Cover Story: HERE COMES THE NEW WAVE

July 21, 2003

Rx-to-OTC switches represent a huge professional and marketing opportunity. Are R.Ph.s ready?

 

COVER STORY

HERE COMES THE NEW WAVE

Rx-to-OTC switches represent a huge professional and marketing opportunity. Are R.Ph.s ready?

For the past several years, the Rx-to-OTC switch landscape has been pretty quiet. But the lull is over. Several recent developments have opened the door for a new wave of switched products that will create economic and professional opportunities for pharmacists. The big question is: Will you be prepared to take advantage of these opportunities?

A significant event that is pulling prescription-to-over-the-counter switches out of the doldrums occurred in December 2002, when the Food & Drug Administration gave its blessing for switching Schering-Plough's Claritin (loratadine) to OTC status. The request for the switch came from an unexpected source—a citizen's petition from a health plan, WellPoint Health Networks, Thousand Oaks, Calif.

WellPoint has also requested OTC status for allergy drugs Allegra (fexofenadine, Aventis), and Zyrtec (cetirizine HCl, Pfizer) (see Drug Topics, June 5, 2000). This switch has been stalled due to the manufacturers' objections, but industry experts expect that the FDA will eventually give WellPoint the green light, thereby setting a precedent by approving an Rx-to-OTC switch without the manufacturer's consent.

In late June, just six months after the Claritin switch, the FDA gave the go-ahead for yet another switch—AstraZeneca's heartburn pill Prilosec (omeprazole) to be marketed by Procter & Gamble Co. (see "Prilosec is latest Rx to go OTC").

The FDA's more proactive switch stance has a lot to do with the long-awaited appointment of its new commissioner, Mark McClellan. As a physician and an economist, he has crafted a 2004 FDA budget that makes it clear that the agency will look at switches not only in terms of how these drugs may improve public health, but also as a means of keeping a lid on consumers' healthcare costs.

According to the FDA, one of its objectives under its new budget is "to become more proactive in recommending key potential prescription-to-OTC switches that could result in further consumer empowerment in self-medication as well as provide an expedient way to significantly reduce consumer healthcare costs for certain ailments."

The FDA's goal is to increase Rx-to-OTC switches by 50% on average. To accomplish this, the agency has allocated $1 million to support the hiring and training of seven full-time equivalent (FTE) employees, whose jobs will include expediting the review of Rx-to-OTC switches.

Steven A. Francesco, president of Francesco International, South Orange, N.J., and publisher of the monthly newsletter Switch, isn't surprised by the FDA's friendlier attitude toward switches. He believes the agency's approval for OTC Claritin has set the stage for what will be an explosion of new switches.

"The FDA has wanted to [be proactive with switches] for a long time," said Francesco. "That the agency has the heart and interest to collaborate with another company like WellPoint and to make its point with nonsedating antihistamines shows the will and intent have been there, but there hasn't been a commissioner. Without a commissioner you can't execute that kind of policy."

WellPoint's rapid success in reducing Rx antihistamine use by 50% from January through April 2003 compared with the comparable period in 2002 may indeed encourage managed care plans and other entities that want to reduce healthcare costs to press for future switches. In fact, another entity has already done so. In April 2003, Pharmacists Planning Service Inc. (PPSI), San Rafael, Calif., submitted a citizen's petition for switching Nicotrol Inhaler (nicotine inhalation system) from Rx-to-OTC status to be sold only under a pharmacist's supervision as a third class of drugs.

Does FDA's new receptive position to Rx-to-OTC switches set it at odds with drugmakers? Francesco thinks manufacturers, which typically push for a switch as their drug's patent nears expiration, would be more receptive to switching if the economic incentives were more enticing. He feels tax incentives and patent extensions would appeal to manufacturers.

One scenario that could benefit drugmakers is having dual-status for a drug. This would allow an Rx and OTC product with the same brand name to appear on the market simultaneously. Both drugs would be under patent protection. However, the OTC version would be available in a lower dose than the Rx. The Rx version would be covered by insurance.

Who will pay the price?

Regardless of who pushes for a switch, there's one pressing question: Will consumers have to dig deeper in their pockets to pay for switched medications?

Shortly after Claritin went OTC, many managed care plans made Rx allergy drugs Clarinex, Allegra, and Zyrtec nonformulary, and some health plans with three-tiered benefits placed these drugs in the third tier. The lay press had a field day reporting that allergy sufferers were shelling out more bucks for OTC Claritin than they did when the drug was paid for by their health insurance.

Robert Seidman, VP and chief pharmacy officer at WellPoint, acknowledged that there is the potential during what he dubbed an "interim period" for some of the Rx nonsedating antihistamines to have a higher co-pay than they did before Claritin went OTC. However, he argued that when Claritin was an Rx, WellPoint's average brand-name co-pay was between $15 and $25 for a 30-day supply of medication. "The average out-of-pocket cost of a 30-day supply of OTC Claritin, Alavert, or a generic version is less than $10 for the exact same medication," he said.

A recent Pfizer- and UCB Pharma-sponsored national phone survey of more than 1,000 people impacted by allergies revealed that patients and caregivers are opposed to changes in Rx antihistamine coverage being made by managed care organizations. In fact, 86% of allergy sufferers and caregivers whose insurance covers allergy medications agreed that insurance should cover all allergy medicines. Furthermore, nearly one-third of the respondents said they would switch insurance plans to get coverage for the allergy medicine their doctor recommends and 72% said they would see a doctor before switching from an Rx to an OTC allergy medicine.

Rochelle Ellis, analyst at Front Line Consulting in San Mateo, Calif., recently collaborated with two other analysts to conduct a study of Rx-to-OTC switches. She noted that accessibility to switched drugs also saves consumers time from not having to visit a doctor and money from the co-pay for the visit and the medications.

Categories ripe for future switches

Eric Manning, analyst at Front Line Consulting, and Ellis predict that several categories are ripe for future switches, such as hypertension, osteoporosis, and glaucoma. "The leader in the hypertension category is Norvasc [amlodipine besylate, Pfizer], and it is facing patent expiration July 31, 2006," Manning said. "The clinical data are fairly positive. All of the drugs in this category have a low occurrence of side effects, and the adverse reactions that do occur are not too dramatic."

Osteoporosis is another category that the pair cited as having the potential to go OTC. "These drugs fall into a category in which, once you have been diagnosed, it's fairly easy and safe to self-medicate. Certain drugs in this category are more risky, but some are fine," said Manning. Ellis concurred but cautioned that most of the drugs in this category are hormones so patients need to be monitored.

Glaucoma is another category the pair considers excellent for a switch. "These drugs are eyedrops. Glaucoma is a good new segment for the OTC market because the prevalence of glaucoma is increasing. In the United States, the prevalence is more than two million and is predicted to grow to at least 3.5 million by 2010," said Ellis.

Ellis and Manning believe that since mild asthma drugs and those in pill form have a better safety profile than Rx drugs in inhaler formulations, they would be better candidates for switching. "Through interviews with healthcare professionals, we found that if the drug is in inhaler form and is indicated for severe asthma, it would not be a good candidate for OTC because it requires a lot of one-on-one patient education on how to use the inhaler correctly," said Ellis. Incorrect use of an inhaler could result in death. In addition, asthma medications work differently. If someone has asthma, needs relief right away, and chooses the wrong medication, it could result in serious consequences, she said.

Because of safety concerns with drugs in the benign prostatic hyperplasia (BPH) category, the analysts think that Flomax (tamsulosin, Boehringer Ingelheim) would be the only product amenable to a switch.

The two analysts took a dim view of statins making the OTC jump. "For a small segment of the population, statins can cause liver damage. Before patients start taking statins they have to have a liver test to make sure their liver is functioning properly, and the first year patients are on statins, they have to have their liver function monitored," said Ellis.

Paul Doering, a professor of pharmacy at the University of Florida School of Pharmacy, disagreed with the analysts' thumbs-down on statin drugs going OTC. While he acknowledged that there are some serious concerns about potential liver and muscle problems, he said these problems do not occur that frequently. He did agree that patients would need to have their cholesterol monitored. "This would open up the opportunity for pharmacists to get involved in testing of cholesterol and triglycerides," he said.

WellPoint's Seidman believes that emergency contraception and drugs for cholesterol, allergies, and arthritis are excellent therapeutic categories for OTC switches. "We've heard that GlaxoSmithKline is interested in taking Flonase OTC upon its patent expiration in 2005. We know that Bristol-Myers Squibb and Merck are very interested in taking the 10-mg versions of Mevacor [lovastatin, Merck] and Pravachol [pravastatin, BMS] OTC. There are significant opportunities here to lower the cost of care, broaden access, and in many cases get better outcomes," he said. The patent for Mevacor has expired. Pravachol still has a year or two of exclusivity. Merck is interested in the OTC lower-dose market—a 10-mg version of its product.

Seidman is optimistic that Celebrex (celecoxib, Pfizer) could win approval as an OTC. He explained, "Celebrex is the closest to the NSAIDs [nonsteroidal anti-inflammatory drugs], which are sold OTC today, such as ibuprofen and naproxen. Because of their COX-2 specificity and issues with cardiac events, the FDA would be nervous about switching Vioxx (rofecoxib, Merck) and Bextra (valdecoxib, Pfizer)."

EP Publications, a service of WWMR Inc., a market research firm in San Francisco, recently released a report called Rx Brand Erosion by OTC Switches. In the report, several categories were mentioned as ideal for future switches, including incontinence, insomnia, migraine, and obesity.

A wake-up call for pharmacists

As the FDA steps up its perusal of switch candidates, a new wave of Rx-to-OTC products will inevitably hit the market. When that happens, pharmacists will undoubtedly have more opportunities to counsel patients, charge for these services, and increase their bottom line from the sale of these products. But are R.Ph.s ready for this OTC explosion?

Tim Covington, executive director, Managed Care Institute, McWhorter School of Pharmacy, Samford University, believes that many pharmacists have undervalued nonprescription drug therapy and OTC consultation as a business and professional opportunity. This, he said, is in part evident in the OTC market share loss by pharmacy since 1979 (65% of the OTC market in 1970 versus 36% to 39% today). "Pharmacies that don't offer information and consultative services relative to the safe, appropriate, effective, and economical use of OTC drugs are little more than commodity vendors," he said.

Noting that gross margins on OTC drugs are excellent, Covington said that in an analysis of 20 widely used OTCs to treat colds, allergies, heartburn, pain, and constipation, the gross margin on OTC national brands was 28% and OTC store-brand/private-label products was 44%. "In the face of declining margins on Rx drugs, the opportunity in pharmacy-based OTC consultations and counseling is obvious," he said. "Furthermore, OTC drug therapy involves first-pay payment. The absence of third-party constraints is no small matter. Have we forgotten the added-value profitability in cash-and-carry business?"

In addition to profits generated by the sale and counseling of OTCs, pharmacists can gain a lot of professional satisfaction from counseling.

Doering said that the myriad OTC line extensions confuse the public. Helping consumers to understand the products is an opportunity to "turn around the whole practice of pharmacy. A typical pharmacy is organized backwards," he explained. "They have the wrong people doing the wrong functions. If I were in a pharmacy setting, I'd spend a lot of time out front helping people sort through the products." Pharmacists need to take advantage of OTC switches, he said. Why should people go to a gas station, supermarket, or vending machine for OTCs? They should go to pharmacies, he asserted.

The American Pharmacists Association has already let the FDA know that pharmacists can be effective in counseling, especially if emergency contraceptives were to go OTC. In 2001, in a statement to the FDA regarding the Rx-to-OTC transition of emergency contraceptives, APhA said, "Pharmacists can very effectively manage the provision of emergency contraception services working with physicians under a collaborative practice protocol."

Francesco believes that pharmacists have a lot to gain professionally and financially if they jump on the Rx-to-OTC counseling bandwagon, especially in the next three to five years. However, he warned that getting on board will require pharmacy to redefine itself in order to create an environment in which switched drugs can be used properly.

"The pharmacy of today needs to change its structure so that it can answer new questions," advised Francesco. For instance, if the statins were to be switched, he said, pharmacists would have to be able to answer questions that were previously answered by physicians, such as, How do you stop someone from taking a statin when he shouldn't be taking it? How do you ensure that a patient who has not seen a physician is taking the right dose and is getting the desired effect from taking the statin?

The pharmacy of tomorrow, Francesco continued, has to be different in order to accommodate the treatment of chronic therapy in a self-medication setting. "This is not a return to the third class of drugs. The pharmacist is simply one more medical professional qualified to be involved in this. It's not going to be pharmacist-dominated. Depending on the condition, there could be nurses, chiropractors, orthopedists—any number of people who have the proper training to be involved in monitoring a particular condition and drug along with it," he said.

Chains or independent pharmacies that can create the environment that supports a business centered on monitoring and counseling certain health conditions with switched products will have a competitive advantage, envisioned Francesco. "It's going to happen, so if one of the chains jumps on the bandwagon, it will force the other chains to do so," he said. "The independents can jump on it faster because there's less bureaucracy. The issue is whether they have the vision, willingness, and money to be able to make the changes necessary."

Whether the chains or the independents jump on this bandwagon first remains to be seen. One thing is certain, as Francesco summed up, "There's an opportunity for pharmacists who are progressive and open to change and who have the vision to see that the pharmacy of the future is different from the pharmacy of today."

Sandra Levy

Current and potential OTC therapeutic categories

Current categories

Acne remedies

Allergies

Analgesics

Antifungals

Cough and cold

Diet aids

Digestive remedies

Eyedrops

Hair restoration products

Lice treatments

Smoking cessation aids

Women's health

Potential categories

Arthritis

Asthma* (mild asthma, pill form)

Benign prostatic hyperplasia

Glaucoma

Hypercholesterolemia

Hypertension

Obesity*

Osteoporosis

*Front Line does not expect these to be launched to OTC by 2008.

Source: Front Line Strategic Consulting

Prilosec is latest Rx to go OTC

The first proton pump inhibitor (PPI) to go over-the-counter is expected to reach pharmacies in mid-September. Procter & Gamble, which will market and distribute Prilosec OTC (omeprazole magnesium delayed-release tablets), believes it will "be one of the largest Rx-to-OTC switches" on record. At a press conference in Cincinnati to launch the product, Jeff Barker, director of P&G Health Care Marketing Development Organization, said Prilosec OTC "is expected to grow the category 15% to 20%."

Prilosec OTC will be available in 14-, 28-, and 42-count packages. Each tablet will cost $1 or less. Prilosec OTC will be available at the Rx-strength dose (20 mg) and is indicated specifically for frequent heartburn (two or more days per week). AstraZeneca will continue to make Rx Prilosec, also available at 20 mg, and Nexium (esomeprazole magnesium). Unlike Prilosec OTC, the Rx forms are approved to treat multiple indications, such as gastroesophageal reflux disease and other acid-related diseases.

P&G will "aggressively advertise the product and aggressively do free sampling," said Barker. Although unable to comment on overall cost of the campaign, he said, "This will be the largest initiative for P&G in the past three to five years." P&G will advertise with purple, the color currently associated with the brand, even though Prilosec OTC tablets are actually salmon-colored. In addition to on-line, print, radio, and TV ads, P&G will begin "The BurnTown Challenge," a nationwide educational program. After identifying cities with the highest percentage of frequent heartburn sufferers, P&G will offer an estimated 24,000 participants a free, 14-day trial supply of Prilosec OTC, educational materials from the American Pharmacists Association, and a chance to enter a sweepstakes.

Tom Dowling, Ph.D., Pharm.D., assistant professor, University of Maryland School of Pharmacy, applauded the FDA's decision and said this switch can benefit the consumer. "It provides a new option for heartburn sufferers," he said. He warned, though, that patients should "understand it is for short-term [14 days] use only, follow the instructions carefully, and recognize that the drug may take one to four days to take effect. Also, patients must be aware of potential interactions with drugs such as warfarin and digoxin, and that recurring symptoms could be a sign of a more serious condition."

Janet Engle, Pharm.D., immediate past president of APhA, emphasized that by educating consumers and guiding their choice of OTC products, pharmacists will become key players in the transition. "Fifty-four million people have frequent heartburn," she said. "So, it's something we really need to deal with as healthcare professionals. From the pharmacist's standpoint, the reason I'm excited ... is that it gives me an opportunity to talk more about heartburn and to take care of some of these patients."

This switch will "underscore the importance of pharmacist-patient interactions and counseling," said Dowling. "The label indicates that individuals taking some medications should 'ask a doctor or pharmacist before use.' This will promote a dialogue between the consumer and pharmacist and may lead to discovery of other drug-related problems or medical issues."

Barker said consumers spend an average of $1.8 billion on Rx PPIs. Consumers with no insurance pay approximately $800 million, and those with insurance pay $1 billion in co-pays. When asked whether consumers would end up paying more for the OTC than the Rx, he replied, "It is dependent on their coverage. On average, though ... it will be a value to the consumer."

Ashley Mattingly

The AUTHOR is a writer based in Cincinnati.

 

Sandra Levy. Cover Story: HERE COMES THE NEW WAVE. Drug Topics Jul. 21, 2003;147:26.