A narrower interpretation of "serious adverse event" - compared with FDA's definition - is costing Matrixx Initiatives at least $10 million dollars with the recall of its intranasal Zicam products - assuming FDA cannot be convinced to reverse its position.

FDA issued a consumer safety warning June 16 that use of certain Zicam intranasal products has been linked to anosmia, or loss of the sense of smell.

Matrixx says it launched a voluntary withdrawal of the products the same day, hours after receiving a warning letter.

FDA's action came less than a month after agency officials inspecting Matrixx's facility said that reports about anosmia associated with the use of a company's product should be submitted to the agency, as required by adverse event reporting law.

Matrixx is still compiling information but seeks a meeting with FDA to present data in an effort to get the agency to reverse its decision, said William Hemelt, Matrixx acting president since October 2008.

He said the firm has studies that show no risk of anosmia related to the products. "We think the product is safe and that's what we want to go talk to FDA about," Hemelt said.

FDA previously exercised enforcement discretion under its homeopathic drugs policy, allowing Matrixx to market Zicam products without a new drug application. However, the risk of anosmia prompted the agency to take enforcement action.

If the firm wants to continue marketing the products, it must submit an NDA and seek approval from the agency, "regardless of [the products'] homeopathic status," the agency says.

Hemelt says the firm will likely not file an NDA for the two products.

Filing an NDA is "a multi-year project and consequently it's a very expensive process, involving numerous extensive clinical trials," he said. "Since it's not really our expertise and due to the expense and the time, that is not something we would likely pursue."

Instead Matrixx is focused on rebuilding its Zicam brand by restoring consumer confidence and shifting people to its oral remedies.

"When you have this kind of publicity it unfortunately extends to all your other products," Hemelt noted. "But, of course, we feel just as strongly that they are safe and that's what we hope to promote, certainly this coming year, if we are unable to get those two products back on the shelf."

The recalled products made up 40 percent of the firm's 2009 sales, or $44.6 million.

A Cautionary Tale

The Zicam case serves as a cautionary tale for manufacturers trawling for reportable adverse events who may not be casting as wide a net as FDA would advise.

OTC drug and dietary supplement manufacturers are required to notify FDA of serious adverse events within 15 days of a consumer report under the Dietary Supplement and Nonprescription Drug Consumer Protection Act of 2006.

Adverse events associated with use of personal-care products currently are reported on a voluntary basis. Interest groups such as the Environmental Working Group have lobbied Congress to make the reporting of adverse events mandatory for cosmetics firms (¹ Also see "House Subcommittee Hearing Explores Alleged Gaps In Cosmetic Safety" - HBW Insight, 19 May, 2008.).

The Food and Drug Administration Globalization Act of 2009 (H.R. 759), sponsored by Rep. John Dingell, D-Mich., would require personal-care manufacturers to report serious adverse events, as well as to conform to good manufacturing practices (² Also see "2009 FDA Globalization Act Scratches Fees For Cosmetics, “Unanticipated” AEs" - HBW Insight, 30 March, 2009.).

The bill has been referred to the House Energy & Commerce Committee, but the bulky legislation has stalled and the committee has elected to focus on food safety, which has been separated out in Dingell's H.R. 2749, the "Food Safety Enhancement Act."

If mandatory reporting of serious adverse events is in the future for the personal-care industry, manufacturers will be faced with the legal challenge of deciding what exactly constitutes a "serious" event.

Matrixx Says Reports Did Not "Fit" AE Definition

Since 2004 Matrixx has been the target of lawsuits from consumers alleging that they experienced anosmia as a result of using the Zicam products FDA now says are unsafe. In a May 12 earnings call, Hemelt said the firm's legal expenses related to lawsuits were between $300,000 and $400,000 in its fiscal 2008 fourth quarter, and totaled $2.2 million for the full year. He also said some of the lawsuits have been dismissed.

FDA issued its Zicam warning to the public after identifying complaints of anosmia linked to Matrixx products in more than 130 AERs voluntarily submitted by consumers and health-care providers.

The affected zinc-containing products, which Matrixx markets as homeopathic treatments, include Zicam brand Cold Remedy Nasal Gel and Cold Remedy Swabs. FDA also questioned the safety of a discontinued product - children's size Cold Remedy Swabs.

"This disabling loss of one of the five senses may be long-lasting or even permanent in some people," according to Deborah Autor, director of FDA's Office of Compliance in the Center for Drug Evaluation and Research.

Matrixx maintains it was not required to submit anosmia AERs to FDA. "We didn't believe that we were required to send them under the new regulations," Chief Operating Officer and Acting President William Hemelt said. "And we based that on the opinion of counsel that looked at the FDA regulations and said, 'No, it doesn't fit.'"

According to the regulation implemented under the Dietary Supplement and Nonprescription Drug Consumer Protection Act, a serious adverse event involves death, a life-threatening event, congenital anomaly, hospitalization or a disability.

The law requires manufacturers and distributors of monograph OTC drugs and dietary supplements to submit to FDA all serious AERs they receive. It was during an inspection May 26-28 that FDA officials "suggested for the first time that their interpretation was to report all complaints of diminishments of smell" under the AER regulations, Hemelt said.

In the course of the inspection, FDA officials determined that Matrixx had 800 AERs on file that had not been submitted to the agency.

Matrixx contends the firm is required only to have those reports available during inspections. "That position that [FDA officials] articulated to us just about two or three weeks ago is directly contrary to the written advice that we had received from our counsel after those regulations were adopted," Hemelt said during a June 18 conference call.

Furthermore, the firm wrote FDA following the May inspection seeking to resolve any questions the agency had. "We heard nothing from the FDA until we received the warning letter," Hemelt said.

Ivan Wasserman, a partner with Manatt, Phelps & Phillips, said Matrixx's situation "really illustrates the struggle companies have deciding whether a particular report is reportable."

Daniel Fabricant, the Natural Products Association's VP of scientific and regulatory affairs, noted: "It's a tough issue. It comes down to medical criteria."

FDA's action against Matrixx underscores the importance of having medical expertise on staff to advise management on compiling AERs and submitting the information to FDA, Fabricant said.

$10 Million Recall

Scottsdale, Ariz.-based Matrixx must respond to FDA's warning within 15 working days with the steps it is taking to remove product from the marketplace.

Matrixx estimates the cost of the recall at around $10 million. As for the overall impact on the firm's business, Hemelt acknowledged that there will be "significant effects" if the products are kept off the market. The firm has withdrawn its guidance for 2010.

In a financial note posted June 19, B. Riley analyst Nick Genova said the likelihood of FDA reversing its position is "a long shot."

But Ivan Wasserman, a partner with Manatt, Phelps and Phillips, notes "it is not unprecedented for FDA to change a position it has taken in a warning letter or, more typically, for a company to reach an agreement with the agency to make changes to its marketing claims or product labeling or formulation to allow a product to stay on the market."

Following FDA's consumer alert, Matrixx shares fell about 70 percent to close at $5.78 on June 16. As of NASDAQ's close on June 25, the firm's shares were valued at $4.90.

- Katie Stevenson (k.stevenson@elsevier.com)

What Does FDA Deem A "Serious Adverse Event"? Matrixx Learns The Hard Way

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