13
Lifecycle Management Through the Rx-to-OTC Switch
Introduction
In the US, there are many reasons to switch a
drug from prescription to OTC status, or to
potentially launch a new chemical entity directly
OTC. Improving access to medications provides a
public health benefit and reduces overall health-
care costs. For drugs that have demonstrated
safety and efficacy as prescription products,
Rx-to-OTC switch also can provide an effective
lifecycle management tool when properly man-
aged, OTC brands can live into perpetuity.
Not all Rx-to-OTC switches have been
commercially successful therefore, an assessment
of the switch product’s value must be carefully
considered before expending organizational
resources and external costs on the switch pro-
gram. In addition to the relatively high R&D
costs associated with the OTC development
plan, significant commercial expenditures are
required to ensure commercial success. Factors
such as order of entry, exclusivity, and competi-
tiveness within a given therapeutic category must
be carefully considered to ensure both initial
commercial success and the long-term viability
of an Rx-to-OTC switch brand. In addition,
companies with potential switch candidates
much secure critical OTC-specific commercial
capabilities and infrastructure. For pharma-
ceutical companies that have attractive switch
candidates but no OTC infrastructure, a decision
needs to be made about whether to “build, buy, or
borrow” the organizational capabilities required
for success.
Benefits of Switch
The Consumer Healthcare Products Association
(CHPA) highlights the public health benefits,
including convenience and access, that have
occurred as a result of Rx-to-OTC switches.
According to CHPA research:
• As more prescription allergy medicines have
switched to OTC, there has been a clear
shift toward more convenient, effective,
and affordable options. The percentage of
allergy sufferers who use OTCs increased
from 66% in 2009 to 75% in 2015.
• When nicotine replacement therapies went
OTC, there was a 150–200% increase in
their purchase and use in the first year after
the switch. Increased access enabled tens of
thousands of smokers to use these prod-
ucts to help quit smoking, resulting in a $2
billion social benefit every year.
Additional research points to overall savings
to the US economy as a result of Rx-to-OTC
switches. A landmark 2019 study conducted by
IRI and CHPA found that, on average, each
dollar spent on OTC medicines saves the US
healthcare system approximately $7.20, total-
ing nearly $146 billion in annual savings.1 The
estimated savings from unnecessary clinical visits
is based on the study’s finding that nearly 90 per-
cent of consumers who treat a condition with an
OTC medicine would seek professional medical
treatment if OTC options were not available.
Why Switch? Evaluating the Value of
Switch Candidates
By Susan B. Levy
2
Lifecycle Management Through the Rx-to-OTC Switch
Introduction
In the US, there are many reasons to switch a
drug from prescription to OTC status, or to
potentially launch a new chemical entity directly
OTC. Improving access to medications provides a
public health benefit and reduces overall health-
care costs. For drugs that have demonstrated
safety and efficacy as prescription products,
Rx-to-OTC switch also can provide an effective
lifecycle management tool when properly man-
aged, OTC brands can live into perpetuity.
Not all Rx-to-OTC switches have been
commercially successful therefore, an assessment
of the switch product’s value must be carefully
considered before expending organizational
resources and external costs on the switch pro-
gram. In addition to the relatively high R&D
costs associated with the OTC development
plan, significant commercial expenditures are
required to ensure commercial success. Factors
such as order of entry, exclusivity, and competi-
tiveness within a given therapeutic category must
be carefully considered to ensure both initial
commercial success and the long-term viability
of an Rx-to-OTC switch brand. In addition,
companies with potential switch candidates
much secure critical OTC-specific commercial
capabilities and infrastructure. For pharma-
ceutical companies that have attractive switch
candidates but no OTC infrastructure, a decision
needs to be made about whether to “build, buy, or
borrow” the organizational capabilities required
for success.
Benefits of Switch
The Consumer Healthcare Products Association
(CHPA) highlights the public health benefits,
including convenience and access, that have
occurred as a result of Rx-to-OTC switches.
According to CHPA research:
• As more prescription allergy medicines have
switched to OTC, there has been a clear
shift toward more convenient, effective,
and affordable options. The percentage of
allergy sufferers who use OTCs increased
from 66% in 2009 to 75% in 2015.
• When nicotine replacement therapies went
OTC, there was a 150–200% increase in
their purchase and use in the first year after
the switch. Increased access enabled tens of
thousands of smokers to use these prod-
ucts to help quit smoking, resulting in a $2
billion social benefit every year.
Additional research points to overall savings
to the US economy as a result of Rx-to-OTC
switches. A landmark 2019 study conducted by
IRI and CHPA found that, on average, each
dollar spent on OTC medicines saves the US
healthcare system approximately $7.20, total-
ing nearly $146 billion in annual savings.1 The
estimated savings from unnecessary clinical visits
is based on the study’s finding that nearly 90 per-
cent of consumers who treat a condition with an
OTC medicine would seek professional medical
treatment if OTC options were not available.
Why Switch? Evaluating the Value of
Switch Candidates
By Susan B. Levy
2