Merck CEO Ken Frazier: ‘Whatever’s Best for Patients in the Long-term Is Best for Our Business’

Byron Pitts and Mary-Rose Abraham
Merck CEO Ken Frazier: ‘Whatever’s Best for Patients in the Long-term Is Best for Our Business’

It’s an interesting collection of heroes and mentors who have influenced Ken Frazier, the chairman and CEO of one of the world’s largest pharmaceutical companies, Merck.

Dr. Martin Luther King, Jr.; Supreme Court Justice Thurgood Marshall, who inspired him to practice law; James “Bo” Cochran, the Death Row prisoner whose innocence he proved; Dr. Roy Vagelos, the former head of Merck who told him to “be willing to learn”; and his father, Otis Frazier, who worked as a janitor.

“It was always helpful to me as a young man growing up to understand the struggle that my father had gone through to give me the opportunities,” said Frazier, recalling his childhood in inner-city Philadelphia. “He was a very strong human being and believed that if you worked hard, you can be successful. His view of the world was it didn't matter how many forces were arrayed against you, the only question is, ‘Can you be stopped?’”

Believing that he was “brainwashed by my parents to succeed,” Frazier said the knowledge that he and his siblings weren’t allowed to be stopped laid the foundation for his path to Penn State, Harvard Law School, partner at a Philadelphia law firm, and then, Merck. Frazier first made his mark there when he successfully defended the company in a spate of lawsuits related to Vioxx, the arthritis drug linked to heart attacks and strokes.

Merck, the publicly traded pharmaceutical giant with yearly sales of about $48 billion, is known for drugs treating everything from allergies to cancer. Frazier believes the business of healing the sick “requires that we be both compassionate as well as competitive.”

“The company goes back to a saying from our modern founder, George W. Merck, who said medicine is for the people, not for the profits,” said Frazier. “And the more we remembered that, the better the profits have been. So it's important for us not only to discover and develop innovative medicines, but also to make sure that people have access to those medicines.”

Access can be a complicated issue, considering the cost of certain drugs. Frazier said when discussing pricing, people often talk about the list price and not the effective discount, pointing to those negotiated with managed care providers and the government, which lowers the cost of medications.

“Having said that, I have to say that the question's still a legitimate question,” he explained. “In some countries there are price controls that actually put a ceiling on what you can charge for a branded pharmaceutical. We happen to think that those kinds of price controls in the long run are antithetical to the kinds of research that we do. And the reason why the U.S. has a very strong, robust pharmaceutical industry that creates, for example, really high-paying jobs, is because we have the financial incentives, the market incentives, to go after drug research.”

For its part, Merck offers patient assistance programs and was the first company to price its HIV/AIDS drugs to match the purchasing power of a particular market. And like other pharmaceutical companies, Frazier lauded the Affordable Care Act to improve health care access for 30 million Americans, though it will cost Merck more money in the short-term.

“But I have to say we take the long view,” said Frazier. “And that is, whatever's best for patients in the long-term is best for our business.”

That is the basis for its social responsibility programs as well. Since 1987, Merck has donated a drug to treat onchocerciasis – better known as river blindness – in remote communities in Africa, Latin America and the Middle East. The company has also committed $500 million in a decade-long campaign called “Merck for Mothers” to improve safe childbirths around the world and in the United States which ranks a dismal 47th in the world in maternal mortality.

Besides overseeing initiatives at Merck, Frazier is also active in personal volunteer work. He points to his most rewarding legal work as representing Cochran, a 19-year Death Row inmate, and proving his innocence: “It changed my life. In many ways [Bo Cochran] was already free before I represented him because of the way that he looked at the world. And even now when I talk to Bo he refuses to be a victim.”

Frazier continued: “I think if you look at the way the death penalty is applied in many places in this country, I think it's pretty clear to say that it is not applied in such a way that we can feel confident that the verdicts that come out of the state court system, in particular, don't create issues with respect to false positives. My bottom line is that I think that the system of justice is not calculated in terms of the kinds of representation that people get to give us any certainty about the death penalty.”

Just as his father stressed the importance of education, Frazier and his wife are among the founders of Cornerstone Christian Academy in southwest Philadelphia.

“We have found over the 25 years that the school has been in existence that we can take children who come from fragile home environments, children who have maybe not the best in terms of nourishment, not the best in terms of preparation from school,” said Frazier. “But if you put them in an environment that's both challenging and nurturing at the same time, those children can actually achieve great things. I think it's a terrible lie in our society when we say that children who come from poor backgrounds are destined to go on to lives of crime or less than full citizenship.”

Frazier and his wife also established a scholarship for diverse students at his alma mater Penn State. After that school was rocked by a sexual abuse scandal in its legendary football program, he headed the university committee to investigate that.

“I think one of the things that as a society we have to understand is just how common this issue of child sexual abuse is,” said Frazier. “So I think one of the big findings is that it's a mistake to look at this as a Penn State issue. Certainly this got a lot of coverage because it happened at Penn State and some of the personalities are very well-known people. And certainly we found shortcomings which we have corrected as a university and the university is committed to being a beacon on this issue of education and awareness of child sexual abuse. But the main thing I think we have to understand is just how unfortunately common this is across our society.”