The US Supreme Court ruled unanimously that Matrixx Initiatives was wrong when it claimed that it did not have to disclose reports of adverse effects caused by its Zicam nasal spray because the number of reports was statistically insignificant. Matrixx is being sued by investors for securities fraud for failing to reveal reports that the product had caused some patients to lose their sense of smell (anosmia).
The FDA warned consumers not to use the product in 2009, five years after concerns about Zicam and anosmia were first raised publicly by a news program.
According to the ruling, “Matrixx’s premise that statistical significance is the only reliable indication of causation is flawed. Both medical experts and the Food and Drug Administration rely on evidence other than statistically significant data to establish an inference of causation. It thus stands to reason that reasonable investors would act on such evidence.”
The justices also found that, “Assuming the complaint’s allegations to be true, Matrixx received reports from medical experts and researchers that plausibly indicated a reliable causal link between Zicam and anosmia. Consumers likely would have viewed Zicam’s risk as substantially outweighing its benefit.”
Read the ruling.
