Procter & Gamble: On A Short Leash

For months, the Food & Drug Administration had been writing letters to Procter & Gamble Co., complaining that it was misleading to use the word "fresh" on Citrus Hill packages because the orange juice is made from concentrate. And despite a long day of meetings between agency and company representatives last spring, P&G still would not back down and remove the offending word.

Finally, at about 10:30 p.m. on an evening in April, P&G's people stalked out, apparently convinced that the FDA wouldn't take action. They were wrong. Within days, the FDA flexed its regulatory muscle by seizing a shipment of Citrus Hill. An embarrassed P&G quickly agreed to alter the labels. And just a few weeks later, the FDA forced it to take the words "no cholesterol" and a small heart off packaging for Crisco corn oil.

These high-profile incidents are only the latest in a string of setbacks the consumer-products giant has suffered recently at the FDA (table). P&G isn't the only company trying to cash in on the health craze by launching new products and making new claims. Nor is it the only marketer to be bitten by the newly aggressive watchdogs at the FDA. But P&G is feeling more scrutiny than most, because it has been making its health push across a broader array of categories--everything from prescription drugs to potato chips. It has run into obstacles partly because many of its products and claims are ground-breaking. It has also, by its own admission, mishandled some issues.

CRESTFALLEN. Procter's problems with the FDA are troubling--not just because 75% of its U. S. brands are in some way regulated by the agency but because P&G sees health and beauty products as a main engine for its U. S. growth. The company seemed ideally positioned to capitalize on health concerns. Besides marketing muscle, it has plenty of technological prowess. So it could ultimately benefit from a stricter FDA that would permit health claims only from companies with the science to back them up. In the meantime, though, its recent reversals are holding up growth in the company's U. S. business, where unit volume shrank 4% in the first quarter.

P&G's most costly misstep may have been its botched attempt to gain FDA approval for a new version of Crest toothpaste. The company asked for permission to launch Ultra Protection Crest, formulated with triclosan, an antimicrobial agent that is sold in toothpastes abroad as a plaque-fighter. P&G told the FDA that its proposed label would make only cosmetic claims. But at an October meeting of the American Dental Assn., Procter promoted the toothpaste's "antibacterial efficacy," raising eyebrows at the FDA. P&G later backpedaled, but it was too late: In February, the company aborted its launch of the toothpaste after the agency said it planned to consider it a new drug, requiring clinical studies and a time-consuming application process.

P&G's woes are partly the result of an unfortunate coincidence. Just as the FDA has grown more watchful, the company, long known for its ultracautious style, has become more aggressive. "They've been willing to be a little faster, with a little more gutsy approach," notes a regulatory expert at one rival. In the case of Citrus Hill, though, bad luck may also have been to blame. Procter "just happened to be in the wrong place at the wrong time," says Peter Barton Hutt, a former FDA chief counsel. Agency gfficials acknowledge they were looking for a visible target to show they were serious about misleading labeling, and orange juice was a good one.

NONFAT CHANCE. The story is more complex for olestra, the fat substitute that the FDA has been pondering for more than four years. No previous food additive has had the potential to be consumed in the quantity that olestra might, so the FDA has had to develop a new standard to test its safety. And while P&G has made a good deal of headway, the company is still doing research on olestra's effects in the body. "The olestra case is precedent-setting. It has to be approached very carefully," says F. Edward Scarbrough, acting director of the FDA's Nutrition & Food Sciences Office.

If P&G is having problems with olestra, a drug-like food, it also faces them with its fiber laxative Metamucil, a food-like drug. Four years ago, Procter asked the FDA for permission to tell consumers that psyllium, the active ingredient in Metamucil, helps lower blood cholesterol. Some research has shown it does just that, albeit modestly. The agency said it needed more data, which P&G is now producing. But competitors may get a head start. As part of new nutrition labeling rules that will be in place by 1993, the FDA could permit cholesterol-reduction claims by cereals containing psyllium.

Competition also is an issue with P&G's most promising prescription drug, Didronel, which has long been used to treat a bone ailment called Paget's disease. P&G asked last year that it be approved as a treatment for osteoporosis, the bone disease that afflicts more than 20 million U. S. women. Some analysts have it pegged as a $500 million drug.

However, some members of an FDA advisory panel that met in March voiced concerns over the latest research, which indicated a possible reversal of earlier benefits as therapy continued. P&G Vice-President Geoffrey Place sees this as a "statistical wobble" and says evidence for the drug is solid. But the new questions could cause Didronel to lose ground to other similar drugs under development. "It's very important to P&G to get this going quickly because there are two drugs not far behind," notes independent analyst Hemant K. Shah.

'SHORT-TERM' SNAGS. Despite P&G's numerous regulatory headaches, no one sees any attempt by the FDA to single out the company. Place concedes that P&G has been "ineffective" in some of its dealings with the FDA, although he says the snags are "a short-term, tactical issue which will not affect our long-term relationship or our ability to build our business." Even so, P&G Chairman Edwin L. Artzt is unhappy over the way the food-labeling issue was handled. "Some of it could have been avoided," he says. Some analysts and former P&Gers believe that the June resignation of B. Jurgen Hintz, the P&G executive vice-president responsible for the food and beverage business, reflected in part that displeasure.

P&G set up a new worldwide organization to handle regulatory issues lastNovember, and Place believes that itwill soon prove its mettle in Washington. He expects the FDA to approve Didronel for osteoporosis, and new prescription drugs for inflammatory bowel disease and urinary tract infections, in lessthan the two or three years the agency normally takes. P&G filed for the drugs in 1990.

Other tests of P&G's regulatory relations are nearing. Later this month, the FDA will consider whether the stomach remedy Pepto-Bismol can continue tobe marketed to treat diarrhea. And if partner Syntex can gain FDA approval, P&G hopes to sell Syntex's top-selling antiarthritic drug, Naprosyn, in over-the-counter form. Another petition just filed at the FDA asks it to affirm as safe a low-calorie fat called caprenin, which P&G hopes to sell as a substitute for cocoa butter in confections. How these and other health items fare will have a great impact on P&G's own health.


ULTRA PROTECTION CREST Halted national launch after FDA said new toothpaste with an antibacterial agent required new-drug approval

CITRUS HILL FRESH CHOICE Agreed to drop `fresh' from name after FDA seized some of the orange juice, saying the labeling was false and misleading

CRISCO CORN OIL Dropped `no cholesterol' labels from all its food products after FDA told vegetable-oil marketers to stop using the claim

METAMUCIL Doing clinical research to support cholesterol-reduction claims for this fiber laxative after FDA asked for more data

DIDRONEL Awaiting FDA approval to market this prescription drug as an osteoporosis treatment--but an advisory panel has questioned some of the data

OLESTRA Still hasn't won FDA's go-ahead four years after its initial petition to sell this fat substitute


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