It’s Official: Zicam Cold Remedies Recalled; Could Cost Company $10 Million

It was only a matter of time.

Two days after the Food and Drug Administration issued a stern public warning about the risk of losing the sense of smell from using three brands of Zicam Cold Remedy products, the company that makes the homeopathic treatments announced it has agreed to a recall.

Matrixx Initiatives Inc. of Scottsdale, Arizona had been told to immediately stop marketing Zicam Cold Remedy Nasal Gel and two nasal swab products for adults and children. The FDA said since 1999, it has received 130 reports of consumers losing their senses of smell after using the products. However, company officials admitted today that they never told the FDA about another 800 reports of Zicam users losing their senses of smell because the company did not think it was required by law to notify the FDA.

Authorities said zinc in the products may be interfering with the sense of smell in users, some of whom say they used the products only once or for short periods of time before being injured.

The FDA also required Matrixx to submit a new-drug application to the agency, which had never extensively reviewed or approved the products because they are considered homeopathic remedies and not subject to strict FDA review.

However, until today, there was no formal recall of the three Zicam products.

Matrixx President, chief financial and chief operating officer William Hemelt announced today that the company was recalling the over-the-counter products immediately. That means Zicam products currently on pharmacy and drug store shelves will be pulled until this whole mess can be sorted out.

Recall a Big Blow to Matrixx

Hemelt said the Zicam controversy could have devastating effects on the healthcare company. He estimated the possible financial damage will be as high as $10 million. As a result, the company is withdrawing its previous sales and earnings forecasts for 2009 in light of the Zicam recall.

Officials said it will lose about $5 million in lost sales of the recalled Zicam products and another $5 million it will be forced to spend in advertising to reach out to consumers in an attempt to rebuild credibility.

The company said complying with the FDA order to submit applications for approval of the Zicam brand treatments would be “highly expensive” and take several years.

In 2006, the company shelled out $12 million to hundreds of Zicam users who said they lost their senses of smell. The company still faces dozens, possibly hundreds, of additional lawsuits.

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