Evelyn Pringle April 17, 2006
On January 20, 2006, Matrixx Initiatives, Inc, the maker of Zicam cold remedy products, agreed to settle a class action lawsuit by paying out $12 million to 340 plaintiffs, who claim Zicam nasal spray permanently damaged their sense of smell, a condition known as anosmia.
In the summer of 2005, Matrixx also settled the only lawsuit that has gone to trial, with a 42-year-old computer consultant, for an undisclosed amount.
As of January 18, 2006, according to the company's filings with the Security and Exchange Commission, there were 49 different lawsuits pending against Matrixx involving approximately 400 individuals.
The lawsuits began in 2003, with some persons claiming to have lost the ability to smell as a result of using Zicam spray only once. For instance, the first lawsuit was filed in October 2003, in the US Western District Court of Michigan. The complaint by Plaintiff, Dennis Christensen, said that he experienced an immediate and intense "stinging and/or burning sensation in his nose" after using Zicam.
"Since this one and only use of Zicam Cold Remedy Nasal Spray, plaintiff Dennis Christensen has totally lost his sense of smell," the lawsuit said.
In its answer to the complaint, in regard to Zicam spray, Matrixx said it had met all of the FDA "requirements to lawfully market an over the counter homeopathic drug in interstate commerce in the U.S."
But here lies the problem. Because Zicam contains the naturally occurring mineral zinc, long recognized as being safe, it is considered a "homeopathic" remedy, and is exempt from the regulations that govern the testing and manufacturing of regular drugs. As such, Zicam was not required to obtain FDA approval before entering the market.
A second lawsuit was filed on December 18, 2003, in Etowah County, Alabama, by Janie Sutherland, and also named Wal-Mart as a defendant.
The third lawsuit was filed in Maricopa County, Arizona, in January 2004, by 3 plaintiffs claiming to have lost their sense of smell and taste immediately after using Zicam.
After that, lawsuits began sprouting up all over the country.
The recent settlement agreement with the 340 plaintiffs, was announced jointly by Matrixx spokesman, Robert Murphy, and Arizona lawyer Charles Zimmerman, on behalf of a group of attorneys representing plaintiffs from all across the country.
Under the terms of the settlement, the average pay-out per plaintiff will be about $21,000, but the amount will vary based on the extent of the injury to each individual.
Matrixx spokesman, Murphy, said the company was not admitting liability, but settling the case made good business sense because Matrixx had already spent about $12 million in legal fees defending against claims related to the nasal spray.
However, $12 million here or there is mere chickenfeed to Matrixx when considering the fact that the company markets 22 products in the booming $3-billion-plus over-the-counter cough and cold industry. Its zinc nasal spray gel is the only one of its kind on the market and has reportedly sold more than 10 million bottles since it was introduced to consumers in 1999.
Cold-Eeze, was a competing zinc spray, but after being hit with a few anosmia lawsuits, the product was pulled off the market by the manufacturer in 2004, after only a year on the shelves.
According to Matrixx earnings reports, the company's net sales last year were more than $46 million during the first 9 months of 2005, which was about 40% higher than sales during the same period in 2004.
Besides, according the company's January 2006, SEC filing, Matrixx expects about 40% of the $12 million to be covered by insurance.
However, the settlement does not cover all lawsuits filed against Matrixx. About two dozen are still pending involving Zicam nasal swabs, as are 32 lawsuits filed outside of Arizona. And, it has not slowed Zicam users from filing new personal injury claims against Matrixx.
According to the FDA adverse-event database, in 2004, there were 133 adverse reaction reports on users of Zicam products. Most of the complaints involved the nasal gel and the loss of smell. However, because smell heavily influences taste, people often report a loss of taste along with the loss of smell.
Because these products are not required to prove efficacy, not surprisingly, studies have shown that zinc nasal sprays are pretty much ineffective. While two placebo-controlled trials showed that intranasal zinc gluconate modestly shortened the duration of cold symptoms, 2 other studies found the product provided no benefits.
In any event, never mind the lawsuits, the company recently came under the scrutiny of a much larger predator. On March 21, 2006, Matrixx received a letter from the Federal Trade Commission's East Central Region Office in Cleveland, Ohio, notifying the company that the FTC is conducting an inquiry into the company's advertising and promotional activities for the following products: Zicam Cold Remedy Nasal Gel; Zicam Cold Remedy Swabs; Zicam Cold Remedy Swabs for Kids; Zicam Cold Remedy RapidMelts; Zicam Cold Remedy Chewables; and Zicam Cold Remedy Oral Mist.
The purpose of the inquiry, according to the company's April 2006, SEC filing, is to determine whether Matrixx engaged in "unfair or deceptive acts or practices" in violation of the FTC Act. The agency has requested that the firm provide certain information by April 27, 2006.
Matrixx says it is cooperating fully and believes that its advertisements and promotional activities are accurate and comply with "laws and regulations in all material respects."
In another interesting turn of events, on November 23, 2005, the FDA sent Charles Hensley, co-inventers and patent holder of Zicam, a letter about another one of his other products called Vira 38, which he apparently was marketing on a web site as an effective means of treating influenza, bird flu and SARS.
The FDA informed Hensley that by selling an unapproved drug, he was violating federal law, and basically, told him to knock it off or he could face legal action including the "seizure of illegal products."
Some ear, nose and throat specialists say the problem with Zicam is that the force of the spray bottle propels the product too high into the nose where it comes in contact with the tissue containing the olfactory nerve. No doubt with this in mind, last year, Matrixx developed a new "control tip" for the bottle that is supposed to prevent the gel from reaching this sensitive area of the nose.
At about the same time the new tip was announced, Matrixx launched a major advertising campaign featuring testimonials from product users, including one presumably aimed at drug addicts, by none other than radio talk show host, Rush Limbaugh, the old prescription drug-fiend himself.
Which means its probably safe to predict that sales may increase among coke heads, or other illicit drug snorters, with little danger of potential lawsuits being filed by a group of consumers who can't smell that well to begin with.