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Merck's Special Interest

In the post-Jack Abramoff era, when the term "lobbying" is bandied about, people are likely to think the worst. But in certain cases when special interests pursue their goals, it turns out to be the best move for everyone. While some will no doubt vociferously disagree, Merck's (NYSE: MRK  ) current lobbying effort for Gardasil, its human papillomavirus (HPV) vaccine, will likely be a win for its shareholders and the public.

The Associated Press reports that Merck has been shelling out cash to the group Women in Government, an organization of female state legislators across the country, in an effort to get Gardasil included as a mandatory vaccination in as many states as possible. HPV is linked to most cases of cervical cancer, so compulsory vaccination could be a major boon to women's health, in addition to boosting Merck's bottom line.

However, not everyone is enthusiastic about the idea. HPV is transmitted sexually, and some strains can cause genital warts. To inoculate against the virus, women must be vaccinated before they become sexually active, and the treatment can be given as early as age 11. Some conservatives have argued that by blocking a sexually transmitted disease, vaccination would encourage premarital sex, thereby undermining efforts to promote abstinence.

In the end, though, I think Merck will likely succeed in getting states to see its perspective. For one thing, most states will probably allow parents to opt out of vaccination. For another, it's not as if parents must discuss the sexual implications of vaccination with their 11-year-olds. And finally, many states now mandate childhood vaccination against hepatitis B, which also can be transmitted sexually.

For Merck, of course, getting states to mandate Gardasil's use doubtless would mean huge sales. The vaccine brought in $235 million in sales in 2006, despite having been on the market only since July.

Still, investors shouldn't necessarily bet everything on Gardasil. GlaxoSmithKline (NYSE: GSK  ) is expected to bring Cervarix, its own HPV vaccine, to market by the end of this year. Glaxo also is now preparing a trial to determine whether its offering provides better protection against cervical cancer than Gardasil does; the results of that study could determine which product becomes the market leader. In the end, though, both companies stand to profit big even as they improve public health.

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GlaxoSmithKline is an Income Investor recommendation, and Merck is a former recommendation of that service. If you like dividend-paying stocks, check out our Income Investor service free for 30 days.

Fool contributor Brian Gorman does not own shares in any the companies mentioned. The Fool has a disclosure policy.

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10/21/2016 4:00 PM
MRK $61.20 Down -0.72 -1.16%
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