Landmark health care legislation, a newly invigorated Food and Drug Administration, and frugal, post-recession consumers all promise big changes ahead for over-the-counter medications. Not only are more products being added to shelves, industry observers believe more prescription-only drugs will be switched to the OTC side.
“Think about the fact that we'll be expanding coverage to more people,” said David Spangler, senior vice president of policy and international affairs for the Consumer Healthcare Products Association, referring to the new law requiring all Americans to have health insurance. “It underscores some of the trends already taking place and why they point to a promising future for a prescription-to-non-prescription switch.”
The industry certainly seems poised to increase its activity in this area. Several mergers last year — including Pfizer/Wyeth and Merck/Schering-Plough — created mega-companies with a catalog of sometimes competing drugs. As these products lose their patents, the expectation is that drug makers will consider submitting the more established ones for an Rx-to-OTC switch. Even federal regulators appear to be more welcoming of such applications.
“The direction [the FDA] would like to move is towards making more drugs available over the counter, wherever appropriate,” noted Jim Wisner, president of Wisner Marketing Group, Libertyville, Ill. “The simple reason is that this increases availability and enables people to get into a therapeutic course of action who otherwise might not have the time or money to see a physician.”
Consumers seem to be receptive, too. Layoffs, loss of benefits and restricted access to traditional health care caused many to adopt “do-it-yourself” strategies that featured OTC treatments as a foundation. Studies conducted for the CHPA found that 73% of Americans prefer to treat themselves at home whenever possible, and six in 10 stated it's a preference they expect to keep going forward.
“You're forgoing the cost of a doctor's visit and OTC is convenient,” said Spangler. “You can get them anywhere and anytime. They really highlight the importance of access.”
OTC also appeals to the consumer's desire for reducing expenses. A study conducted by the Nielsen Co. estimated that consumer use of OTC medications in 2009 saved individual consumers about $175, and the U.S. health care system more than $750 million.
What kind of shopper will propel sales? An aging population is expected to have more influence on OTC volume in the coming years, as Baby Boomers pass retirement age and health conditions become more of a priority. A large part of this population currently might be taking prescription medication for their various ills, but there is a good chance at least some of those formulas will be available without authorization before too long. A groundbreaking 2009 study by Kalorama Information found that more than one-third of OTC medicine use is attributed to the over-65 crowd. Such medicines have wide distribution, and can be found in more than 750,000 retail locations, including supermarkets. By comparison, prescription drugs are available at only 58,000 pharmacies nationwide.
Pressure to switch to OTC will also come from within the system itself, noted Spangler.
“As you look at health care costs and an aging society like we have, you have fewer workers per retiree to support the system,” he said. “So you're going to have to look for better ways, where appropriate, of delivering health care.”
Efficiency is also on the minds of employers and the health insurance industry. Even though the new health care law prohibits employee flexible savings accounts from covering OTC drug purchases, experts believe that cost-containment issues and consumer demand will eventually pressure lawmakers to amend the statute and clear greater OTC coverage under a person's health plan.
“Finally we're getting to the point where managed care organizations are finding that it's really smarter and actually saves everybody a lot of money” to cover OTC expenditures, said Wisner.
For retailers, the challenge is organizing operations in such a way that the pharmacy becomes a destination — not only for products, but services. Organizations such as the Food Marketing Institute and the National Association for Chain Drug Stores have been promoting the idea of pharmacy as a “medical home.” The term describes a single primary medical provider that has the ability to coordinate the health of the patient across the spectrum of the health care system, using tools such as medication therapy management.
Ultimately, the direction and speed with which the country moves regarding Rx-to-OTC switches may come down to federal regulators. The FDA has made headlines recently for being a more consumer-friendly agency, and for stepping up enforcement actions. Whether it has enough resources to devote to the switch process remains to be seen.