I have often said that over the counter (OTC) drugs are the best deal in health care. Many were once available only with a doctor’s prescription. When a drug loses patent protection and is switched OTC, within a year the price often falls by more than 97% according to my research.
Most care is self-care, at least initially. The most common way Americans care for themselves is with an OTC drug. The Consumer Healthcare Products Association (CHPA), the trade association for OTC drugs, estimates that the U.S. health care system saves $7.33 for every $1 spent on OTC drugs, resulting in an annual savings of $167 billion. The range of drugs available without a prescription includes 80 separate drug class, such as pain relievers, an oral contraceptive, allergy medications and ophthalmology drugs, to name only a few.
Over the counter drugs significantly boost access to care. The CHPA estimates that 60 million people would not seek treatment without OTC drugs. Indeed, Americans make nearly 3 billion trips to purchase OTC products annually, which are available at 750,000 outlets. By contrast, prescription drugs are available at only about 54,000 pharmacies.
OTC drugs are not only much cheaper than their prescription counterparts, they also do not require a trip to see your doctor. A prescription for the allergy drug, Claritin used to cost around $85 a month in the year 2000. It also required $50 office visits twice a year to access a prescription. Claritin is now available in generic form for $12.45 for a 10-month supply on Amazon. Do the math: $85 a month 25 years ago versus $1.25 today. That’s a deal!
The American Enterprise Institute recently published a report on OTC drugs. Specifically, the report explored a recent proposal by the U.S. Food and Drug Administration (FDA) to expand OTC drugs through Additional Condition for Nonprescription Use (ACNU). In addition, ACNU could potentially lead to a third class of drugs, sometimes called behind the counter (BTC) drugs that pharmacists could dispense without a doctor’s prescription.
I have advocated for behind the counter drugs for years. The CHPA, and many of their members, are leery of creating a BTC class of drugs out of fear it would become the de facto OTC class by a risk-averse FDA. If a third class of drugs is created there should be safeguards to ensure it did not push aside future OTC approvals. Currently there are a few BTC drugs such as allergy drugs that contain the decongestant pseudoephedrine. Pseudoephedrine products were placed out of reach of retail shelves due to the potential for abuse as a stimulant.
Behind the counter drugs would be a huge benefit to consumers but the concept should be approached with caution. Consider the example of Allegra D. It is sold only behind the counter in drug stores. Fexofenadine, the generic name for Allegra, is available in bulk for as little as $24.95 for a 180 count bottle on Amazon. Yet, if you want generic Allegra D the cheapest I can find it is $29 for a box of 30. While the hassle of speaking with a pharmacy tech is relatively minor (and far easier than a physician visit), the added regulatory burden has an adverse effect on prices. Instead of $0.14 cents per tablet on Amazon, the behind the counter version costs nearly $1.00.
Something that nobody seems to discuss is a proactive nudge by FDA to identify prescription drugs that are good candidates for OTC, including drugs under patent protection. The way it currently works is the FDA waits for manufacturers to apply for a switch. This protects higher drug company profits by continuing to require safe products be sold only by prescription. This is basically the argument that Wellpoint made in 1998. Wellpoint sued to make the FDA approve Claritin over the counter despite the fact Schering-Plough, the patent holder, did not want it sold that way until the patent expired. Schering-Plough argued that the FDA lacked the authority to force it to sell Claritin over the counter. That’s probably true but switching the drug to OTC would have meant health plans no longer had to cover it. When health plans no longer cover a drug prices fall significantly, since consumers are price sensitive.
Anything that can be done to substantially boost the number of drugs available over the counter will increase access to care and reduce drug costs. I just hope the FDA’s new initiative isn’t a bureaucratic boondoggle that complicates Rx-to-OTC switching.
Read the AEI report Expanding Pharmaceutical Access Via Over the Counter Drugs.