Rx-to-OTC switching in USA can protect phama revenues, cut health care costs

With the growing cost of developing novel drugs, combined with the fact that, from year to year, fewer such drugs are gaining regulatory approval, the use by pharmaceutical companies of lifecycle management techniques is playing an ever-more important role in the increasingly cost-conscious pharma industry.

During 2002/6, three times as many reformulated products were approved by the US Food and Drug Administration than novel entities. The advantages of LCM strategies are manifold, but are ultimately employed either to increase or prolong the revenues of a given brand. With reformulated products taking less time, and therefore less money, to develop (with clinical trials typically beginning in Phase III), LCM strategies have become an important tool used by Pharma, says Datamonitor pharmaceutical strategy senior analyst Alistair Sinclair. "Prescription to over-the-counter switching is one such strategy employed to either enhance existing franchise revenues or protect branded revenues from generic competition. An Rx-to-OTC switch involves the reclassification of a prescription product as an OTC product by the relevant national regulatory authorizations," he notes.

Volume of OTC market declining in majority of seven major markets