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One undeniable drawback to Mevacor, at least from the patient's standpoint, is its high price. A single 20-mg pill goes for $1.64, and a year's treatment can cost up to $3,000. Says Congressman Henry Waxman, a California Democrat who chairs the House Health and Environment Subcommittee: "Merck, like other big drug companies, has been raising prices dramatically and has introduced new drugs at shockingly high prices." Even drugs whose patents have long expired remain expensive. A bottle of 60 25-mg tablets of Merck's arthritis- fighting Indocin sells in New York City for $28, vs. $12 for an equivalent generic brand.
For their part, Merck and other drugmakers say high prices generate the revenue needed for research, testing and development of new products. Much of that revenue, however, goes into heavy advertising and promotion aimed at getting doctors to remember the big companies' brand names at the expense of generics from smaller firms. Even Merck, which is heavily research oriented, spends more on advertising and promotion (an estimated $670 million last year) than it does on lab work ($560 million).
Yet behind all the puffery are genuine breakthroughs. When Vagelos joined Merck, the company was slogging through a slump in its product development. But he helped start a huge campaign that brought on board hundreds of new research scientists. That talent hunt continues to this day. As chief executive, Vagelos makes surprise visits to his divisions, asking managers, "Whom have you recruited recently? How are they coming along?" Another hallmark of the Vagelos style: a penchant for promoting promising employees several rungs at a time, building creative tension in the ranks.
Vagelos proves that corporate leaders can be straight shooters who are persuasive without being abrasive. To be sure, the trim, five-mile-a-day jogger, one of the few chief executives in the drug business with an M.D. degree (and a mere two weeks of business education from a Harvard seminar), is a demanding boss. "When the phone rings on a Sunday morning, you know it's Vagelos," says Edward Scolnick, president of Merck Labs. But the chairman also wins high marks for staying in touch with his staff. He keeps his spartan office open to any of his 32,000 employees with a complaint or a suggestion, and lunches in the company cafeteria, as do his top executives. The company supports a day-care center for employees' children, lets many workers choose their hours and regularly assigns senior managers to awareness-training courses to help them understand subordinates' family-related needs.
These days Vagelos is pushing his researchers to come up with the next generation of wonder drugs. In the testing stages: another cholesterol- lowering drug that could prove more potent and longer lasting than Mevacor; an anti-ulcer medication that has shown a high degree of effectiveness; MK- 538, a drug that holds promise of aiding diabetes sufferers. Merck will soon launch large-scale clinical trials for MK-906, which in preliminary tests shrank swollen prostate glands without bad side effects, alleviating a problem that vexes millions of men over 40. Other teams are studying cures for cataracts, arthritis, cancer and AIDS. But so are Merck's rivals. London-based Burroughs Wellcome last week won, as expected, the U.S. patent on use of the drug AZT against AIDS, thus giving the company an early lead in that market.