FDA, Drug Firms Butt Heads Over Over-the-Counter Sales
Agency May Force Such Sales For Some Allergy Medications
By LEILA ABBOUD
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- The Food and Drug Administration's quest to contain drug costs could produce friction with pharmaceuticals makers in lots of ways, and one of the biggest fights lies immediately ahead: The agency may force over-the-counter sales of certain blockbuster allergy medicines, which would deprive drug makers of the lucrative prices they can charge for prescription-only drugs.
And money isn't the only issue. Drug makers see such a move as a violation of their patent rights that would squelch innovation.
While this step has been considered before, the possibility of impending action has drawn warning flares from the industry. "It would mean World War III between the drug companies and the FDA," says Peter Barton Hutt, a former agency general counsel who has represented Schering-Plough Corp. on regulatory matters.
Pfizer Inc. Chief Executive Henry McKinnell informed shareholders at his annual meeting last month that his company isn't taking a passive stance on the issue, which is one of the toughest facing new FDA Commissioner Mark McClellan. "We are trying to intervene in that discussion, to make sure the decision is made on our recommendation, not on the FDA's recommendation," he declared.
Three medications would be the first affected by a new FDA policy: Schering-Plough's Clarinex, Pfizer's Zyrtec, and Aventis SA's Allegra. Beyond that, the FDA could consider similar moves for heartburn medicine, birth-control pills and emergency contraceptives, known as "morning after" pills.
A showdown with drug makers would be politically risky for Dr. McClellan, a physician and economist by training who is out to lower health costs. The pharmaceuticals industry has been a generous donor to his boss, President Bush, and to the Republican Party. In last year's tight congressional campaign, drug companies were credited with helping tip the balance to Republicans with $16.3 million of donations, according to the nonprofit Center for Responsive Politics here. Drug companies say FDA-forced switches would undercut a company's ability to recoup research and development investments.
But there are public-relations benefits in attacking drug prices, with prescription outlays more than tripling over the past decade to $140.6 billion and health care shaping up as a major theme of the 2004 presidential campaign. An FDA forced-switch policy could help, since prices tend to fall when drugs lose prescription status, facing more intense competition in the over-the-counter market as well as haggling from megaretailers.
Besides, there are big political guns on the other side of the debate. Insurance companies -- which don't reimburse policyholders for over-the-counter medicines -- love the idea of requiring that drugs be sold without prescriptions as much as pharmaceuticals makers hate it, since such a shift would allow insurers to drop coverage for such medicines. The insurance industry gave $25.2 million to Republicans for last year's election. Backers of a forced switch include the American Association of Health Plans, a Washington-based insurers trade group; Blue Cross and Blue Shield Association; and Express Scripts Inc., one of the country's largest pharmacy-benefit managers.
Consumers are lukewarm on the issue. While they may benefit in the long run, in the short run they often have to pay more out of pocket for over-the-counter drugs because insurers won't cover them.
Dr. McClellan said in a recent interview that a forced switch for the three main prescription allergy drugs is under "active consideration" and noted "an important consequence" likely would be "a substantial decrease in price and a substantial increase in use." But he said safety, not pricing, would drive the decision, and declined to say which way the agency is leaning.
Dr. McClellan also refused to offer a timetable for deciding. If the agency does go ahead, lawsuits, lobbying and regulatory challenges from the affected manufacturers likely would delay implementation for several years.
According to federal law, all medicines should be sold over the counter unless they pose a safety risk when used without a doctor's guidance. But over the years, drug makers have asked that virtually all their new products start in the prescription market, regardless of the risks, and the FDA has rubber-stamped those applications. Companies then usually wait until their patent protection expires -- when generic-drug competitors can drive down prices anyway -- and then switch to over-the-counter sales, which also require FDA approval.
The forced-switch fracas began in July 1998 when Wellpoint Health Networks Inc., a California managed-care company, petitioned the FDA to switch the three leading prescription allergy medications to over-the-counter status. Wellpoint estimated at the time it would save $90 million a year.
"These drugs are so safe that having to prescribe them trivializes the prescription system," Robert Seidman, chief pharmacist for Wellpoint, told an FDA advisory committee in 2001.
Before the agency could decide, Schering-Plough voluntarily agreed to shift its top-selling Claritin to over-the-counter status in December 2002, when its patent was set to expire anyway. The price soon fell to $1 per pill from $3 per pill.
But the FDA didn't drop the issue. The makers of Allegra and Zyrtec -- the second- and third-biggest selling nondrowsy antihistamines, accounting for half of the market -- refused to switch. Allegra's patent lasts until at least 2011 and Zyrtec's until 2007. And Schering-Plough remains opposed to FDA intervention because the company wants control over the marketing of Clarinex, the Claritin successor that since has come to market.
An FDA advisory panel decided more than two years ago that Zyrtec and Allegra were safe for over-the-counter use, and the agency repeatedly has claimed the legal authority to mandate forced switches. But the agency's top lawyers are studying whether the agency would win a court battle on the issue.
And there are scientific hurdles. The FDA would have to prove the drug can be safely used without a doctor. Companies likely would refuse to turn over their own data in support of such a petition.
Dr. McClellan said the FDA is examining whether there is enough publicly available data to analyze over-the-counter safety of allergy drugs. "If additional studies were required, we would not do them," he said, citing the cost of such analyses.
Drug makers are prepared to battle any decision that doesn't use their data. The agency would be on "dangerous ground ... highly risky to the patient," says John T. Kelly, a scientific and regulatory affairs expert for the Pharmaceutical Research and Manufacturers of America, the industry trade group.
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NOTHING TO SNEEZE AT
Forcing companies to sell prescription drugs over the counter is one remedy to runaway drug prices being considered by the FDA. The price range of Claritin is a case in point:
AVAILABILITY --------------------------------- TIME PERIOD | PRICE RANGE OF A 10 MG TABLET
Prescription only ---------------------------------December 1997 to December 2002 $2.58-$3.00
Over the counter ----------------------------------January 2003 to May 2003 $0.90-$1.35
When generic versions enter the market -Jul-03 $0.40-$0.50 (FDA estimate)
Source: Schering-Plough; FDA
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Write to Leila Abboud at leila.abboud@wsj.com
Updated May 6, 2003
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