A Limited Shelf Life?

By Natalie Brandweiner, Deputy Editor

Will President Obama’s health-care reforms scuttle plans by pharmaceutical companies to combat patent expiries by switching branded products to OTC? Schering-Plough’s Brent Saunders brings NGP’s Natalie Brandweiner up to speed.

“A lot of governments are becoming more interested in self-medication or OTC status for drugs because it shifts the burden from the public health system to the individual”
-Brent Saunders

Having begun his career in compliance at PricewaterhouseCoopers, Brent Saunders is a noted speaker on risk management issues in the health-care industry – a useful tool in his current position as Senior Vice President, and President, Consumer Health Care, at Schering-Plough. Knowing when the time is right to risk the success of an over-the-counter switch requires a certain element of risk and business savvy, and Saunders certainly seems to be the man for the job.

He describes OTC switching as being a very simple process: the switching of an FDA approved prescription medicine to a non-prescription over-the-counter or OTC status medicine. In essence, he says, the process is more efficient, as there is less need for patients to visit a doctor and receive a prescription for a drug if they can enter a drugstore and buy it themselves. Saunders explains that OTC switch is becoming more and more prevalent as both drug companies and patients themselves are keen to reap the benefits of this simplified system.

“If you have a well-established medicine that is safe and effective and you believe that consumers can self-diagnose and treat with your medicine, then it’s appropriate for OTC or over-the-counter status,” Saunders says. “The reason a company may be interested in doing this is that on the prescription side they may either be losing their patent or they may see their market eroding and recognize that a better place for the medicine may be in the OTC status versus the prescription status.”

But facilitating the decision as to when a prescription medicine should be switched and what sort of process in which to conduct the switch involves a variety of factors, each one having a unique set of circumstances that need to be considered. Saunders advises that generally, those major switches that have occurred over the last two or three years have been due to patent life, each switch requiring a complex process.

“We have to work out with the FDA whereby you need to demonstrate that the drug is first and foremost safe, and then you have to go on to also establish that consumers can self-medicate without harm or concern.

“There are different ways of doing One of the primary tools we’ll use is label comprehension studies, and surveys. We’ll spend a lot of time understanding how a consumer views a label and what their comprehension and understanding of how to use a medicine is, and whether there is any potential for misuse or misdiagnosis. Then we work with the FDA to ensure that labeling is clear and appropriate for each medication in its OTC status,” he explains.

More efficient
Saunders believes that the impact of OTC switch on the health-care system can benefit consumers – providing greater time efficiency. The move toward customer choice and self-medication has become more and more popular with Americans, who prefer to control their own health care. Saunders notes the financial side as another benefit, because the patient doesn’t need to pay for the doctor’s appointment or co-pay for their insurance to cover the prescription drug. However, he also advises that on the negative side, the patients do have to then self-pay for the medicine in its OTC status in most instances.

“It really depends on the drug and the category,” Saunders continues. “With many drugs, the consumer will pay more directly out of their pocket for the medicine, but when you factor in the doctor’s visit and the co-pay, it probably becomes even.

“Also, when people have to pay out-of-pocket for something they tend to use it only when they need it, versus if it’s completely reimbursed or the cost is passed through, so that it’s in essence free to them. Take a category like upper respiratory infections. A Consumer Healthcare Products of America study (CHPA) showed that moving several treatments to OTC status saved the health-care system about $4.75 billion annually.

“What we are seeing around the world, not just in the US, is that a lot of governments are becoming more interested in self-medication or OTC status for drugs because it shifts the burden from the public health system to the individual,” he says.

President Obama’s health-care reform plans have pledged to expand health-care coverage, but will this mean a lesser need for over the counter, as patients will now be able to receive medication through their insurance? Saunders says that this will depend on the category to which the drug belongs.

“For example the PPI category, or the allergy category, most of the prescription drugs, though not all, are moved to a third tier co-pay. The co-pay for some of those medicines can be between $35 and $45, so it’s either the same price as the OTC for treatment or it’s more expensive than the OTC treatment itself. In prescription status, that drug may cost $200 and in an OTC status it may cost $20 dollars, ” he explains.

Patent expiries
Often the cause for OTC switch is due to patent life. But along with expanding insurance coverage, Obama is also hoping to promote the use of more generic drugs and allow them to become more available, which will supposedly make medicines cheaper. But it remains to be seen how these two issues, patent expiry and generic usage, will run in tandem, and if this is to be done over the counter.

“You know, in most instances when you go over-the-counter you do face competition from store brands. Generally stores will create their own version of your compound, so it  then it becomes a brand competition. There are certain people that tend to like brands and there are certain people who are more cost-conscious and tend to trust or look to a private label or store brands,” he says, suggesting an OTC switch to provide competitive benefits to a drug that is already on the brink of losing its patent.

He provides Schering-Plough’s drug Claritin as an example of this. “Just for the US marketplace alone, when the patent life ended, we could have simply walked away from the category, or we could have switched it. By switching it, we’ve generated well over $2.5 billion of additional sales since the patent expired. That’s a nice life cycle strategy for a brand. Claritin as a prescription had a finite patent life, but now Claritin as a brand should last forever.”

Saunders expands that although there will always be people who will prefer a brand to a generic product, and as marketers, companies must demonstrate why a brand is more important. Schering-PloughConsumerHealthcare is continuing to innovate Claritin by looking at new formulations and combinations to stay ahead of the private label companies.

“Innovation doesn’t end simply because the patent has expired and the drug has been switched to OTC status. Innovation in the hands of a good consumer health-care company continues through the entire lifecycle. This year we launched a new formulation of Claritin in a liqui-gel format, which was never part of the prescription life of that product. It was something we innovated. We had to file with the FDA for a new drug application for that formulation. It took us a couple of years to do it, but we now have Claritin Liqui-gel availble for consumers

Strategy
OTC switching is certainly a determined strategy for Schering-Plough. Ninety-five percent of the company’s OTC products were once prescription, compared to an industry average of 26 percent, making the company an industry leader in OTC switch. “We’ve had a very solid 30 year track record of doing it, and frankly we do it because it’s a strategic priority for our division,” says Saunders.

“We focus on good medicines. We like to say that we provide products that really help consumers with their health care. By the time a medicine is a candidate for over the-counter status,  you have demonstrated efficacy because you’ve gone through a new drug application, you’ve gone through all the clinical testing required to bring an approved drug to patients, and you know the safety profile is strong. So it’s a really good basis for a successful product.

Schering-Plough recently developed a proprietary switch process. Saunders explains that no two switches are ever the exactly the same, and the world of switching is becoming ever more complicated. “A lot of the low-hanging fruit has already been switched,” he explains. “Switches in the future will require more thought and more expertise than ever before.”

He explains that the company’s tried and tested best method to approach a switch is to bring together a small group of experts within Schering-Plough and to leverage outside resources, as appropriate. The emphasis is placed on ensuring a dedicated team is attached to each switch so that it can address the specific needs and requirements of each particular switch. The team must then manage the switch process through the lifecycle to the launch.

The approach used by Schering-Plough differs from that of other companies – it is often a trend that other companies have people either in their market research or their R&D group who are responsible for switches. The main difference that can be attributed to Schering-Plough is their proven methodology, and their heavy use of a dedicated and structured team format for switching.

Saunders is reluctant to highlight any of the switches that Schering-Plough currently has in its pipeline; the switching business is a highly competitive game. However, he does mention one that is currently in process – Zegerid, a prescription product in the US used for frequent heartburn. “It was filed by a company called Santarus out of California,” he explains. “They market it as a prescription product today. We have a signed a licensing arrangement with them to switch the 20 mg product to OTC status. We are now in the process of working with the FDA to make that happen. We think it’s going to be a really unique entry into that marketplace.”

Despite conducting a huge amount of switches in comparison to other pharma companies, the actual amount that of around one per year. As Saunders says, “A switch is a big deal.  There is not a large pool of drugs that are at the stage of switching.” He notes a successful switch – two and a half years ago Schering-Plough switched a drug called MiraLAx, a medicine used for constipation – and advised to get to that stage of success took a relatively long period of time.

However, the future for switching as an increasing trend looks promising. “Around the world we see governments more interested in self-medication, which is a positive for OTC switches,” he predicts. “Public policy is moving in the direction to support OTC switches, and a lot of that is the burden that it relieves from the healthcare system financially.

“But by that same token there’s some counterbalancing in that the switches that are out there that are interesting are things for more chronic ailments. And those are more difficult switches to do, and they require longer studies and more extensive studies to really prove the safety case for the FDA.

“Policy is moving in that direction, but the work that has to be done is a little bit more complex and probably more difficult. The industry has a bright future, but we need to continue to look at ways to use technology and good marketing practices to help ease some of the concerns of abuses around medicines in the OTC side,” he concludes.

Brent Saunders is Senior Vice President, and President, Consumer Health Care, for Schering-Plough Corporation. He joined Schering-Plough as Senior Vice President, Global Compliance and Business Practices, in November 2003. Saunders came to Schering-Plough from PricewaterhouseCoopers, where he led the firm’s compliance business advisory services group.

The OTC switch market
Kalorama Information has released a new report, ‘Rx to OTC Switches
2009’, to further understand the effects of the increase in OTC switching. They note that OTC medicine currently saves American consumers more than $20 billion per year, both in direct and indirect costs. The Rx-to-OTC market was valued at $6.7 billion in 2008, and is expected an increase of eight percent annual growth between 2009 and 2013.

They examine the benefits of OTC switching for pharma companies as having the ability to extend patents, and therefore a product’s lifecycle, rather than the previous method of fighting the generic competition through the courts.

Kalaroma has identified the areas most open to Rx-to-OTC switches in the near future as being gastrointestinal drugs, cholesterol-reducing drugs, osteoporosis treatments, overactive bladder, sexual dysfunction and contraceptives.

“Innovation doesn't end simply because the drug has been switched to OTC status. Innovation in the hands of a good consumer healthcare company continues through the entire lifecycle”
-Brent Saunders