Rx-to-OTC Switch Data

Rx-to-OTC Switch Management Issues

Rx-to-OTC Switch Trends

Where to find more information on Rx-to-OTC Switches

There is a continuing disparity between the high quality of drugs produced today and our attack on key disease states. While each day new drugs are becoming more safe and effective, we are still doing a miserable job on addressing key health problems such as:

n Hypertension

n Hypercholesterolemia

n Benign Prostate Hyperplasia

n Osteoporosis

This disparity is creating a widening gap between the drug haves and the drug have nots. Unfortunately, that gap may increase even farther over time as reimbursement systems reduce the number of drug options that they will cover. Nonprescription status is the only other commercially viable alternative.

This proposal recognizes that an important shift has occurred in pharmaceutical product research and development. The ever-present issue of pharmacological safety has changed in recent years. From the very beginning products are safer now than before. While not abandoning the issue of safety at all, the attack on disease therapy should broaden and shift to solving the many problems concerned with OTC compliance and monitoring.

Therefore, the government should provide sufficient incentives to pharmaceutical companies to pursue breakthroughs in OTC monitoring and compliance.

The incentive for private enterprise would be a three year period of market exclusivity after OTC launch plus the opportunity to develop product combinations covered in the US monograph system. The market exclusivity part is an extension of existing legislation granted by the FDA for work that is considered "essential" to the switch, virtually always involving safety. Current legislation does not link up switch applications to the monograph system. We propose changing that also.

In our proposal, to gain market exclusivity after OTC launch, the pharmaceutical company must perform essential research or other efforts at Phase III that will significantly enhance the chances of this drug to switch to nonprescription status. Exclusivity can be gained by performing important breakthrough research in over the counter areas of

Under this proposal all healthcare constituencies will benefit.

SWITCH firmly believes that the above proposal deserves the support of all the constituencies mentioned. SWITCH intends to pursue this initiative and asks for your support. Please contact us for further information or fax back our form.

There are distinct and definable problems in the movement of products from prescription to nonprescription status. Many of these concerns are currently associated with legitimate worries on consumer compliance and monitoring. For example, Johnson & Johnson • Merck US is wrestling with the FDA over the switch of Mevacor. Major issues remain regarding monitoring and compliance concerns.

How do you arrange to insure that the consumer is taking the drug and that his or her hypercholesterolemia is lowering properly? The safety of the drug is less an issue.

This concern can be simplified to a formulaic sentence

This basic question can be asked of a very large number of indications, including osteoporosis, hypertension, hypercholesterolemia, benign prostate hyperplasia, etc.

The common thread among these and other therapeutic areas is in treating chronic conditions with OTC drugs. Chronicity and OTC is the next big frontier. Chronic conditions require monitoring and compliance in some form. (Please see our Special Report, Questions in Treating Chronic Conditions.)

The following are some alarming facts regarding the current state of certain conditions that merit high government priority (please see Potential Government High Priority Therapeutic Areas for OTC for more on what needs to be done):

Osteoporosis - Only 10% of women and 1% of men with osteoporosis are appropriately diagnosed and receive treatment in the US.

Hypertension - Only 53% of those with hypertension are in any kind of therapy at all.

Hypercholesterolemia - Only 42% are appropriately diagnosed and treated.

Benign Prostatic Hyperplasia - Only 57% of those suffering from benign prostatic hyperplasia receive any treatment.

Estimates on the savings to the healthcare system if the above problems were treated run into the billions of dollars in saved medical expenses and lost time, not to mention the inestimable cost of suffering.

It is quite clear that problems exist in our healthcare system. It is also evident that there has been very little progress in handling these problems under the current structure.

Therefore, a new mechanism deserves serious consideration. That new mechanism is incorporated into this SWITCH proposal: Target the problems, provide incentives to solve the problems and reward those who provide important answers.

The clear focus of this proposal is the improvement of public health. As such, that goal is consistent with government's interest. However, for any legislation to take hold, there needs to be broad support. This proposal is designed to be a winner for

The Pharmaceutical Companies:
Besides the self-medicating public the most obvious winner with this proposal is the pharmaceutical industry. The additional protection period provides another powerful defense against generic drug penetration.

But this benefit is at a price: increasing costs at Phase III for additional research. And these costs are already quite high and increasing each year. As can be seen in the graph, the costs for clinical research vary between Phase I and Phase III, with Phase III being far more expensive.

There is also additional risk for the pharmaceutical company since an effective solution to the problem is not obvious and the FDA must agree that the work was essential.

We also stressed the need for the trials to be at Phase III. As the chart indicates, Phase III is the major human trials period, well before an OTC switch is usually contemplated. This legislation would force pharmaceutical companies to address the OTC market well before most of them would like to. OTC is clearly out of their comfort zone at this point.

Phase III OTC research with incentives would significantly change the mind-set of the Rx-oriented industry. There would be a fundamental change in the drug development paradigm with public health as the big winner.

Moreover, there are likely to be significant savings to be realized to the pharmaceutical companies if they address switch issues along with basic approval issues at Phase III.

For the OTC pharmaceutical industry the protection would be helpful as well. However, perhaps the biggest benefit to them would be in gaining access to the US monograph system. The situation is that, right now, a new OTC NDA must file amendments to the NDA to gain approval to combinations with the base ingredient. For example, it is a little known fact that generic ibuprofen outsells Advil. This is because Advil was an NDA submission without automatic access to the monograph system.

New submissions for a switch could continue with the NDA switch system in place now. However, the market for the brand name product would be larger with the ability to more easily line extend the brand.

Service Industries to the Pharmaceutical Industry, especially Clinical Research Organizations (CROs).
The following is interesting math.

It is estimated that over US$21 billion was spent in 1998 on pharmaceutical research and development. Fully 75% of that sum was spent in the US. The average cost of a product to get to market is about US$180 million.

Phases I, II and III take up about 30% of R & D, while Phase IV costs about 6%. That means that a full 36%, or about US$53 million on Phases I-III is spent to get a drug approved by the FDA.

Now, what does it cost to get a drug approved for a switch? Roughly US$10 million.

Therefore, addressing a switch issue early, at Phase III, for maybe US$2 million is a minor incremental increase to pharmaceutical companies for the potential payback of OTC market exclusivity later. This is a good deal for them and the public.

The big gain, however, will be for those CROs who have the skills to address complicated switch questions. It is the opinion of SWITCH that, due to the economics, CROs are generally quite weak and insincere when they express their commitment to solid switch studies.

Our SWITCH legislative proposal will make switching more attractive to CROs and undoubtedly improve the quality of the research.

There are other service groups, such as consultants and market researchers who would benefit by this legislation. However, the CROs would be the big winners.

The Government (FDA) and, by extension, the Public: In addition to the clear benefit to the self-medicating public, this legislation would, in a surprising way, benefit the FDA. Our proposed SWITCH legislation would benefit the FDA by

There are two other points worth mentioning. First, according to current US law, the definition of an appropriate OTC is the following under USC 353(b)(1):

Pursuing OTC status at Phase III is totally consistent with the spirit and letter of that law.

Secondly, from a pharmaceutical company standpoint the mere exercise of considering OTC at Phase III will result in addressing such issues as

In other words, the company will address the issue of product differentiation, something the Rx divisions typically deal with far too late, if at all, right now.

SWITCH firmly believes that our proposal makes sense, the time is right and the benefits are substantial to all involved in improving the state of healthcare and, in particular, self-medication, in the US.

SWITCH believes in the responsible enhancement of self-medication. We know you do too. But we would like to hear from you on our first legislative proposal. We need your suggestions and support.

Please copy and fill out the questionnaire and mail/fax/e-mail it to us. We will share the responses with you at a later date.

We are all in this together! n

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