Market Report Source

Overview

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.

Scope of this report:

• Overview of the Rx-to-OTC strategy, analyzing why, when, where, what and how to implement such a switch strategy
• Identification of drivers and resistors of Rx-to-OTC switching across the seven major pharmaceutical markets
• Case study analysis of the most recent Rx-to-OTC switches

Research and analysis 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.

Key reasons to read this report:

• Identify the recent trends in the Rx-to-OTC market, including which are the most popular OTC indications, and who is implementing Rx-to-OTC switches
• Gain insight into the drivers and resistors of implementing Rx-to-OTC switches across the seven major markets
• Recommendations on how to maximize the commercial success of an Rx-to-OTC switch

Table of Contents

CHAPTER 1 EXECUTIVE SUMMARY 4
Scope of the report 4
Key findings 5

CHAPTER 2 OVERVIEW OF RX-TO-OTC SWITCHING 12
Why implement lifecycle management strategies? 13
Classification of medicine types 14
What is Rx-to-OTC switching? 16
Why switch? – Drivers and resistors of Rx-to-OTC switching 18
Pharmaceutical companies – Drivers 20
A lifecycle management tool to generate revenues towards the end of an Rx drug’s life 20
Boosting brand awareness 22
Gaining additional periods of exclusivity 23
Opportunity to differentiate between brands 26
Pharmaceutical companies – Resistors 28
Loss of reimbursement 28
Limited applicability 30
The cost of OTC launch and prospect of facing limited uptake if not first-to-market 32
OTC products often have a lower price point 33
Consumers – Drivers 34
Increasing public demand for healthcare knowledge and access to a variety of healthcare options 34
Consumers – Resistors 35
Out-of-pocket cost 35
Misdiagnosis, product misuse/non-compliance, and lack of trust in OTC products 36
Payers and Governments – Drivers 40
Switching allows limited healthcare budgets to cover the cost of drugs not available OTC 40
Healthcare professionals – Drivers 41
Transferring patients from the physician to the pharmacist leads to long-term healthcare cost savings 41
Healthcare professionals – Resistors 43
Increased pressure on pharmacists to act as healthcare providers rather than simply as dispensers 43
What to switch? – Which products are targeted for Rx-to-OTC switching? 45
Who is switching? – Which companies are the leading Rx-to-OTC switchers? 47
What are the likely future Rx-to-OTC switches? 50
Zyrtec-D enters a crowded market 54
Trial run of Viagra OTC 54
Schering-Plough files for OTC Zegerid in the US 56
When to switch? – When is the optimal time to implement an Rx-to-OTC switch? 58
How to switch? – What are the US and EU regulatory processes? 60
Rx-to-OTC regulatory processes in the US 60
Rx-to-OTC regulatory processes in the EU 62
Marketing and promotion of switched products 65
DTC recommendations for Rx-to-OTC switched products 66
The cost of switching 67
Selecting a price 68
Zocor Heart Pro in the UK 69
Strategic pricing in GlaxoSmithKline’s EU triptan franchise 69

Summary of key Rx-to-OTC switch success factors 71

CHAPTER 3 RX-TO-OTC SWITCHING ACROSS THE SEVEN MAJOR MARKETS 75
Declining OTC usage across the seven major markets 76
Overview of the US OTC market 80
US medicines classification 80
Market assessment of Rx and OTC classifications in the US 80
Drivers and resistors in the US market 81
Gaining 3 years additional exclusivity 81
Potential loss of reimbursement 82
BTC – A future switching option in the US? 82
Unofficial BTC drugs – limiting misuse 82
Pros and cons of implementing a new class of medicines in the US 84
Suitability of drugs for a BTC classification 88
Recommendations on proceeding with the potential introduction of BTC medicines 89
BTC implementation by the FDA – will they, won’t they? 91
Overview of the Japanese OTC market 92
Japan’s medicines classification 92
Market assessment of Rx and OTC classifications in Japan 92
Drivers and resistors in the Japanese market 93
Free pricing system 93
Low utilization of OTC products at present, but demand for low-cost medicines is set to rise 93
Recent update of Rx-to-OTC switch procedures to ease transition 94
Increased access to OTC products drives uptake 95
Less than one-third of the population are aware of self-medication 96
EU approach to Rx-to-OTC switching 97
Overview of the UK Rx-to-OTC market 99
UK medicines classification 99
Market assessment of Rx and OTC classifications in the UK 99
Drivers and resistors in the UK market 101
The UK OTC market is underperforming, but has significant growth potential 101
No OTC patent protection, but 1 year’s data exclusivity 102
Change in marketing and promotion laws limits capitalization on Rx branding 103
Consumer willingness to self-medicate is influenced by co-payment for prescription drugs 103
Other OTC drivers and resistors in the UK market 105
Overview of the German OTC market 106
Germany’s medicines classification 106
Market assessment of Rx and OTC classifications in Germany 106
Drivers and resistors in the German market 108
Minimum 9-month regulatory switch procedure 108
No dual status limits scope of Rx-to-OTC switch strategy 108
Limited OTC availability limits uptake 108
OTC de-reimbursement led to decline in OTC usage 108
Deregulation has not led to price competition 109
Increased leniency set for OTC product advertising 109
Overview of the French OTC market 110
France’s medicines classification 110
Market assessment of Rx and OTC classifications in France 110
Drivers and resistors in the French market 112
Underdeveloped OTC market 112
France’s shrinking OTC market 112
Free pricing in the French OTC market 112
OTC products in France are non-reimbursable 113
Marketing and promotion of pharmaceuticals is strictly regulated in France 113
Internet pharmacies are not permitted in France 113
The absence of chain pharmacies limits national branding potential 114
The government has taken small steps to improve price competition 114
Overview of the Italian OTC market 115
Italy’s medicines classification 115
Market assessment of Rx and OTC classifications in Italy 116
Drivers and resistors in the Italian market 118
Introduction of OTC classification which can be promoted to the general public 118
Introduction of pricing flexibility and discounting promotes competition 118
Greater distribution flexibility increases public access to OTC medicines 119
Drive to increase awareness and confidence in OTCs 119
Training future pharmacists on the benefits of OTC medicines 119
Overview of the Spanish OTC market 120
Spain’s medicines classification 120
Market assessment of Rx and OTC classifications in Spain 120
Drivers and resistors in the Spanish market 122
No dual status permitted in Spain limits attractiveness of Rx-to-OTC switching 122
Overhaul of product advertising 122
Increased access to OTC medicines 123

CHAPTER 4 RX-TO-OTC CASE STUDY ANALYSIS 124
The varying success of GlaxoSmithKline’s EU triptan Rx-to-OTC/pharmacy-only strategies 125
An unsuccessful Rx switch strategy for sumatriptan in the UK 126
Potential advantages of Imigran Recovery 126
A failed generic defense strategy 126
Factors limiting the impact of Imigran’s switch 128
Key take-home message 129
GlaxoSmithKline successfully switches naratriptan in Germany 130
Key strengths of the GlaxoSmithKline’s naratriptan 132
Key take home message 134
The varying success of GlaxoSmithKline’s non-Rx triptan franchises – Formigran versus Imigran Recovery 135
The rise and fall of Alli 136
Key strengths of Alli 138
Why Alli sales plummeted post launch 140
Key take-home message 142
Antiulcerants – a prime target for Rx-to-OTC switching 143
Zantac’s multiple formulations maintain OTC franchise momentum 144
Evaluating the success of Zantac 150 Max Strength 145
Key strengths of the Zantac Rx-to-OTC switch 147
Key take-home message 147
MiraLAX – fulfilling an unmet need in a highly genericized market 148
Key strengths of Schering-Plough’s MiraLAX Rx-to-OTC switch 150
Key take-home message 151

CHAPTER 5 BIBLIOGRAPHY 153
Publications and online articles 153
Publications, online articles and meetings 161
Datamonitor resources 162
Databases 163
Abbreviations 163

List of Tables
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

List of Figures
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