Updated from 5:26 P.M. EDT
Three of the most widely prescribed allergy drugs in the U.S. -- Claritin, Allegra and Zyrtec -- are safe enough to be sold over the counter, an advisory panel of the
Food and Drug Administration
voted late Friday.
The vote is a victory for advocates of lower drug prices, including
WellPoint Health Networks
, a health maintenance organization that pushed for an end to the drugs' prescription-only status. While the FDA usually follows such recommendations, it's questionable whether the switch will happen, given fierce industry opposition.
, makers of Claritin, Allegra and Zyrtec, respectively, were on the losing end of Friday's decision. They have fought the switch since WellPoint raised the issue with the FDA three years ago.
But the fight is far from over. The committee's recommendation now goes to the full FDA, which has final say over the matter. And while the FDA usually agrees with committee recommendations, it is unclear if the agency has the power to enforce the decision.
analyst Robert Hazlett wrote in a note after the decision that if the full FDA attempted to force the switch, it "would likely result in a drawn-out court battle ultimately won by the drug industry." His firm has not done underwriting for any of the three companies involved.
The stakes are very high. WellPoint, with 10 million members, has said it stands to save $45 million a year if the changes are implemented. And U.S. allergy sufferers, especially those without health insurance, will benefit from lower prices. A Claritin prescription, for example, sells for about $85 in the U.S., but for only $11 in Canada, where it already is sold over the counter.
That news is not so good for the drug makers, who racked up $4.5 billion in U.S. prescription sales of the three drugs in 2000, with Schering-Plough's Claritin making up more than half of that total. In fact, Claritin sales account for about 30 percent of the drug maker's total revenues. A portion of that revenue would be in jeopardy because over-the-counter drugs usually sell at a fraction of the cost of prescription drugs.
Robert Seidman, chief pharmacy officer at WellPoint and the HMO's point man on the case, was ecstatic with today's ruling, but he acknowledged that the fight was far from over.
"This is a real victory for allergy sufferers," he says, adding that he believes the FDA has the regulatory power to force drug makers to make the switch. "But I realize that there are going to be significant legal discussions about this vote.
The switch is not going to happen overnight."
In a statement issued after today's vote, Schering-Plough disagreed with the committee's decision, stating that there are enough safety issues with Claritin that warrant its status as a prescription drug. The company went on to say that it "believes there are significant legal and public policy issues that would be raised if the FDA were to require a switch without drug-sponsor support."
Schering-Plough might be in double trouble because it already has developed a successor to Claritin, called Clarinex, which is currently awaiting FDA approval. If Claritin and the other drugs are approved for over-the-counter sale, it could dampen sales of Clarinex, which would be sold by prescription only.
"Clarinex is a drug that is all dressed up with nowhere to go," says WellPoint's Seidman. "It's a niche product that will never develop critical mass because Claritin will now be available over the counter."
Schering-Plough executives could not be reached to comment on how today's ruling might affect Clarinex.
But this conjecture may be getting ahead of the immediate issue -- can the FDA force the drug makers to make the switch? Several drug industry observers doubt the agency has the power to do so. Ultimately, a federal court may have to decide where millions of U.S. allergy sufferers buy their allergy medicines.