Chapter 2: Why Switch? Evaluating the Value of Switch Candidates
14
OTC medicines continue to be an extremely
cost-effective option for millions of consumers
each year. The value of Rx-to-OTC switches to
US consumers includes more than just the cost
of prescription co-payments, which vary greatly
from insurance plan to insurance plan. Other
additional expenditures, such as fees for doctor’s
visits, travel and time off from work, and reduced
childcare costs, could be considered extra savings
when implementing Rx-to-OTC switches. Even
more alarming are the number of Americans
who do not have healthcare insurance. The
Congressional Budget Office says that as many as
60 million Americans may lack health coverage/
insurance at some point in any year. And many
of those Americans with health coverage do not
necessarily have a drug plan.
Access to OTC medicines also benefits
the economy by preventing productivity losses.
The common cold is a leading cause of missed
workdays and decreased productivity. A 2004
study by Northwestern University estimated the
impact of this lost productivity at $25 billion,
with $16.6 billion attributed to on-the-job
productivity loss.2 The study estimated that using
nonprescription medications to treat common
upper respiratory infection symptoms could save
the US economy $4.75 billion per year.
And many Americans do not always have
access to a medical professional. A 2019 study
found that one in four Americans living in rural
areas said that they could not get the healthcare
they needed because their healthcare location
was too far or difficult to get to.3 In other cases,
access to medical professionals is only available
during certain times of the day, which may not
be convenient for shift workers or for consumers
who need symptomatic relief after hours. OTC
medicines enable consumers greater access when
distance or time of day would otherwise prohibit
availability of prescription medications.
It must be recognized that marketing efforts
for OTC medicines can help educate consumers
about various self-treatable health conditions.
For some therapeutic areas, OTC marketing
and education can empower consumers with an
acceptable vocabulary to “normalize” and destig-
matize diseases or conditions. The OTC approval
of Gyne-Lotrimin in 1990 enabled women to
treat annoying, recurrent vaginal yeast infections.
Access to Plan B has empowered women to
control their reproductive health.
Despite the reduced cost to the US health-
care system (resulting from access to OTC
medicines, improved work productivity, improved
quality of life with access to better treatment
options, etc.), NDA holders are unlikely to
submit an application for an Rx to OTC switch,
unless the business case justifies the investment.
For pharmaceutical products, Rx-to-OTC
switch provides an effective lifecycle manage-
ment tool. An EvaluatePharma report estimated
$198 billion in prescription drug sales to be
at risk between 2019 and 2024 due to patent
expirations.4 It is well established that the entry
of generic drugs quickly and significantly erodes
a prescription drug’s sales, even when sponsors of
those prescription drugs have spent millions in
marketing costs to build brand equity.
Rx-to-OTC switches enable companies to
introduce a “new to the world” consumer health-
care brand. Once available over-the-counter,
brands that are well-maintained with marketing
spend and innovation can live into perpetuity.
Recent syndicated data shows that Advil, which
was switched Rx-to-OTC in 1984, has US retail
sales of $680 million.5
While prescription products are considered
“blockbusters” when sales exceed $1 billion,
Rx-to-OTC switches are typically deemed
successful when annual sales exceed $100 mil-
lion. There is no simple formula to predict the
commercial success of Rx-to-OTC switches
however, a number of recent switches have failed
to hit this $100 million threshold. Table 2-1
provides a list of all brands launched via Rx-to-
OTC switch since 2000 and their most recent
annual retail sales in the US.
Assessing Rx -to-OTC Switch Value:
Category Size
A number of factors must be assessed in the
process of evaluating the commercial value of an
Rx-to-OTC switch candidate. OTC category
size is the first of these factors. It is possible to
have multiple successful Rx-to-OTC switches
14
OTC medicines continue to be an extremely
cost-effective option for millions of consumers
each year. The value of Rx-to-OTC switches to
US consumers includes more than just the cost
of prescription co-payments, which vary greatly
from insurance plan to insurance plan. Other
additional expenditures, such as fees for doctor’s
visits, travel and time off from work, and reduced
childcare costs, could be considered extra savings
when implementing Rx-to-OTC switches. Even
more alarming are the number of Americans
who do not have healthcare insurance. The
Congressional Budget Office says that as many as
60 million Americans may lack health coverage/
insurance at some point in any year. And many
of those Americans with health coverage do not
necessarily have a drug plan.
Access to OTC medicines also benefits
the economy by preventing productivity losses.
The common cold is a leading cause of missed
workdays and decreased productivity. A 2004
study by Northwestern University estimated the
impact of this lost productivity at $25 billion,
with $16.6 billion attributed to on-the-job
productivity loss.2 The study estimated that using
nonprescription medications to treat common
upper respiratory infection symptoms could save
the US economy $4.75 billion per year.
And many Americans do not always have
access to a medical professional. A 2019 study
found that one in four Americans living in rural
areas said that they could not get the healthcare
they needed because their healthcare location
was too far or difficult to get to.3 In other cases,
access to medical professionals is only available
during certain times of the day, which may not
be convenient for shift workers or for consumers
who need symptomatic relief after hours. OTC
medicines enable consumers greater access when
distance or time of day would otherwise prohibit
availability of prescription medications.
It must be recognized that marketing efforts
for OTC medicines can help educate consumers
about various self-treatable health conditions.
For some therapeutic areas, OTC marketing
and education can empower consumers with an
acceptable vocabulary to “normalize” and destig-
matize diseases or conditions. The OTC approval
of Gyne-Lotrimin in 1990 enabled women to
treat annoying, recurrent vaginal yeast infections.
Access to Plan B has empowered women to
control their reproductive health.
Despite the reduced cost to the US health-
care system (resulting from access to OTC
medicines, improved work productivity, improved
quality of life with access to better treatment
options, etc.), NDA holders are unlikely to
submit an application for an Rx to OTC switch,
unless the business case justifies the investment.
For pharmaceutical products, Rx-to-OTC
switch provides an effective lifecycle manage-
ment tool. An EvaluatePharma report estimated
$198 billion in prescription drug sales to be
at risk between 2019 and 2024 due to patent
expirations.4 It is well established that the entry
of generic drugs quickly and significantly erodes
a prescription drug’s sales, even when sponsors of
those prescription drugs have spent millions in
marketing costs to build brand equity.
Rx-to-OTC switches enable companies to
introduce a “new to the world” consumer health-
care brand. Once available over-the-counter,
brands that are well-maintained with marketing
spend and innovation can live into perpetuity.
Recent syndicated data shows that Advil, which
was switched Rx-to-OTC in 1984, has US retail
sales of $680 million.5
While prescription products are considered
“blockbusters” when sales exceed $1 billion,
Rx-to-OTC switches are typically deemed
successful when annual sales exceed $100 mil-
lion. There is no simple formula to predict the
commercial success of Rx-to-OTC switches
however, a number of recent switches have failed
to hit this $100 million threshold. Table 2-1
provides a list of all brands launched via Rx-to-
OTC switch since 2000 and their most recent
annual retail sales in the US.
Assessing Rx -to-OTC Switch Value:
Category Size
A number of factors must be assessed in the
process of evaluating the commercial value of an
Rx-to-OTC switch candidate. OTC category
size is the first of these factors. It is possible to
have multiple successful Rx-to-OTC switches