FDA warning stuns Scottsdale company Matrixx
Report said Zicam swabs, gels can cause loss of smell
5 commentsby Ken Alltucker - Jun. 19, 2009 12:00 AM
The Arizona Republic
The Scottsdale company that makes and sells Zicam said the Food and Drug Administration's safety warning about the popular nasal gels and swabs came as a complete surprise as the firm mounts an aggressive defense of its products' safety.
Matrixx Initiatives Inc. executives said they want to meet with the FDA to dispute the federal agency's warning issued this week that the Zicam gel and swabs can permanently damage the sense of smell.
"We are hopeful that if we can tell our story to the FDA, we can get them to change their mind," William Hemelt, acting president and chief operating officer of Matrixx, said during a Thursday morning conference call with analysts. "We are certainly hoping for that outcome, but we are moving ahead as if that may not happen."
The company has halted new shipments of Zicam Cold Remedy gels and swabs to retailers and will recall existing products on store shelves. Matrixx estimates such a recall could cost about $10 million, which includes reimbursing customers and compensating retailers for removing the product from store shelves.
The long-term impact of discontinuing the gels and swabs would be much more costly. The products account for about 40 percent of Matrixx's annual sales, which surpassed $110 million during the past fiscal year.
Hemelt acknowledged that the FDA's warning letter was "strongly worded," but nevertheless wants to present the company's evidence that the product is safe. He said the intranasal products have been tested in four clinical trials, and none has ever produced evidence that the zinc-based remedies caused loss of smell.
"We believe our products are safe," Hemelt said. "We would like the opportunity to share the information with them."
If Matrixx is unable to persuade the federal agency to reverse course, Hemelt said, it is unlikely the company will file a new application to gain FDA approval to again sell Zicam intranasal products because the process will be too expensive and time-consuming for the firm.
Hemelt also defended Matrixx's decision not to share with the FDA about 800 grievances customers filed directly with the company.
An FDA spokeswoman said that, under a 2007 rule, companies that make and sell over-the-counter products such as Zicam are required to hand over such "adverse events" reports to the federal government.
Hemelt said Matrixx first learned during the FDA's on-site inspection last month that the federal agency wanted all such "adverse events" reports immediately after consumers filed them with the company. Matrixx, acting on its legal advice, thought the company merely had to make such reports available to FDA inspectors during on-site visits.
"We have complaints here, clearly, but we weren't required to send them; at least we didn't believe we were required to send them," he said.
He said Matrixx also is preparing for a new wave of lawsuits from consumers alleging that Zicam intranasal products have caused anosmia, or lost of smell and taste. The company has been sued hundreds of times over the past decade. In early 2006, it settled a batch of 340 lawsuits for $12 million to avoid the legal costs of defending each suit, company officials said.
Since 2006, however, Matrixx has successfully defended several lawsuits, in part because there is no independent study that has linked Zicam to smell loss.
Hemelt said that the FDA's decision should not favor consumers who have existing lawsuits because it does not change the evidence standards required by courts. The real impact for the company may be the cash required to defend additional lawsuits, which can cost as much as $300,000 to $500,000 if they reach trial, Hemelt said.
"It is a very expensive proposition for us and the other side," he said.
Matrixx also will attempt to convert customers who use Zicam intranasal products to other Zicam oral products that are not subject to the FDA's action. The company sells more than a dozen Zicam products over the counter to treat common colds, coughs, allergies and other conditions.
Hemelt did not say how much the company will spend to market the Zicam oral products, but he said it will likely be less than the amount of money the company spent on advertisements for the Zicam swabs. The company also will turn to social-networking venues such as Twitter and Facebook as well as publish an open-letter advertisement in newspapers for its customers.
Because Matrixx faces the loss of its top-selling product, Hemelt warned that the company will have to cut costs accordingly, including its marketing budget.
"We obviously have to learn how to shrink this company if we cannot get this product back on the shelves," Hemelt said. |
