Rx-to-OTC Strategies: Maximizing the Commercial Potential of an Rx-to-OTC Switch

With the growing cost of developing novel drugs, combined with the fact that fewer such drugs are gaining regulatory approval, the use of lifecycle management is playing an ever-more important role in the increasingly cost-conscious pharma industry. Rx-to-OTC switching is one such strategy employed to either enhance existing franchise revenues or protect branded revenues from generic competition.

Report Highlights
For Rx-to-OTC switches to succeed, there needs to sufficient differentiation between the existing Rx drug and the new OTC product. However, differentiation must meet a genuine unmet need. Differentiation for the sake of it is unlikely to produce a winning Rx-to-OTC switch strategy.

The volume of the OTC market is declining in the majority of the seven major markets. If this trend continues, it will not only impact the profits of OTC manufacturers, but also national cost-containment measures to reduce ever-escalating healthcare costs.

At present, Rx-to-OTC switches in the five major EU markets are decided at a national level. However, despite ongoing discussions, there are numerous barriers to harmonized EU Rx-to-OTC switches. Consequently, it is unlikely that in the EU harmonization will happen at least in the foreseeable future.
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Table 1: OTC product differentiation, therapeutic and commercial drivers, and additional data required for regulatory approval 24
Table 2: Rx-to-OTC switches in the US since 2001 49
Table 3: Therapeutic categories likely to be targeted for Rx-to-OTC/BTC switches in the next 5 years in the US 51
Table 4: OTC/BTC products could capture $1 billion in sales from drugs facing patent expiry in the US during 2008-2012 53
Table 5: Summary of Rx and OTC antiulcerant, GERD and heartburn products, 2003-08 57
Table 6: Pros and cons of early Rx-to-OTC strategy implementation 58
Table 7: The varying success of GlaxoSmithKline's OTC/pharmacy-only triptan franchise - Formigran versus Imigran Recovery 59
Table 8: Development and regulatory timeline for Rx-to-OTC product switching 62
Table 9: The pros and cons of pricing a drug too high or too low 68
Table 10: The varying success of GlaxoSmithKline's OTC/pharmacy-only triptan franchise - Formigran versus Imigran Recovery 70
Table 11: OTC market volume, value and price trend data across the seven major markets, 2003-07 76
Table 12: Summary of GlaxoSmithKline/UCB's Rx and OTC/pharmacy-only triptan products 125
Table 13: Imigran Non-Rx and Rx franchise in the UK, 2003-07 128
Table 14: Germany naratriptan OTC and Rx franchise 2003-07 131
Table 15: The varying success of GlaxoSmithKline's non-Rx triptan franchise in Germany and the UK - Formigran versus Imigran Recovery 135
Table 16: Summary of Rx and OTC orlistat products in the US, 2008 136
Table 17: Orlistat OTC and Rx franchise in the US, 2006-07 138
Table 18: Summary of Rx and OTC antiulcerant, GERD and heartburn products in the US, 2003-08 143
Table 19: Ranitidine OTC and Rx franchise in the US, 2003-07 144
Table 20: Ranitidine OTC and Rx franchise in the US, 2003-07 146
Table 21: Polyethylene glycol OTC and Rx market in the US, 2006-07 148
Table 22: Comparison of MiraLAX OTC and Imigran Recovery - OTC products launching into a genericized market 152
Table 23: Datamonitor exchange rates ($) 168
Figure 1: A wide range of brand defense strategies are available, however timing of implementation is critical 13
Figure 2: Differences between Rx and OTC drugs 14
Figure 3: Rx-to-OTC/pharmacy-only switches in the US and UK, 2001-07 17
Figure 4: Pros and cons of Rx-to-OTC switching 18
Figure 5: Benefits and risks of responsible self-medication 20
Figure 6: OTC Zantac becomes market leading ranitidine antiulcerant franchise, Q1 2003-Q4 2007 22
Figure 7: Response by payers once a prescription drug becomes available OTC 28
Figure 8: Factors to be considered when evaluating an Rx-to-OTC strategy 33
Figure 9: OTC products yield significantly greater sales per promotional spend than Rx drugs during the first 9 months post launch 35
Figure 10: Online patient decision support tool for Zocor Heart Pro 37
Figure 11: Rx-to-OTC switch and decision support tools may actually increase the number of patient-doctor consultations 42
Figure 12: Effect of Rx-to-OTC switching on the level of patient-physician interaction and healthcare costs 43
Figure 13: Leading Rx-to-OTC drug classes in the US and UK, 2001-07 46
Figure 14: Rx-to-OTC switch initiator companies in the US and UK since 2001 48
Figure 15: Branded sales at risk following US patent expiries during 2008-2012 52
Figure 16: Sales of Viagra in UK retail pharmacies, 2006-07 56
Figure 17: The evolution of prescription-only medicines (POM) to pharmacy-only and to general sales list (GSL) status in the UK 64
Figure 18: Regulatory approval process for product reclassification by the UK's MHRA and the Committee on Safety of Medicines (CSM) 65
Figure 19: High price of Zocor Heart Pro limited its uptake in the UK 69
Figure 20: Disparity between OTC volume and value growth trends across the seven major markets, 2003-07 77
Figure 21: Drivers and resistors of Rx-to-OTC switching across the seven major markets. 79
Figure 22: Value ($) and volume (SU) of the US's Rx and OTC markets, 2003-07 81
Figure 23: Pros and cons of implementing a new class of medicines in the US 85
Figure 24: Key comments made by the APhA supporting the FDA introduction of BTC status, March 2008 90
Figure 25: Value ($) of Japan's Rx and OTC markets, 1997-2005 93
Figure 26: Enhanced Rx-to-OTC switch scheme proposed by the PAFSC, March 2007 95
Figure 27: Value ($) and volume (SU) of the UK's Rx and OTC markets, 2003-07 100
Figure 28: Summary of drivers and resistors of implementing non-Rx strategies in the UK market outlined by the PAGB 105
Figure 29: Value ($) and volume (SU) of Germany's Rx and OTC markets, 2003-07 107
Figure 30: Value ($) and volume (SU) of France's Rx and OTC markets, 2003-07 111
Figure 31: Italian OTC product trademark 116
Figure 32: Value ($) and volume (SU) of Italy's Rx and OTC markets, 2003-07 117
Figure 33: Value ($) and volume (SU) of Spain's Rx and OTC markets, 2003-07 121
Figure 34: Sumatriptan OTC and Rx franchise in the UK, 2003-07 127
Figure 35: Naratriptan OTC and Rx franchise in Germany, 2003-07 132
Figure 36: Price of naratriptan OTC and Rx products in Germany, 2003-07 134
Figure 37: Orlistat OTC and Rx franchise in the US, 2006-07 137
Figure 38: Promotional spend of orlistat products in the US, 2006-07 140
Figure 39: Ranitidine OTC and Rx franchise in the US, 2003-07 145
Figure 40: Polyethylene glycol OTC and Rx market in the US, 2006-07 149
Figure 41: Promotional spend on PEG products in the US market, Q2 2006- Q4 2007 150
Figure 42: Pricing of PEG products in the US, 2006-07 151
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