When an advisory panel to the Food & Drug Administration suggested on June 30 that dosing restrictions be imposed on the popular painkiller acetaminophen, the agency set the stage for a war between two consumer-product stalwarts. On one side is Johnson & Johnson (JNJ), maker of the most famous acetaminophen product, Tylenol. On the other is Wyeth (WYE), which makes Advil, a member of the competing class of painkillers known as non-steroidal anti-inflammatories (NSAIDS). What they're battling over is public perception—and both have a decided interest in coming out on top.
The panel recommended that the maximum dose of acetaminophen be reduced from 1,000 milligrams to 650 milligrams. The 1,000 mg. version, tantamount to what's found in over-the-counter Extra Strength Tylenol, would be made into a prescription product. The recommendation was prompted by concerns that too much acetaminophen can cause liver damage. Overdoses are responsible for 56,000 emergency room visits a year, the FDA estimates. Panel members were particularly concerned about combination products that contain, say, acetaminophen and antihistamines, for fear that consumers would take those along with Tylenol, or another product like it, causing an inadvertent overdose.
J&J's McNeil Consumer Healthcare unit went on the attack, expressing in a written statement its disapproval of the panel's advice. "McNeil Consumer Healthcare believes that this recommendation is likely to lead to more serious adverse events as consumers shift to other over-the-counter products such as non-steroidal anti-inflammatory drugs (NSAIDS) in search of pain relief," the statement said. It went on to point out that, unlike NSAIDS and other competitors, acetaminophen doesn't cause "adverse events, such as stomach discomfort and bleeding."
J&J consultant Dr. Kenneth Rothman, who spoke to panel members at the FDA confab, warned that if acetaminophen restrictions caused 30% of patients to switch to NSAIDS, the result could be 5,000 deaths per year from stomach bleeding and other complications. Responded Wyeth in a statement: "The dire predictions being made about the hypothetical health consequences of patients switching from OTC acetaminophen to an OTC NSAID as a result of acetaminophen restrictions are contradicted by actual real world experience."
Why do these companies care so much? Even though Tylenol and Advil went generic long ago, the brand equity they provide is still vital to both companies. Tylenol is one of the best-known brands in J&J's consumer-products basket, which has provided a major cushion in a rough economy. While J&J's prescription-drug and medical-device units have stagnated of late, its consumer business has been growing about 10% year-over-year. Consumer products accounted for $16 billion of the company's $64 billion in sales last year. (The company does not break out Tylenol sales.)
J&J's consistent leadership on drugstore shelves has helped its stock weather the recession better than that of some of its pure-play competitors: J&J's stock has fallen only 3% this year, while consumer giant Procter & Gamble (PG) has dropped 14%, and prescription drugmaker Pfizer has lost 13%.
Pfizer is now trying to be less of a pure play, which is why it announced in January that it would buy Wyeth for $68 billion. Advil is one of the crown jewels in that purchase, with sales of $673 million in 2008. In 2006, Wyeth introduced Advil PM, a direct competitor to the similarly named Tylenol PM. Both pain drugs contain a sleep medication. Sales of Advil PM rose a remarkable 17% in 2008, after Wyeth advertised the drug heavily on television. Advil PM was the fastest growing product for Wyeth Consumer Healthcare, the unit that accounted for 12% of the company's $22.8 billion in sales last year.
Vicodin and Percocet
The FDA panel also voted in favor of recalling prescription drugs containing acetaminophen, such as Abbott Laboratories' (ABT) Vicodin and Endo Pharmaceuticals' (ENDP) Percocet. The branded versions and their generic counterparts were prescribed 124 million times last year, making them the most popular class of prescription drug on the market. Sales totaled $1.4 billion.
In a press conference after the panel vote, FDA officials didn't indicate whether they would go so far as to remove products from the market. But they did say they detected strong support for lowering dosages on both the prescription and over-the-counter versions of acetaminophen and for beefing up cautionary language on labels. Such actions would be in keeping with a raft of safety measures the agency has imposed on popular consumer products lately.
In a statement to BusinessWeek, the FDA says it has been paying more attention to products after they hit the market in reponse to pressure from Congress. "We have increased our communications to the public about drug safety issues using a variety of vehicles," including medication guides and boxed warnings, the agency said. "The goal of this program is to ensure that patients and prescribers have the most up-to-date information to inform decisions about appropriate use of drugs in individual patients."