so far as to give the drug
away for free. This story seems to run counter to the assumption that, given the choice
between profits and ethics, companies will always choose the former. The choice, however,
may not be as clear-cut as this dichotomy suggests. Some have suggested that, in the long run,
Merck will benefit from this act of kindness just as they are currently benefiting from a
similar situation in Japan.
Even so, most companies would probably not invest in an R & D project that promises no
profit. And some companies often engage in outright unethical behavior. Still, habitually
engaging in such behavior is not a good long-term business strategy, and it is the view of this
book that, though unethical behavior sometimes pays off, ethical behavior is better in the long
A more basic problem is the fact that the ethical choice is not always clear. Merck, as a for-
profit corporation, has responsibilities to its shareholders to make a profit. Companies that
spend all their funds on unprofitable ventures will find themselves out of business.