GMDC videocast: There is a lot of potential within Rx-to-OTC switch if done right

COLORADO SPRINGS, Colo. — About 30% of top-performing OTC drugs today were once prescription-only medications noted Dave Wendland, VP Hamacher Resource Group, on Thursday during a videocast hosted by GMDC titled "Rx-to-OTC: Getting it Right at Retail."
 
"From a numbers standpoint, Rx-to-OTC switch represents 13% of total OTC sales," he said. Looking forward, there is a potential $36 billion book of business to be had out of future switches. 
 
There are a number of external factors that are helping to drive switch considerations, Wendland noted, including a growing and aging population and an increased focus on consumer empowerment and education. "If consumers are able to self-diagnose, self-treat and self-manage, then the [Food and Drug Administration] looks favorably on that switch," Wendland said. According to a study conducted by the Consumer Healthcare Products Association, 73% of Americans would rather treat themselves at home than see a doctor.
 
Wendland noted that the FDA is open to more complex switch paradigms, provided the risk-benefit ratio continues to skew toward less risk and greater benefit. A few years ago the FDA formed the NSURE panel (Non-prescription Safe Use Regulatory Expansion) to explore the benefit of using pharmacists as a resource in the switch of a medicine, to potentially implement such technology as healthcare kiosks in the switch of a medicine, and to realize the benefits of switching more medicines for chronic conditions.
 
There are a number of examples of the benefits switched products have brought to the overall healthcare paradigm. Take nicotine replacement therapies, for example. There was a 150% to 200% increase in their purchase and use in the first year of switch, Wendland said. "That has resulted in a $2 billion social benefit every year," he said. Another example is heartburn medicines; consumers save on average $174 per year in saved prescription costs and doctor visits, Wendland noted, citing CHPA statistics. 
 
For retailers, there are three primary benefits of an Rx-to-OTC switch. First, the switch peaks consumer interest and brings them into the store. Second, there are collaborative advertising opportunities with manufacturers on promoting the switched products. And third, that increased foot traffic equates into potential add-on sales. As much as 50% of first-year volume of most switch products is sourced from the parent Rx product, Wendland noted. That means the other 50% are potential new patients to the category. 
 
"Execution, however, is key," Wendland said. There are the "four P's" that every switch manufacturer should consider: make sure they have the product available, priced right, placed on shelf properly and with a solid promotion campaign to support the switch.
 
"The most successful OTC switches achieve 60% or higher distribution within eight weeks of product launch," Wendland said. 
 
 
 
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