Rx to OTC Switch-Market Analysis

Introduction

Over-the-counter (OTC) drugs are medicines that may be sold directly to a consumer without a prescription from a healthcare professional, and are commonly used to treat symptoms of common illnesses that may not require the direct supervision of a physician.

• For a medicine to be granted OTC status, it must have a wide safety margin and be effective, and must bear understandable labeling to ensure proper use
• More than 700 OTC products on the market today use ingredients or dosages, that were available only by prescription, less than 30 years ago
• Rx to OTC switch refers to the transfer of proven prescription drugs (Rx) to non-prescription, over-the-counter (OTC) status. Rx to OTC switch is a data-driven, scientifically rigorous, and highly regulated process that allows consumers to have OTC access to a growing range of medicines

There are two ways in which drugs are commonly switched as approved by FDA in US :

1. The OTC Drug Review
   • Began in 1972
   • Ongoing assessment of the safety and effectiveness of all nonprescription drugs
   • Panels of non-government experts review active ingredients in marketed OTC drug products to determine whether they can be classified as safe and effective
   • About 40 former prescription-only drug ingredients have been switched by this process
2. New drug application (NDA) process
   • Manufacturers submit data to the FDA showing the drug is appropriate for self-administration.
   • The submission includes studies showing that the product's labeling can be read, understood, and followed by the consumer without the guidance of a health care provider
   • Some drugs are approved initially as OTC drugs, but most are first approved for prescription use and later switched to OTC

Market Overview

OTC Market

Source:Kalorama Information

Time Period	CAGR
2005-2009	3.3%
2009-2014	2.7%
2005-2014	3.0%

Rx vs. OTC Market

Total Pharmaceutical Market by Country, 2009 ($B)

Country	Rx Market	OTC Market	Total Pharma Market	OTC as % of Total Pharma Market
United States	214	18	232	7.8
Japan	56	11	67	16.4
Germany	35	5	40	12.5
France	32	4	36	11.1
China	16	5	21	23.1
United Kingdom	17	3	20	15.0
Russia	13	3	16	18.8
Brazil	10	2	12	16.7
Mexico	9	2	11	18.1
India	6	3	9	33.3

Source: Kalorama Information

Rx to OTC Switches

Source:Kalorama Information Source:Kalorama Information

• CAGR for 2008-2013 is 9.4%

Major OTC Players

Source:Company Websites

Sales Data for selected Rx to OTC Switches, USA

S.No	Switched Drug	Manufacturer/Marketer	Drug Category	Switch Year	First 12-Month Sales (in $M)
1	Alli	Glaxo SmithKline Consumer Healthcare	Weight Loss Aid	2007	80
2	MiraLax	Schering-Plough Healthcare	Gastrointestinal	2006	40
3	Prilosec OTC	Procter & Gamble	Gastrointestinal	2003	130
4	Claritin	Schering-Plough Healthcare	Allergy	2002	380
5	Nicoderm CQ	Glaxo SmithKline Consumer Healthcare	Smoking Cessation	1996	160
6	Nicorette	Glaxo SmithKline Consumer Healthcare	Smoking Cessation	1996	195
7	Rogaine	McNeil Consumer Healthcare	Hair Loss	1996	180
8	Pepcid AC	Johnson & Johnson- Merck Consumer Pharmaceuticals Co.	Gastrointestinal	1995	200
9	Zantac 75	Boehringer Ingelheim Consumer Healthcare Products	Gastrointestinal	1995	140
10	Aleve	Bayer Consumer Care	Analgesic	1994	110

Source:Company Websites, Press Releases and Journals

Factors Affecting Rx to OTC Switch

Trends in Rx to OTC Switches

Rx-to-OTC Switches Since 2000

S.No	Ingredient	Product Category	Date of OTC Approval	Product Examples	Company
1	ibuprofen (NDA)	migraine	25/02/2000	Motrin Migraine Pain	McNeil Consumer Healthcare
2	docosanol (NDA)	cold sore/fever blister	25/07/2000	Abreva Cream	Avanir Pharmaceuticals
3	famotidine, calcium carbonate,	heartburn,	17/10/2000	Pepcid Complete	J&J/Merck
	magnesium hydroxide (NDA)	acid indigestion
4	butenafine hydrochloride (NDA)	athlete's foot, jock itch, ringworm	7/12/2001	Lotrimin Ultra	Schering-Plough
5	ibuprofen, pseudoephedrine HCl,	analgesic/decongestant	18/04/2002	Children’s Advil Cold	Wyeth
	suspension for pediatric use (NDA)
6	guaifenesin extended-release tablet (NDA)	expectorant	12/7/2002	Mucinex	Adams Respiratory Therapeutics
7	nicotine polacrilex troche/lozenge (NDA)	smoking cessation	31/10/2002	Commit	GlaxoSmithKline
8	loratadine (NDA)	antihistamine	27/11/2002	Claritin Tablets, Claritin RediTabs, Claritin Syrup	Schering-Plough
9	loratadine, pseudoephededrine sulfate (NDA)	antihistamine/	27/11/2002	Claritin-D 12 Hour Extended Release Tablets,	Schering-Plough
		decongestant
10	omeprazole magnesium	acid reducer to treat frequent heartburn	20/06/2003	Prilosec OTC	Procter & Gamble
11	loratadine (NDA)	hives relief	15/11/2003	Claritin hives relief	Schering-Plough
	diphenhydramine citrate & ibuprofen (NDA); diphenhydramine HCl & ibuprofen potassium (NDA)	analgesic sleep-aid	21/12/2005	Advil PM	Wyeth
12	ecamsule (combined with avobenzone and octocrylene (NDA)	sunscreen	21/07/2006	Anthelios SX	L’Oreal
13	levonorgestrel (NDA)	contraceptive	24/08/2006	Plan B	Duramed
	polyethylene glycol 3350 (NDA)	laxative	6/10/2006	MiraLAX	Schering-Plough
14	ketotifen (NDA)	antihistamine eye drops	19/10/2006	Zaditor	Novartis
15	orlistat (NDA)	weight loss aid	7/2/2007	alli	GlaxoSmithKline
	cetirizine HCl & pseudoephedrine HCl (NDA)	antihistamine/	9/11/2007	Zyrtec-D	McNeil
16		decongestant
17	cetirizine HCl (NDA)	antihistamine, hives relief	16/11/2007	Zyrtec	McNeil
	lansoprazole (NDA)	acid reducer to treat	18/05/2009	Prevacid 24 HR	Novartis
18		frequent heartburn
19	levonorgestrel (NDA)	contraceptive	10/7/2009	Plan B One Step	Duramed
	omeprazole and sodium	acid reducer to treat	1/12/2009	Zegerid OTC	Schering-Plough
20	bicarbonate (NDA)	frequent heartburn

• Blue highlighted drugs are patent-protected
  
• Purple highlighted drugs are under FDA exclusivity period

Rx to OTC Switches before patent expiry

S.No	Product Examples	Company	Date of OTC Approval	Patent Expiry	FDA Exclusivity	Patent Number
1	Abreva Cream	Avanir Pharmaceuticals	25/07/2000	28/04/2014	--	4874794
2	Pepcid Complete	J&J/Merck	17/10/2000	15/10/2000	--	4283408
3	Mucinex	Adams Respiratory Therapeutics	12/7/2002	28/04/2020	--	6372252
4	Commit	GlaxoSmithKline	31/10/2002	21/08/2010	--	5110605
5	Prilosec OTC	Procter & Gamble	20/06/2003	15/11/2019	--	5690960, 5753265, 5817338, 5900424, 6403616, 6428810
6	Claritin hives relief	Schering-Plough	15/11/2003	19/06/2002	--	4282233
7	Anthelios SX	L’Oreal	21/07/2006	24/12/2013	--	5587150
8	Plan B	Duramed	24/08/2006	--	24/08/2009	--
9	MiraLAX	Schering-Plough	6/10/2006	--	6/10/2009	--
10	alli	GlaxoSmithKline	7/2/2007	6/1/2018	7/2/2010	6004996
11	Zyrtec-D	McNeil	9/11/2007	10/6/2022	--	6469009, 6489329, 7014867, 7226614
12	Zyrtec	McNeil	16/11/2007	2/7/2018	--	6455533
13	Prevacid 24 HR	Novartis	18/05/2009	--	18/05/2012	--
14	Plan B One Step	Duramed	10/7/2009	--	10/7/2012	--
15	Zegerid OTC	Schering-Plough	1/12/2009	15/07/2016	--	6489346, 6645988, 6699885, 7399772

• Purple highlighted drugs are under FDA exclusivity period

Trend Analysis

1. 11 out of 22 recent drugs (50%) which switched from Rx to OTC were patent protected
2. 4 out of 22 recent drugs (18.2%) which switched from Rx to OTC were under FDA exclusivity period
3. 13 out of 22 recent drugs (59%) were switched from Rx to OTC before their patent or FDA exclusivity expiry. 2 drugs switched after the expiry of patents
4. 6 out of these 13 drugs made a switch more than 10 years before expiry
5. 5 out of these 13 drugs made a switch between 3 to 10 years before expiry

Potential Drugs for Rx-to-OTC Switch

S.No	Drug	Patent Expiry Date	Expected Switch Year	US Patent Numbers
1	Allegra	14/3/2017	2012	5578610, 6037353, 6187791, 6399632, 7138524
2	Clarinex	1/12/2018	>2013	6514520, 7211582, 7214683, 7214684
3	Crestor	17/6/2022	>2014	6858618, 6316460, 7030152, RE37314
4	Lescol	12/6/2012	>2014	5356896, 5354772,
5	Lipitor	8/1/2017	>2014	5969156, 4681893, 5273995, 5686104, 5969156, 6126971, RE40667
6	Pravachol	22/10/2014	>2014	5622985
7	TriCor	21/2/2023	>2014	7276249, 5145684, 6277405, 6375986 , 6652881, 7037529, 7041319, 7320802
8	Vytorin	25/4/2017	>2014	RE37721, 5846966,
9	Zetia	25/7/2022	>2014	7030106, 5846966, 7612058, RE37721
10	AcipHex	8/5/2013	2013	5045552
11	Nexium	25/11/2018	>2014	7411070, 5690960, 5714504, 5877192, 5900424, 6147103, 6166213, 6191148, 6369085, 6428810, 6875872
12	Protonix	30/3/2025	2010	7553498, 4758579, 7544370, 7550153
13	Zofran	7/12/2026	>2014	7544370, 4758579, 7550153, 7553498
14	Propecia	5/11/2013	2011	5571817, 5547957, 5886184
15	Imitrex	10/3/2014	>2010	5554639, 5307953, 5705520
16	Actonel	10/12/2018	>2014	6165513, 5583122, 6096342
17	Boniva	2/9/2014	>2014	5662918, 4927814
18	Fosamax	17/1/2019	>2014	6225294, 5462932, 5994329, 6015801
19	Evista	10/3/2017	>2014	6894064, 6797719, 6458811, 5393763, 5457117, 5478847, 5811120, 5972383, 6906086, RE38968, RE39049, RE39050
20	Detrol	11/5/2020	>2014	5382600, 6630162, 6770295, 6911217
21	Ditropan	22/11/2015	>2014	5674895, 5840754, 1 5912268, 6262115, 6919092
22	Cialis	26/4/2020	>2014	7182958, 5859006, 6140329, 6821975, 6943166
23	Levitra	31/10/2018	>2014	6362178, 7696206
24	Viagra	22/10/2019	>2014	6469012, 5250534

US Market Survey - Physicians Preferences and Insights

Objectives of Survey

• To find Physician preferences for OTC drugs in comparison to prescription drugs
• To find insights on OTC drugs market and usage
• To understand the effectiveness of different sources of marketing

Research Methodology

The research instrument used was a questionnaire survey administered to collect empirical data. The physician responses were kept confidential to encourage openness and disclosure. The respondents rated the questions on Yes or No, ticked the relevant choices from the options available and ranked the options on a numerical scale. All the responses were coded using a binary system logic and analysis was done to derive insights there after.

Sample Size and Screening Criteria

Gender	Sample Size
Male	18
Female	2
Total Physicians	20

Screening Criteria
Primary Medical Specialty	General Physician/Family Practice
No. of years in practice	10
No. of patients consulting per month	150

Survey Results

• All the respondents would recommend an OTC drug for fever
• About 95% of the doctors feel that the usage of OTC drugs has increased in the past five years
• About 85% of them would do so for other minor ailments like cold/cough and acidity

• Low cost, effective and easy availability are selected as the major factors that resulted in increased usage of OTC drugs
• All the respondents feel it is important to prescribe a drug that minimizes patients' out-of-pocket costs, while choosing between equally effective and safe medications

• Advertisement is the major source of information on OTC drugs for most of the respondents
• Only 30% of respondents replied in positive when asked about permitting marketing executives to market OTC products through them

• About 63% of the respondents reported the growth rate of OTC usage during 2005-2010 between 25% - 50% and equal percentage of respondents stated that patients are trusting OTC drugs more than they used to do before as the prime reason for the growth

• Less than 50% of the patients are not prescribed OTC due to their medical history

• The case of patients coming to the doctor due to side effects from OTC drugs happens once a month
• About 45% of the respondents feel that non-prescription of drugs is not a serious problem

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• 85% of the doctors feel that the information on the label of OTC drugs is sufficient for the patients, in order to take OTC medicines
• 50% of the doctors feel that more OTC drugs should be included under Medicare/insurance coverage

The effective ranking of the ailments in the order of safety of available OTC drugs is as follows:

To see the calculation of the effective scores and effective ranking, click on this link

Indian Market Survey - Physicians Preferences and Insights

Objectives of the Survey

The reason for carrying out this research is to determine the scope of potential switch of prescription drugs to over the counter drugs in the Indian pharma industry. The study is particularly focused at the scope of making statins(a drug for reducing cholesterol level) available over-the-counter. The study aims to understand how successful a switch would be, and if it is safe for such drugs to be made available without prescription. The study also aims at determining the marketing pattern of over the counter drugs, and how it can be improved in future.

The objectives for the survey are :

• To understand the effectiveness of OTC drug marketing campaigns in India
• To understand the source of information for the OTC drugs among doctors
• To explore the potential of switch from Rx to OTC drugs
• To gauge the current prescription pattern of statins in India
• To identify if statins can be switched to OTC

Research Methodology

The research instrument used was a questionnaire survey administered to collect empirical data. The physician responses were kept confidential to encourage openness and disclosure. The respondents rated the questions on Yes or No, ticked the relevant choices from the options available and ranked the options on a numerical scale. All the responses were coded using a binary system logic and analysis was done to derive insights there after.

Sample Size and Screening Criteria

Screening Criteria

Screening Criteria
Medical Specialty	General Physician, Consulting Physician, Gynaecologist, Dermatologist, Cardiologist, Pediatrician
No. of years in practice	10
No. of patients consulting per month	150

Sample Size

Gender	Sample Size
Male	44
Female	16
Total Physicians	60

Medical Specialty-wise Breakup
General Physician	17
Consulting Physician	9
Gynecologist	9
Dermatologist	4
Cardiologist	12
Pediatrician	6
Geographywise Breakup
Mumbai	15
Hyderabad	15
Delhi NCR	14
Bangalore	16

Survey Results

• 97% of the Indian doctors feel that the usage of OTC drugs has increased in the past 5 years
• Indian doctors feel that the usage of OTC drugs has increased by more than 50% in the past 5 years
• Ease in the availability of OTC drugs, Advertisements and Saving time are the major reasons for increase in the usage of OTC drugs

• Headache, Cold/Cough and acidity are the most common ailments for which physicians prefer giving an OTC drug

• More than 80% of the patients are not prescribed OTC drugs beacuse of their prior medical history

• Only 13% of the doctors feel that the information on the labels of OTC drugs is sufficient
• 98% of the doctors feel that drug-drug interactions might be a potential danger for OTC drugs
• 48% of the patients come once a month to doctor due to side effects caused by OTC drugs

• 95% of the doctors feel that the problem of taking OTCs in India is serious

The effective ranking of the ailments in the order of safety of available OTC drugs is as follows:

To see the calculation of the effective scores and effective ranking, click on this link

• 72% of the doctors see an opportunity for Rx-to-OTC switch in Indian pharma market
• Drugs relating to Vitamins, Antacids, Cuts, wounds and burns & Cold/Cough have a better potential to do well as an OTC drug

Effectiveness of marketing campaigns

• Advertisements are a major source of information for Indians on OTC drugs

• Only 23% of the doctors permit marketing executives to market OTC products through them
• Quality is the most important factor affecting the choice of a drug

Results on Statins

• More than 50% of the patients with high cholesteral level fall in the age group of 40-60 years
• 73% of the patients with high cholesteral level are prescribed Statin by doctors

• Atrovastatin and Rosuvastatin are prescribed more than 90% of the times (whenever statins are prescribed) by doctors to patients with high cholesterol level

• Sale and effectiveness of the drug, Manufacturer of the drug and Patient type are the major factors for choosing any type/brand of statin

• Only 25% of the doctors feel that statins safe to be made available as OTC drugs for low- to-moderate risk group