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Supreme Court Allows Lawsuit to Continue Over Failure to Disclose Zicam Problems

By March 24, 2011July 18th, 2019Dangerous Drugs

As a pharmaceutical liability attorney, I’ve written in this space before about the serious side effects of the now-defunct cold medicine Zicam. Versions of Zicam containing zinc were taken off the market in 2009 after regulators confirmed that using it could cause permanent loss of the sense of smell, also called anosima. Its manufacturer, Matrixx Initiatives, has already paid $12 million to settle lawsuits from patients, and reports say many more have been filed. But on March 23, NPR reported that the U.S. Supreme Court has allowed another class-action lawsuit to continue, this one from investors in the company. Those investors allege that Matrixx intentionally withheld information about the problems to keep its stock price high, ultimately defrauding investors when prices sank.
Under FDA regulations, Zicam was not a drug, but an “unapproved homeopathic product” with active ingredients including zinc gluconate. Zinc is believed by some to help shorten the common cold, but Zicam also constricted blood vessels in the nose, ultimately killing users’ senses of smell. After receiving reports of more than 130 people who permanently lost their ability to smell, the FDA told Matrixx to stop selling the implicated products. However, the shareholders say in their lawsuit that Matrixx executives knew about the risk as early as 1999. The stock fell dramatically in 2004, after news reports about the problem were released, and shareholders filed a class-action lawsuit.
The Supreme Court was asked to rule on whether the shareholders had standing — that is, the legal right — to sue Matrixx. In a 9-0 decision, it said they did. Writing for the majority, Justice Sotomayor said the facts suggest that Matrixx likely didn’t disclose the problems because it knew they would affect its stock prices — not because, as the company claims, it didn’t believe they were significant. Among other things, the court said, Matrixx apparently hired an outside consultant and a panel of scientists to look into the smell allegations. However, Sotomayor noted, shareholders would still be required to prove their claims in court.
I look forward to seeing them do so, because — as a dangerous drug lawyer — I know many of the shareholders’ allegations could help patients involved in highly related lawsuits against Matrixx. If the company hid negative information about its products, it broke the law in at least two ways: once by misleading shareholders, and again by deceiving patients. In the case of the patients, however, the result is permanent loss of their ability to smell, and by implication taste. Money can be repaid, but losing your sense of smell is unfortunately permanent. I suspect Matrixx settled the earlier patient lawsuits because it understands how inexcusable this will look to a jury — and how much it could pay in a jury verdict as a result

At Carey, Danis & Lowe, we represent clients who were sickened or seriously injured by a prescription or over-the-counter drug with serious safety problems. Unfortunately, numerous drugs have this kind of safety problem — from high-profile prescription drugs like Vioxx and Risperdal to everyday cold medicines like Tylenol. Our defective drug attorneys help patients harmed by these and many others hold drug makers responsible for the results of their sloppy or illegal safety practices. Under the law of all 50 states, drug makers have a legal obligation to avoid selling drugs that are defective or carry risks they didn’t warn about. When they do it anyway, and people are hurt as a result, those people and their families can sue to collect all the costs of their injuries, including medical costs, lost wages and compensation for a reduced quality of life.
If you or someone you love developed a serious medical problem you believe was caused by a defective drug, you should call Carey, Danis & Lowe right away. To set up a free consultation, send us a message online or call us toll-free at 1-877-678-3499.