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Report: Increase in Rx-to-OTC Switches as Result of Recession

Thu, 04/16/2009 - 9:32am
Over-the-counter (OTC) medicine use saves American consumers more than $20 billion per year in both direct and indirect costs, and over one third of American consumers use an OTC medication at least every other day, notes Kalorama Information in its new report “Rx to OTC Switches 2009.” The report indicates that OTC use is increasing as a result of the economy among other factors. This bodes well for the Rx-to-OTC market, which was valued at $6.7 billion in 2008, with annual growth estimated at a healthy 8% between 2009 and 2013. Since the late 1970s, pharmaceutical companies have increasingly viewed the OTC self-medication market as critical to the long-term strategy of a pharmaceutical brand and a mechanism to thwart losses from patent expiration. Since it is costly for drug manufacturers to fight generic competition through the courts, they often try to come to agreements, wherein a generic may come to market before patent expiration. But an OTC switch is a viable alternative which can extend the patent and thus a product’s lifecycle. “We anticipate petitions for early Rx-to-OTC switches before patents expire may become more prevalent in light of economic conditions and cost-control measures,” said Melissa Elder, analyst for Kalorama Information. “As many blockbuster drugs near patent expiration, face generic competition and demand intensifies for self-medication we can expect a healthy future for Rx-to-OTC switches.” Kalorama believes that the approval of new OTC drug categories will have the most impact on continued growth, and has identified the areas which may open to Rx-to-OTC switches in the near future, including gastrointestinal drugs, cholesterol-reducing drugs, osteoporosis treatments, overactive bladder, sexual dysfunction, and contraceptives. The gastrointestinal market has been one the most successful in reaping the benefits from Rx-to-OTC switches. Pepcid AC, for example, switched to OTC before the patent expired, creating a dual status switch and reaping more than $200 million in the first 12 months of OTC market exposure. Claritin exceeded this number during the 2003 year with $380 million in sales estimated for the product’s first 12 months on the OTC market.
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