The Motley Fool recently whittled down 1,700 public companies to name its list of The 25 Best Companies in America. Merck (NYSE:MRK), the second-largest pharmaceutical company in the U.S. behind Pfizer (NYSE:PFE), didn't make the final cut -- neither did Pfizer.

But unlike Pfizer, Merck was at least able to claim a consolation prize, making it to the final group of about 40 companies before getting cut. Pfizer didn't have the metrics to get that far.

Merck sells a variety of drugs. Everything from Singulair for asthmatics, Januvia for diabetics, HPV vaccine Gardasil, and an HIV drug called Isentress. It even has drugs for animals and consumer health products such as Coppertone sunscreen and Dr. Scholl's foot-care products.

The case for Merck
In 2008, Merck announced disappointing results from the Enhance trial testing its cholesterol-lowering drug Vytorin, where the drug didn't reduce plaque in patients' arteries more than a cheaper generic. Shares fell. A lot. Rightfully so because Vytorin was a major portion of the company's growing revenue stream.

But since the Enhance tragedy, Merck has turned things around. Shares have nearly doubled from the lows in 2009. And the total return has been substantially higher than that thanks to Merck's shareholder-friendly stance on its cash.

Even with the share decline, Merck held its dividend steady. Investors that bought near the 2009 lows have seen about 30% of their purchase price returned to them in the form of dividends. The dividend raises went on a hiatus while the company turned things around after the Vioxx scandal, but now that things are back on track Merck has raised the dividend over the last two years. The dividend yield sits at more than 4%, trumping Johnson & Johnson's (NYSE:JNJ) 3.4%, Pfizer's 3.6%, and Sanofi's (NYSE:SNY) 3.5% dividend yields.

In 2009, Merck acquired its partner, Schering-Plough. While large acquisitions in this space haven't exactly produced solid returns on the investment, Merck's looks fairly solid thus far. Schering-Plough helped Merck restock its pipeline, and since they were already partners on Vytorin and Zetia, Merck was able to value Schering-Plough appropriately and not overpay. At the time, I commented that the acquisition looked much better than the Pfizer-Wyeth combination and so far Merck's combination has exceeded my expectations.

Beyond shareholders, Merck appears to be balancing the rest of the stakeholders by being a good corporate citizen. For the last four years, Merck has been on the Dow Jones Sustainability North America Index, the top 20% of the largest 500 North American companies based on corporate economic, environmental, and social performance.

Merck's patient assistance program dates back more than 50 years. In the last 10 years alone, Merck has provided 32 million free prescriptions valued at more than $2.5 billion.

The average employee review of the company on Glassdoor was 3.2 out of 5. That's not particularly impressive, but might be somewhat explained by the fact that Merck had to cut so much of its workforce after the merger with Schering-Plough. In 2011, employee turnover was 14% including restructuring.

The case against
One word: Vioxx.

Pulling the drug off the market remains a giant black mark on Merck's reputation. It's pretty clear that the company knew about the potential for heart side effects years before the drug was finally pulled off the market.

The FDA let the drug stay on the market, and with Vioxx producing billions of dollars in sales annually, it's easy to see how corporate greed could trump patient safety, especially since the initial results weren't conclusive.

Best of the best?
Between Vioxx and Vytorin, Merck has had its fair share of disasters. It's recovered nicely from the most recent one, but that was true after the drop post-Vioxx as well. I'd like to see a few more years without a major catastrophe before we put it in the top 25.

Click here to read about the companies that made the final cut of The 25 Best Companies in America.

Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.