Medicine, Management, and Mergers: An Interview with Merck's P. Roy Vagelos.

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  • Additional Information
    • Subject Terms:
      MERCK & Co. Inc.; MEDCO Containment Services Inc.
    • Subject Terms:
      VAGELOS, P. Roy
    • Abstract:
      On November 1, 1994, P. Roy Vagelos retired after nearly 20 years at Merck. As head of the research labs from 1975 to 1985 and then as CEO, Vagelos turned Merck into a pharmaceutical powerhouse through a series of breakthrough drugs. More recently, Vagelos shocked this once conservative corner of the medical industry with Merck's acquisition of the prescription-benefits-management company (PBM) Medco Containment Services, which provides prescription drugs to HMOs and employees of large corporations. Merck's acquisition of Medco represents a $6.6 billion bet on where the future of the pharmaceutical industry lies. In today's managed-care environment, Vagelos argues, the company that best controls the information flow from doctor to patient to pharmacist to plan sponsor has the greatest chance of succeeding. Medco has information on 38 million patients, which allows Merck to learn a lot more about how its drugs are prescribed and used and, ultimately, how effective they are in fighting disease. Owning Medco can also help Merck increase its market share in an industry in which no company has more than 5%. Medco pharmacists make about 2 million phone calls a year to doctors, and when it's appropriate medically, Merck can use these calls to ask physicians to choose Merck products. This practice, along with the growth of managed care in general, has shaken the foundation of the pharmaceutical industry. In this interview, Vagelos looks back on his career and forward into the future of the industry. He talks about the trade-offs between risk and focus and his hope that Merck will always have the courage to place big bets. [ABSTRACT FROM PUBLISHER]
    • Abstract:
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