Barcelona 2015

Mar 24, 2015 - Mar 26, 2015, CCIB, Barcelona

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Pharma marketing and sales: When to make an Rx to OTC switch

Angelo DePalma explores prescription to over-the-counter (Rx to OTC) switches as a strategy for extending a product’s commercial life

Prescription to over-the-counter (Rx to OTC) switches are one of the least common among the myriad strategies for extending a pharmaceutical product’s commercial life. Yet once an active ingredient is so designated, scores of products may emerge from it, including one or more bearing the original brand, private labels, and combination products.

Kalorama Information estimates the value of US Rx-to-OTC switches at $7 billion in 2010. It also estimates 7.7% growth through 2015, when the market is expected to hit $15 billion. Kline & Co., a consultancy that closely follows OTC markets, notes that economic conditions in 2008 and 2009 posed considerable challenges for this segment, yet Rx-to-OTC switches remain a strong prospect for future growth.

Prescription success predicts OTC success

The Consumer Healthcare Products Association notes that more than 700 US OTC products use 106 “ingredients or dosage strengths” that were at one time available only by prescription. The FDA, which lists OTC approvals only by chemical entity, provides a more realistic picture of branded OTC approvals. Between 2001 and the present, the FDA approved exactly 24 Rx-to-OTC switches. Of these, nine represent dosage form variations, so in effect FDA approved just 15 ‘new’ OTC molecules during the past decade. All belonged to just six therapeutic categories: stomach acid reducers, antihistamines, weight loss agents, topical antifungals, expectorants, and smoking cessation agents.

The approved categories and agents share significant characteristics. All treat patient-discernable symptoms that very rarely indicate serious conditions, and all enjoy a long history of safe use. The most successful have also enjoyed a loyal following from their prescription days: “When a product goes OTC, its consumers follow,” says Laura Mahecha, healthcare industry manager at Kline.

In fact, prescription success has been a good predictor of a product’s OTC following. This becomes more significant as OTC markets become crowded. For example, nearly all the proton pump and H2-receptor antagonist stomach acid agents are now available OTC.

Developing a consumer brand

Yet developing a consumer brand is a relatively new idea for large drug firms, says Lisa Ebert, managing director at healthcare communications firm Medicus. Ebert was part of the team that made the Rx-to-OTC switch for Allegra. “It’s a unique situation, exciting, and unlike any other,” she observes. “You’re not just switching the product, you’re switching patients loyal to the prescription brand to OTC, essentially over the course of one day.”

To avoid missing market opportunities, sponsors should begin formulating a strategy at least five years before patent expiration. (For more on patent expiration, see Patent expiration: Innovate or die and Branded generics: The emerging market opportunity.) Discussions with regulators might take up to two years, as the OTC switch requires a new label.

Then there is the educational component, marketing, and preparing for the new pricing structure. Esai, for example, now offers significant discounts to its current prescription customers for Aciphex, presumably to cement their connection with the drug before it goes OTC and to garner new patients. “Companies need to retain as many patients as they can before they begin losing them to the private labels, which begins the day the exclusivity period ends,” says Ebert.

When exclusivity ends, consumers face exceedingly complex economic and medical decisions, which is where the education comes in. While ‘everyone knows’ that generics are every bit as good as branded products, loyalties built over years between products, patients, and prescribers, are difficult to shake.

Choices may include one or more branded OTC products, private labels, store brands, and one or more prescription-only versions of the same active ingredient.  More switches are on the way, says Bruce Braughton, who heads the Sanofi-Aventis team that took Allegra OTC and continues to manage the brand. But sponsors can expect increasing regulatory scrutiny, particularly around safety.

While a formal post-marketing safety study is unnecessary, companies need to build a bulletproof case to support self-medication. “Sponsors will spend a lot of time assuring regulators that patients, even those with poor reading skills, understand when to take an OTC product,” says Braughton.

New categories for switches

Anticipated switches are expected from established OTC categories (allergy, heartburn/digestion, analgesia, sleep), with new categories like urinary incontinence, erectile dysfunction, and benign prostate enlargement lurking in the wings. Sanofi-Aventis’ recent switch of Allegra follows the successful OTC launches of Merck/Schering’s Claritin in 2003 and McNeil’s Zyrtec in 2007. Potential future entries category include Clarinex (Merck’s remaining Claratin prescription-only franchise) and the corticosteroid nasal spray Flonase (GlaxoSmithKline).

The case of non-sedating antihistamines illustrates a tangled web of interests.  Claritin (loratadine) was approved in 1993 and quickly became a blockbuster as did Seldane before it and Zyrtec after. The regulatory petition for OTC status for these agents came not from the sponsoring companies but from insurer WellPoint Health Networks. WellPoint successfully argued that these drugs were safer than existing OTC compounds and that the switches would save the US healthcare system billions.

The FDA granted WellPoint’s request but could not force the manufacturers to switch until they were ready; i.e., when patents expired. By thus delaying, all three forfeited marketing exclusivity, which is usually granted to originator firms. Advil and Motrin brands of ibuprofen, by contrast, enjoyed a three-year monopoly on their OTC products.

Schering no doubt feared the loss of a drug that at one time comprised 28% of its total sales. Yet OTC Claratin generates between $300 million and $400 million in sales for Merck and sells for a significant multiple of OTC knockoffs. “True, they spend a lot on direct-to-consumer advertising,” says Mahecha, “but Claratin has become a nice little cash cow. Plus Clarinex (desloratidine) is still on the Rx side.”

In the digestive category, Prilosec (AstraZeneca), which switched in 2003, was joined OTC by Prevacid (Novartis/Takeda) in 2009 and Zegerid (Merck) in 2010. Upcoming candidates include Pfizer’s Protonix and Esai’s Aciphex, although the latter switch has been ‘imminent’ for several years. The issues of symptoms and medical supervision play strongly in how switches are orchestrated. Prilosec, for example, is sold OTC for heartburn but by prescription for ulcers.

Analgesics have a spotty history of switching to OTC. According to common wisdom, the FDA would not approve aspirin today much less allow it to go OTC. The same could be said for acetaminophen (overdose of which is the leading cause of liver failure in the US) and the numerous non-steroidal anti-inflammatory drugs and combinations that, by inference to medicines withdrawn during the 2000s, could be linked to organ failure and heart disease.

Sumatriptan, the active ingredient in the branded migraine medicine Imitrex, is often touted as a potential OTC switch. Sumatriptan has been approved OTC in the UK, but GSK appears to have abandoned its attempts to gain stateside approval. 

Sleep aids have been cited as potential switches as well, for example Ambien (Sanofi), Lunesta (Sepracor), and Rozerem (Takeda). Of the three, the FDA is likely to approve only Rozerem due to its exemplary safety profile and novel mechanism of action. Other potential therapeutic areas being discussed for switches include benign prostate enlargement, urinary incontinence, cholesterol lowering, and erectile dysfunction.

Merck has thrice submitted Mevacor for OTC approval but was denied each time. “It’s not so much that Mevacor is unsafe, but that particular ailment has no symptoms, and you don’t know if the medicine is working without blood tests,” notes Mahecha.

‘Behind-the-counter’ strategies

Drug categories that are poor bets for pure OTC status might benefit from a ‘behind-the-counter’ (BTC) strategy that combines ease of access, significant price reduction compared with Rx, but some level of supervision. The poster child for BTC access is Plan B, a ‘morning-after’ contraceptive marketed by Teva. The product consists of a single high dose of the contraceptive levonorgestrel and costs $50 or more. Customers must ask for the drug and demonstrate that they are at least 18 years old.

BTC status plays nicely with US pharmacists’ desire to get more involved in healthcare counseling and delivery, as they already are in the UK and Europe. But it will take more than proof of age to convince FDA to confer BTC status to statins or agents for prostate, sleep, erectile, or urinary disorders.

In a BTC setting, each of these therapeutic classes will require a unique information program and, in the case of statins, testing as well. For erectile drugs, pharmacists will need to check the patient’s history for nitrate use and the possibility of over-use of erection-enhancing agents. Pharmacies earn more for generics, generally, than for branded products, notes Mahecha, “and this has been the traditional concern, for manufacturers, with going behind the counter. They fear that pharmacists will recommend a more profitable generic.”

While US pharmacy associations favor pharmacist’s new roles as counselors and healthcare providers, the large chains dominating US pharmacy are primarily interested in volume. Moreover, for BTC to work in the US, apothecaries need a strategy for generating revenue from value-added diagnostic and counseling services.

At the same time, manufacturers must compete with nearly fully reimbursed Rx generic competitor products. (OTC drugs are not covered by US pharmacy plans.) Brand value looms large in Rx-to-OTC (or BTC) switches. The question for the US pharmaceutical industry is whether that value suffices to compensate all stakeholders, including patients.

Manufacturers committed to a BTC strategy will need to exploit this value and price products aggressively enough so pharmacists can profit, while simultaneously eliminating incentives to push customers toward generics. They may succeed, according to Mahecha, if they can somehow engage insurers to provide at least partial coverage for branded OTC and BTC products.

For more on marketing, join the sector's other key players at KOL & Stakeholder Engagement Europe on Feb 21-Feb 22 in Berlin, SFE Europe and eMarketing Europe on March 27-29 in Barcelona, and SFE USA on May 30-31 in New Brunswick.

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Barcelona 2015

Mar 24, 2015 - Mar 26, 2015, CCIB, Barcelona

Your Customer is in Charge.