It may be the end of the line for a popular decongestant.
Pseudoephedrine, the mainstay decongestant in many over-the-counter cold and allergy medicines, is at the center of a national upheaval of the cough, cold and allergy category. As a result, products containing PSE may be near extinction, retailers and industry observers told SN.
On March 9, the Combat Meth Act, embedded in the USA Patriot Act, was signed into law by President Bush, effectively limiting the amount of PSE products that can be purchased legally, and also putting the products behind pharmacy counters and in locked display cases nationwide.
"This legislation has been a sales killer for PSE products," said John Fegan, senior vice president, pharmacy, Ahold USA, Braintree, Mass.
Several months ago, Ahold moved its PSE products behind pharmacy counters where statewide PSE legislation had already been enacted. This legislation will remain intact since under the new law, more stringent state regulations can supersede the federal bill.
"We still have people coming in for cold medicines in these stores, but the sales of PSE products are basically very small at this point," Fegan said.
Upon being discovered as a means to illegal methamphetamine production, the sale of PSE products was limited in a number of states, 12 of which allow the products to be sold from behind pharmacy counters only, putting supermarkets without pharmacies at a disadvantage.
"The laws have been very expensive for our company," said Curtis Hartin, director of pharmacy,
Schnuck Markets, St. Louis, which operates in a
number of states touting strict PSE regulations.
"It has taken a lot of resources to keep up with all of the state laws," said Mary Anne Wagner, vice president of pharmacy regulatory affairs, National Association of Chain Drug Stores, Alexandria, Va.
Unit sales for the cold/allergy/sinus tablet/packet category in supermarkets are down 3.74% from a year ago, according to the most recent figures from Chicago-based Information Resources Inc.
"Since there is now a strong federal law on the books, our hope is that the other 38 states won't go to the pharmacy-only requirement," said John Motley, senior vice president, government and public affairs, Food Marketing Institute, Washington. "If so, those stores without pharmacies lose a whole line of products."
In Iowa alone, where Hy-Vee, West Des Moines, has 120 of its 205 pharmacies, all PSE products, except those containing fewer than 360 milligrams of the ingredient, must be sold from behind a pharmacy counter, while those falling under 360 milligrams may be sold from a locked case, said Bob Egeland, assistant vice president of pharmacy. "It becomes difficult to manage which stores can do what."
The federal law also includes a number of costly provisions: Sales of PSE products to any one customer must be limited to 3.6 grams per day and 90 grams per month; customers are to sign a logbook and show photo ID; a paper or electronic logbook must be maintained by the retail store; and retail stores must certify to the U.S. attorney general that staff has been trained in these procedures.
Schnucks has spent considerable time complying with PSE regulations, which has meant an increase in payroll spending, moving product and remerchandising aisles, Hartin said. "We have also spent time printing new shelf labels and informational signage about PSE; training our staff on the various state and local statutes; creating, publishing and distributing logbooks; and modifying software to track PSE sales. This is not counting the lost sales because of lack of availability of the product on the shelf," he said.
To lessen complications, in Kansas and Iowa, Hy-Vee has received permission to monitor sales through the use of its computerized prescription log system. "We run it through just as a prescription item," Egeland said.
Although NACDS has been searching for a broad solution for its members, "we haven't found an electronic solution that can be used in all types of retail locations," Wagner said.
The second major concern of retailers, next to cost, is the time allowed to comply with the law.
According to FMI, the first effective date covering limits on daily and monthly purchases of PSE products would be 30 days after the president signed the legislation into law, or April 8.
"Thirty days is not a lot of time to get systems in place," Ahold's Fegan said.
In addition to the effective date, logbooks would have to be implemented by Sept. 30, according to Wagner. "We are trying to get a technical amendment made that would tie the date of the limited sales in to the date of the logbook."
Although the industry has been "fighting so that our customers do not have to jump through a lot of hoops to get the products they want, we are seeing that the potential for PSE sales has already diminished as replacement products have come into the market," Fegan said.
PE TO THE RESCUE
A number of manufacturers began reformulating their cough, cold and allergy offerings with the alternative ingredient, phenylephrine (PE) in early 2005.
First to launch was Pfizer, New York, with Sudafed PE products, according to Pfizer spokeswoman Erica Johnson. The new products have a different dosing schedule for patients, claiming relief for up to four hours rather than six. "The PE formulations may not have as long a period of relief, but do have comparable efficacy," she said.
Private-label products containing PE also are on the market (see SN, Nov. 14, 2005).
Consumers are buying the PE products, "but not in the quantities they did before," Hartin said.
Reformulating has proven difficult for private-label manufacturer Perrigo Co., Allegan, Mich., which reported a decline of $20 million in PSE-based cough and cold product sales for the second quarter of fiscal 2006.
"The elimination of certain pseudoephedrine products and the shift to behind the counter by many retailers have resulted in lower cough/cold product sales, operational complexity and continued pressure on our consumer health care segment profits as we push to reformulate these products and introduce a record number of new products at the same time," said David Gibbons, chairman, president and chief executive officer, Perrigo, in a statement.
At Ahold stores, "there aren't an awful lot of requests for the PSE products at the pharmacy," Fegan said. A busy pharmacy is unlikely to attract a non-pharmacy shopper, he said.
As far as PE product sales at Ahold, "I think, personally, that the replacement products are selling pretty well and that people don't really realize there's been a formulation change," Fegan said. "The packaging is still bright. It looks almost the same."
"In five years, this law will be a blip on the radar screen, but there will probably be a lot less PSE product on the market," Motley said. "It is going to become scarce."
Paying for the New PSE Laws
Moving pseudoephedrine-containing cough, cold and allergy products behind the pharmacy counter could make the product's price move as well.
"We are not going to be able to provide all of the initial resources involved in moving and monitoring product sales without increasing the price of the product to cover that," said John Motley, senior vice president, government and public affairs, Food Marketing Institute, referring to a new federal law that demands PSE products be either behind the pharmacy counter or in a locked display case, and that sales be monitored through a logbook.
"The pharmacy profession is the most highly legislated profession and this just adds to the complexity of the practice," said Verne Mounts, director of pharmacy, Buehler Food Markets, Wooster, Ohio.
Having product behind the pharmacy, in particular, presents two specific cost issues, Motley said. "You have your highest paid group of people in the store taking the time to check IDs and watch people sign a logbook, then go and get products they didn't have to get before. So you are taking their time and reducing their productivity."
Second, stores have to make space behind the pharmacy for new product, Motley said. "There are supermarkets that carry about 250 different PSE-based products. You have to reduce that number and find some way to expand the space in the pharmacy."