I have often said that over-the-counter (OTC) drugs are the best deal in health care. Most care is self-care. At least initially, most of the time when Americans have a health complaint they reach for an OTC drug rather than visiting their doctors. Self-care with OTC drugs only represents about 1% of national health expenditures. When a drug goes OTC its price falls more than 95% compared to when it was a prescription drug. According to the Consumer Healthcare Products Association, every $1 consumers spend on OTC drugs saves the U.S. health care system more than $7 in prescription costs and the cost of physician visits to authorize a prescription. That cannot be right; that figure is way to low.
In order to switch a drug from prescription-only (Rx) to OTC a firm has to apply to the FDA and go through a long approval process. I’m an advocate for switching more drugs to OTC whether or not drug makers request the switch. The purpose of the U.S. Food and Drug Administration (FDA) should be to protect Americans’ health from bad or adulterated food, drugs and cosmetics, not protect Big Pharma’s profits. By that I mean that drug makers often do not request a switch for an Rx drug because it is more profitable to sell it by prescription only. Prescription drugs are covered by health insurance, whereas OTC drugs are generally not covered by health insurance. Prices for prescription drugs are far higher than when sold OTC because patients are less price-sensitive when their insurance is paying the bill.
A good example of very costly drugs that are also available OTC are the combination pain relievers, Duexis and Vimovo. Duexis is a daily dose of three pills, each taken at intervals throughout the day. Each pill contains 800 milligrams of ibuprofen and 26.6 mg of famotidine. Yes, it’s an expensive prescription drug made from Advil and Pepcid. A 30-day supply of Duexis carries a list price of $900, while the GoodRx discount card price is around $260. That’s a cash price of more than $3,000 a year for a combination you can probably duplicate for $150 a year if you buy in bulk on Amazon. Yet if you buy prescription Duexis paid for by your insurance, the price paid may be $3,000 a year or more. If you haven’t met your deductible that’s your cost.
Vimovo is a combination pain reliever made from Nexium and Naproxen. Both Nexium and Naproxen are available OTC, while the combination drugs Duexis and Vimovo are not. Vimovo’s list price is nearly $2,300 a month but a GoodRx discount card will get that monthly price down to $539. I haven’t done the math on this drug lately, but I suspect a few hundred dollars in OTC Nexium and Naproxen from Amazon would match the active ingredients for 90% less than the prescription cost. Seniors can buy the bulk ingredients on Amazon without a prescription but not combination pills.
A recent study published in JAMA looked at the price of drugs paid for by Medicare that are also available OTC.
Medicare Part D does not usually cover nonprescription or over-the-counter (OTC) drugs. However, Medicare Part D prescription drug plans may cover OTC drugs when they are prescribed by a clinician and approved as prescription drugs by the US Food and Drug Administration (FDA). Patients can obtain these drugs using either Medicare coverage (prescription required) or OTC (pay cash; no prescription required).1,2 In June 2022, the FDA published guidance that may expand the number of such dual OTC and prescription drugs.3 We compared Medicare and patient spending for dual OTC and prescription drugs with their OTC cash prices, which, to our knowledge, has not been investigated previously.
Researchers identified 22 dual OTC/Rx drugs, for which Medicare had paid $716 million in claims on 19 of them. In 84% of the cases Medicare paid more than the cash price.
For 16 of the 19 drugs, OTC cash prices were lower than Medicare’s per-unit spending, with savings ranging from 10% to 97% per drug per year ($79,800 to $121 million). Overall, total spending could have been reduced by $406 million (57%) if the OTC cash price had been paid for all 19 drugs.
Whenever there is debate about a drug being switched to OTC invariably public health advocates proclaim it’s a bad idea because insurance companies will stop reimbursing it and consumers’ costs will go up. This is both incorrect and wrong-headed.
Medicare Part D frequently paid more for dual OTC and prescription drugs than the OTC cash prices. Patients’ cost-sharing was sometimes higher than what they would pay for the same drug without insurance or a prescription.
When insurance deductibles and cost-sharing are considered, consumers often pay more when using their insurance cards at the pharmacy rather than cash. Furthermore, when Rx drugs are switched to OTC, prices often fall by more than 95%. That is a huge benefit in time, money and societal resources.