Merck-Medco Finds the Right Prescription to Combat Dot.com Fever

Sarah Williamson Management Information Systems

April 25, 2005

Case Analysis

Largest pharmacy-benefit manager in US Dot.com boom in late 1990’s Did not want to lose online market Website to fill and process prescriptions

for a client base of over 52 billion Required extensive research best way to

utilize database warehousing

Why go online as a pharmaceutical?

Competition Lose clients Lower overall costs Eliminate intermediaries More efficient sales Quick, inexpensive customer service

Building a Website from Scratch

Long-term benefit:Company-specific operating systemHighly reliant upon own customer databaseCustomize electronic payment systemsPersonalized pages and customer self-

serviceClear and secure disintermediation

Data-driven DSS Analyze large pools of information, take out

useful bits and organize them Used to build data warehouses Online analytical processing and data mining

used to analyze the information Patient identification Service dates Costs Quantities of medication dispensed Occasions the client used customer service

Recommendations Short term: Use the new Internet business not

only to adhere to the needs of current beneficiaries, but also to target new markets

Long term: Be honest VIOXX ® was prescribed to 91 million people Blood clots, heart attacks, strokes, sudden cardiac

death, convulsions, birth defects all found by the American Medical Association and FDA in 2002

VIOXX ® was not pulled from the market until 2004 Now, Merck-Medco’s legal costs will reach $12 billion

(at about $200,000 per lawsuit)

Recommendations

Social responsibility is not avoidable Merck-Medco no longer exists

Merckmedco.com is now re-directed to medco.com

Merck.com is online as another Internet pharmaceutical