SLOW GOING FOR OTC SWITCHES

WENDY TOTH / DAN ALAIMO

While the number of prescription drugs switching to over-the counter status is expected to be sparse this year, the rapid social and political adoption of self-medication may soon quicken the pace, supermarket pharmacy executives and analysts told SN.

Last year's controversy over the safety of drugs in the COX-2 class along with this year's focus on getting Medicare Part D running smoothly have resulted in a cautious environment for Rx-to-OTC switches.

Meanwhile, the recent nomination of a new Food and Drug Administration commissioner has put the political spotlight back on the emergency contraceptive, Plan B - a drug that has been in OTC limbo since 2003.

An aging baby boomer demographic, however, means a greater number of consumers are eager to purchase OTC medications while the health care industry is just as eager to save on prescription drug costs.

"There have been a lot of changes and shake-ups this year," said Verne Mounts, director of pharmacy, Buehler Food Markets, Wooster, Ohio. "We probably won't see as many switches as in past years."

Many pharmacy executives were interviewed for this story during this month's Supermarket Pharmacy Conference held in Miami by the Food Marketing Institute, Washington.

With the Medicare drug benefit's January launch, the industry has been working intently to enroll a large number of patients and streamline coverage nationwide.

"In regard to switch-over drugs, people's attention has been focused elsewhere," said Michele Snider, director of pharmacy, Save Mart Supermarkets, Modesto, Calif. "With the new Medicare drug benefit, the focus is on getting people settled into their plans."

The 2005 withdrawal of the COX-2 anti-inflammatory drug, Vioxx, from the market by its manufacturer, Merck & Co., Whitehouse Station, N.J., due to cardiovascular risks has contributed to FDA prudence, retailers told SN.

While FDA later found Vioxx safe, the agency had Pfizer, New York, withdraw its COX-2 drug, Bextra. (See SN, May 23, 2005.)

"The unfortunate situation with COX-2 has caused the FDA to be a little bit more cautious with regard to OTC switches," said John Beckner, director, pharmacy and health services, Ukrop's Super Markets, Richmond, Va.

In addition, last month's nomination of Andrew von Eschenbach, now the FDA's acting commissioner, to become the agency's permanent head, seems to be delaying immediate movement while promising future progress.

"When an agency like the FDA doesn't have a permanent head, it becomes difficult to make any ground-breaking decisions," said John Coster, vice president, policy and programs, National Association of Chain Drug Stores, Alexandria, Va.

The commissioner's nomination has been put on hold because of actions by Sens. Hillary Clinton, D-N.Y., and Patty Murray, D-Wash., who are trying to force a final decision on the Rx-to-OTC switch of the emergency contraceptive, Plan B.

Barr Pharmaceuticals, Woodcliff Lake, N.J., applied in 2003 to sell the drug without a prescription, and later that year an FDA panel voted to let it pass. But in August 2005, the FDA placed an indefinite delay on the decision while it evaluated the issue of age restriction.

Joseph Friedman, director of pharmacy, Topco Associates, Skokie, Ill., thinks Plan B, whether Rx or OTC, should be sold from behind the counter. "It has all kinds of tangential effects and moral kinds of issues."

One of those issues, currently, is whether pharmacists can refuse to dispense the drug if it is against their religious or moral beliefs. Most retail pharmacies have a policy on the issue, but some pharmacy executives think a final decision on the drug's OTC status may lessen the pressure on pharmacists.

"If passed, it would make access to Plan B easier for the customer and take the decision piece of the puzzle out of the pharmacist's hands," said Curtis Hartin, director of pharmacy, Schnuck Markets, St. Louis.

While the FDA is going to be very slow to move as a result of the recent criticism of COX-2 drugs, "Plan B is a given. That's coming," said John Fegan, senior vice president, pharmacy, Ahold USA, Braintree, Mass. However, the government is likely to find some way to control its distribution.

Rose Dickison, pharmacy supervisor, ShopRite of Hunterdon County, Flemington, N.J., raised one Plan B issue that would affect both consumers and retail pharmacy. "The part that may be missing is the counseling aspect," she said. "It needs not just medical, but often psychological counseling."

"You want to have it accessible," Beckner said. "But it is such a controversial issue that, for that reason alone, it may stay behind the counter for at least the immediate future."

While the controversy over Plan B has received national press coverage, many retailers told SN that in reality, it is a slow-moving medication. A weight-control drug that will likely be approved this year has far greater sales potential.

In January, an FDA panel recommended the OTC approval of orlistat, a pill that helps block fat absorption, from GlaxoSmithKline, Philadelphia. Earlier this month, GlaxoSmithKline was told by the FDA that orlistat is "approvable," meaning the company will meet with the FDA in coming weeks and discuss the conditions of final passage.

The pill, which would be marketed under the name Alli, would be the only FDA-approved weight-loss medication available over the counter. If all goes as planned, the company hopes to release Alli in the second half of this year, although delays are possible.

Misusing the drug can be unpleasant, and that could lead to consumers paying greater attention to its proper use, pharmacists told SN. According to the website of the drug's prescription counterpart, Xenical, side effects include reduced absorption of vitamins and changes in bowel habits including gas with oily discharge, an increased number of bowel movements, an urgent need to have them, and an inability to control them.

Orlistat is one of the most viable candidates to go OTC despite its side effects, Beckner said. "The switch of orlistat presents a unique opportunity for supermarket pharmacists to partner with store dietitians to provide some additional counseling about healthy eating as an adjunct to pharmacological therapy."

The supermarket pharmacist takes on the role of educator during any drug switch-over, industry experts told SN.

"I find that retailers have become the public school system of the health care industry," said Robert Goldberg, vice president, Center for Medicine in the Public Interest, New York. "So the smart retailers are trying to use this baby boomer self-care trend to generate more revenue by leveraging their ability to administer health care."

The intimate relationship of heath care costs to the self-care trend is driving a more positive government attitude toward OTC-switch medicines because patients are paying for that treatment out of pocket. "From a Medicaid, Medicare or insurance perspective, OTC drugs reduce costs," Doyle said.

Supermarket retailers have an opportunity to grow their revenue because these switch-overs bring a lot of business into the store, said Rick DeSantis, partner, Henry Rak Consulting Partners, Libertyville, Ill. "With a consumer-focused approach, these products have a very positive effect on the marketplace."

OTC Remedy for Private-Label Sales

Prescription drugs that switch to over the counter present an opportunity for retailers to increase store-brand sales.

"Some drugs coming into OTC have a built-in customer base and market awareness, so it is important for retailers to look at that launch in the context of the whole category," said Tony Harrington, program manager, health and beauty care, Topco Associates, a cooperative private-label supplier based in Skokie Ill.

Store-brand items generally account for high profits in drug categories, in some cases 20%-30%, Harrington said. "As an Rx-to-OTC item launches, the retailer can defend the store-brand margin in that category by promoting some consistent, strong or established store-brand items.

Retailers can also capitalize by making private-label versions of Rx-to-OTC items available just after they go off patent.

"As soon as a product switches, I'd suggest retailers immediately start watching the clock for private-label introduction," said Jim Wisner president, Wisner Marketing Group, Libertyville, Ill.

The government gives manufacturers a certain number of years to keep the product on patent to recover research and development costs, Harrington said. Many manufacturers apply to take the product OTC just before it goes off patent, giving them a few years of exclusivity in that market. Once off patent, retailers are free to develop private-label versions.

Private-label products of this type have been "wildly successful to the point that some have started to take over dominant market share," Wisner said. For example, he cited smoking cessation products, which is about a 10-year-old category.

"Not only is this a relatively new category that's grown like crazy, but it is becoming disproportionately profitable for retailers."

WENDY TOTH