Matrixx Claims Victim Status in Zicam Ban; Company Sat on 800 Complaints

(MoneyWatch)  Matrixx Initiatives claims the FDA's ban of Zicam cold remedy nasal swabs is political and the company is the victim -- not the 130 people who lost their sense of smell. Meanwhile, the SEC has joined the FDA in investigating the company, according to the WSJ, following news that the company had been sitting on 800 consumer complaints about Zicam, according to Bloomberg.

The recall will cost the company $10 million and Matrixx has withdrawn its analyst guidance and forecasts for 2009. I'm going to wildy speculate that the SEC is probing the company because it believes those 800 unreported complaints are just the sort of material information that should have been disclosed to shareholders at an earlier date.

You can read Matrixx's "FAQ" here -- much of it takes the form of a polemic suggesting that President Obama's jackbooted thugs are trying to victimize a lowly medicine maker. Context: This is a company that claims it has "clinically proven" products that can "remedy" the common cold. There is no cure for colds.

Let's look at the FAQ:

There is a growing sentiment that the new Obama administration/FDA Commissioner is looking to crack down on the regulation of over-the-counter medicines. Do you feel Zicam is the "poster child" for this new environment? We do not have information as to why the agency decided to take the actions it took. We do know that Zicam Swabs and Gel are safe and that the FDA should not have taken the precipitous actions it took without talking to the company about the extensive scientific data that shows these products are not unsafe.

This is a false statement. The FDA explained to the company in its warning letter that the recall was made because 130 people reported losing their sense of smell.

Why is this FDA warning unprecedented? What does FDA usually do with a manufacturer that it did not do at this time? We believe it is unfair for any Federal agency to take the kind of precipitous action it took against the company in a situation like this. Had they talked with us, we would have shared with them the compelling data and information showing that Zicam Swabs and Gel are not unsafe.

So the company is sitting on 800 complaints, but it "would have shared" the information if only the FDA had asked? Is the FDA supposed to go around the country randomly asking companies if they're not sharing adverse event data?

Besides, the ban is not "precipitous." As the WSJ reported, the company settled 600 suits over Zicam in 2006.

I have heard that Zicam purposely withheld consumer complaints about loss of smell from the FDA. Is this true? [The FDA conducted two audits.] During the May 2009 audit, the FDA suggested ?€" for the first time ?€" that the FDA's interpretation of new regulations required the company to report to the FDA all complaints of diminishment of smell, rather than having those complaints available for FDA inspection. The FDA's position is directly contrary to the written advice received from the company's FDA counsel shortly after the new regulations were adopted.

This answer makes it appear that the FDA changed its rules as it went along. But there's a fantastic sleight of hand in that last sentence. Read it carefully: "The FDA's position is directly contrary to the written advice received from the company's FDA counsel ..." In other words, the FDA hasn't changed anything -- the company was relying on the advice of its own lawyer whose guess at the FDA's position on those complaints turned out to be wrong.

I have heard that your products are not regulated. Is this true? No. Zicam Cold Remedy intranasal products are over-the-counter drugs and are regulated by the Food and Drug Administration (FDA).

Again, this is false. The FDA's warning letter states Zicam is not an OTC drug: "There are no approved new drug applications (NDAs) on file with FDA for any of the Zicam Cold Remedy intranasal products; you market them without FDA approval."

Lastly, Matrixx CFO Bill Hemelt made a video on his site to reassure customers. In it, he says:

We believe the cumulative scientific and medical evidence shows that our products are safe and efficacious and there is no credible evidence that Zicam ... causes you to lose your sense of smell.

Apart from the 600 lawsuits, the 800 complaints, and the 130 reports at the FDA.

• Previously:
• FDA: Zicam Can Permanently Kill Your Sense of Smell