"19:45 10-20-00 Drugmakers brace for possible FDA ban, suits may loom
NEW YORK, Oct 20 (Reuters) - Major drug companies said on Friday they are in the process of replacing the active
ingredient in many of their diet aids and decongestants, a day after a U.S. regulatory panel recommended banning the
chemical.
The companies are under pressure to act quickly as a ban on the chemical, phenylpropanolamine (PPA) might imply they
knew or should have known about potential dangers of the chemical that has been linked to hundreds of strokes, some
attorneys said. The drugmakers may still be open to class-action lawsuits from former users of the over-the-counter
products.
"When a drug is taken off the market for safety reasons, especially threatening something like stroke, the threat for legal
action is an automatic," said Newport Beach, Calif.-based pharmaceutical liability attorney Ramon Rossi Lopez, who has
represented hundreds of plaintiffs in the fen-phen diet drug settlement with American Home Products Corp.
A five-year review ended in a U.S. Food and Drug Administration panel recommendation to ban PPA after more than 50
years of pharmaceutical use. The recommendation was based on a recent Yale University study showing an increased risk
of strokes in people ages 18 to 49. The FDA estimated between 200 and 500 haemorrhagic strokes per year could be linked
to PPA.
With that knowledge, major drug firms have begun marketing new versions of over-the-counter products without PPA in
anticipation of a ban, industry analysts said. Newer versions of popular cough and cold medicines Dimetapp, Robitussin and
Comtrex and diet aids Dexatrim and Acutrim have been marketed.
"This panel was not unannounced," analyst Andrew Wolf of BB&T Capital Markets said. "People knew there was an
advisory panel looking at PPA, as did other players in this industry. There has also been switching to more natural drugs.
So (there are) both regulatory and market based reasons."
RED FLAG
Although the drugs represent a small percentage of sales of large pharmaceutical firms, the products could become a large
liability if lawsuits were to be filed related to strokes supposedly caused by the chemical.
"A red flag goes up to start asking whether these firms knew or should of known much sooner than now whether the public
was at risk," Lopez said. "If they knew or should have known, in every law in every state that I'm aware of, that's negligence.
If they knew and didn't tell anybody, you're talking about conscious disregard which means punitive damages."
Chris Keller, a spokesman for Chattem Inc. (CHTT.O), makers of diet aid Dexatrim, said the company would not be
surprised by a lawsuit.
"If we received notice of a filing, I wouldn't say that we never would have expected it," he said. "If something happened, we'd
be prepared to handle it."
Wolf indicated Chattem had hoped to preclude such action with its PPA-free version of Dexatrim, whose sales have been
growing.
"Obviously Chattem would like to manage it in such a way that they could switch Dexatrim users into Dexatrim Natural," he
said.
Kip Petroff, a personal injury attorney specialising in drug and product liability at Dallas-based Petroff & Kisselburgh, said
the drug companies apparently knew five years ago of the FDA review, and developed alternative ingredients.
"It will come down to what did the companies know, when and what did they do about it," Petroff said. "That's the standard
question in every drug case."
SALES A DROP IN THE BUCKET
U.S. sales of cough and cold remedies totalled $3.53 billion for the year ending Sept. 9, while the market for appetite
suppressant diet aids was about $89.4 million, according to market research firm ACNielsen.
However, the makers of many branded versions of these over-the-counter products are giant pharmaceutical companies, for
whom the consumer products typically do not represent a large portion of sales.
"I don't see any major financial ramifications at any of the major companies," said analyst Mario Corso of ABN Amro. "Any
single OTC product isn't going to break the bank for a major drug company."
For instance, both Triaminic cough medicine and Tavist sinus and nasal treatment, which contain PPA, are manufactured
by Swiss drug giant Novartis AG (NOVZn.S). Meanwhile, cough and cold medicines Robitussin and Dimetapp are made by
Whitehall-Robins, the over-the-counter unit of American Home Products Corp. (AHP.N), one of the top ten U.S. drug
makers.
Fran Sullivan, a spokesman for Whitehall-Robins, said the company in August had removed PPA from the only form of
Robitussin cough suppressant that contained it, called Robitussin CF.
"Earlier this year, we decided to take PPA out and make it with pseudo-ephedrine," Sullivan said. He acknowledged that the
company was well aware of the Yale study and knew results would come sometime in late 2000.
Pat Donohue, a spokesman for No. 3 U.S. drugmaker Bristol- Myers Squibb Co. (BMY.N), said the firm is already planning
to remove PPA from its Comtrex and Nadicon flu and cold products.
The company does not yet have a time frame for changing the products, but Donohue said the removal would be based on
safety concerns, as sales of the drug are not a large concern for the Bristol-Myers.
Donohue said to put perspective on PPA-related sales for the company, 1999 sales for all forms of Comtrex -- those with
and without PPA -- were $29 million for a company that has $20 billion in annual revenues.
However, for smaller firms producing PPA over-the-counter drugs, a ban could spell a big financial setback.
Earlier Friday, Chattem estimated that sales of the form of Dexatrim containing PPA would be $20 million for fiscal year
2000. The company said Dexatrim would be expected to contribute between 40 cents and 50 cents per share in fiscal 2001.
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