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BRISTOL-MYERS DISCONTINUING OTC CAPSULE BUSINESS WITH PLANS TO INTRODUCE NEW CAPLET DOSAGES BY JULY; EXCEDRIN TAMPERING FORCES MARKET WITHDRAWAL

Executive Summary

Bristol-Myers is discontinuing its non-Rx capsule business and says it will be ready to introduce new caplet dosage forms within "the next few weeks." While B-M has indicated that it could have new dosage form replacements for the capsules on the market quickly, the abandonment of capsules does not leave a major gap in the company's product line. The company pointed out that over 90% of its Excedrin, Datril, Comtrex and Bufferin customers already use those products in tablet form. In response to the discovery that four bottles of Extra Strength Execedrin were laced with cyanide in the state of Washington, Bristol-Myers alerted the trade on June 20 that "Bristol-Myers Products Division has made the decision to withdraw all of our OTC, non-prescription, capsule products from sale and recall them from our trade customers." The company promised a packet of instructions on returns and credits "in a few days." The processing of returns will take four to six weeks. The firm said, "Please do not deduct this claim in subsequent payments to Bristol-Myers." B-M Products President Ronald Ahrens attributed the decision to the continuing public attention to capsules. In the trade announcement, Ahrens noted that "the tampering with Rx capsules in Auburn, Washington has once again brought nationwide focus on OTC, nonprescription, capsule products." In a short public statement on June 20, B-M attempted to prevent burning its bridges to the capsule business completely by stating its intention to watch packaging improvements. "We recognize that there is still a continuing demand by a substantial number of people for capsules. As capsule sealing technology continues to improve, we will reevaluate our decision." SmithKline Reintroducing Contac, Teldrin Capsules To Strong Trade Demand The B-M decision to withdraw capsules took five days from the breaking of the story of the death of an Auburn woman, Sue Snow. For two days, the company attempted to keep Excedrin capsules at the trade level with a quarantine while determining the extent of the tampering. The discovery of a second bottle on June 18 kicked off a nationwide recall. The unfolding B-M capsule tampering story ironically coincided with the first shipments back to the trade of SmithKline's Contac, after a three-month period off the market due to a stock market manipulation scheme based on a tampering incident in March. The B-M incident, in fact, overshadowed and buried what could have been a dramatically positive story about the OTC capsule business. SmithKline began shipping its new Contac double-banded capsules and caplets on Tuesday, June 17, the same day that Bristol-Myers initiated the quarantine of Excedrin. Contac and Teldrin had been reintroduced by SmithKline to strong trade demand following FDA approval of the new formulations June 13. The company reportedly did about $20 mil. in orders for Contac in its first days of taking orders -- with the orders running roughly 60% for the capsules and 40% for the caplets. SmithKline got an expeditious approval from FDA for the Contac caplet product through the cooperation of Dorsey, which holds an original NDA for Triaminic-12 (75 mg phenylpropranolamine/12 mg chlorpheniramine) tabs. Dorsey granted SmithKline reference rights to its NDA, and the Contac caplet approval is for the same formulation as the Dorsey product. Contac capsules contained 8 mg chlorpheniramine. SmithKline got supplemental NDA approvals for the new capsule versions of Contac and Teldrin. On Friday, June 20, the day that B-M announced its decision to halt OTC capsule sales, an indictment against the tampering suspect in the SmithKline case was announced by the U.S. district attorney in Orlando, Florida. The grand jury indicted Edward Arlen Marks on 37 counts of tampering and wire fraud. The attorney general noted that "in the event that he is convicted, Marks can be sentenced to a maximum of 253 years in prison and $495,000 in fines." The trial is anticipated in August or September. B-M's withdrawal of capsules indicates the lack of options available to OTC manufacturers when a tampering incident develops. B-M's decision to recall all Excedrin caps at mid-week reaffirms the second-bottle rule: once tampering is found in a second bottle, there is little that a company can do but initiate a full recall. The trade's reaction to SmithKline's new Contac caps, however, expresses trade confidence in consumer demand for the cough/cold medicine. A sign that industry is running out of options to respond to tamperings is the Proprietary Assn.'s request that government consider placing restrictions on the availability of cyanide. P-A President James Cope commented that "in light of its recent popularity as a tool for suicide and murder, we think it's time to take a hard look at cyanide's perhaps too-easy availability." P-A also offered an additional $300,000 for information on the Excedrin tampering. FDA apparently is still leaning toward letting the manufacturers decide about the ultimate future for OTC capsules. FDA Com. Young continues to call for a cautious response to a decision on capsules citing the perceived advantages to consumers. The agency is reportedly considering a renewed effort to push for multiple layers of tamper-resistant packaging for capsule products.
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