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FDA Peers Over the Counter

When federal advisory committees meet later this week to decide if Merck's (MRK - Get Report) cholesterol drug Mevacor can be sold without a prescription, they may be taking the next step in putting more health care responsibility into the hands of patients -- or more money in the pockets of drugmakers and insurers.

Since the mid-1970s, efforts to switch drugs from so-called status Rx to over the counter (OTC) have been couched in terms of patient empowerment and consumer savings. "OTC medicines continue to be an extremely cost-effective option for the millions of consumers who are following the trend of self-reliance," says the Consumer Healthcare Products Association, which represents over-the-counter product makers.

"The FDA's goal is to increase Rx-to-OTC switches by 50% on average," the Food and Drug Administration said in a budget request for the recently completed fiscal year. The FDA said it should become "more proactive in recommending" switches "that could result in further consumer empowerment in self-medication as well as provide an expedient way to significantly reduce consumer health care costs for certain ailments."

But neutral observers say the switches are essentially motivated by companies trying to wring extra profits out of flagging prescription products and by insurers and managed-care companies trying to cut costs.

"Maintaining sales post-patent expiry is a key driver of the implementation of an Rx-to-OTC switch," said Adele Schulz, a health care analyst at Datamonitor, a London-based health care strategy firm. Companies often wait until a prescription product is near its patent expiration date, then they seek to switch the drug to "capitalize on hard-earned brand equity even after patent expiry," Schulz said.

"Switching drugs to over-the-counter availability reduces insurers' prescription drug costs but increases the costs for most patients," says a recent study by the Tufts Center for the Study of Drug Development at the Tufts University School of Medicine in Boston. "However, some will benefit, particularly uninsured patients, who previously had to pay the full retail prescription price and the cost of physicians' visits."

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