Table of Contents

Rx-to-OTC Strategies: Maximizing the Commercial Potential of an Rx-to-OTC Switch - Case study-based analysis of Rx-to-OTC strategies within the pharmaceutical industry, examining the varying success of such lifecycle management strategies recently employed in the US and EU markets, providing best practice recommendations.

Product Code: dmhc2399

Publication Date: 26-Jun-2008

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Overview

Introduction

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

· 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

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.

Reasons to Purchase

· 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

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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

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