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 or 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.
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.
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.
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