Do Rx to OTC Switches Really Cut Costs?
By Vidhu Dev, Vice President Rx to OTC Switch, R&D atGlaxoSmithKline Consumer Healthcare
While Rx to OTC switches increases access to prescription medications, the regulatory process to achieve FDA approval is lengthy and challenging. The process requires creative, technologically-driven thinking, alongside tremendous financial investment, organizational patience, commitment, and advocacy from the very top of the organization to genuinely deliver the most successful switches.
It has been 20 years since I initially started working on Rx to OTC switches such as Aleve and Alli, as well as having led all R&D efforts for a successful global launch of Flonase (followed by Veramyst). What I’ve learned during this time is that each switch comes with its own unique challenge that can be overcome with the right team and leadership in place.
A question that repeatedly comes up is ‘does increasing access to prescription drugs reduce costs to the consumer?’ There have been varying opinions on this and the short answer is yes — when you consider the cost savings from not having to pay for a doctor’s visit, increase in productivity and cost savings on the OTC product.
A recent study of 5,000 consumers by the Consumer Healthcare Products Association to independently estimate the value created by OTC medicines in the United States disclosed the following key findings:
- The availability of OTC medicine provides total savings of $146 billion to the U.S. Healthcare System mainly driven by $95 billion in clinical visit savings and $52 billion from drug costs. OTC medicines are priced lower than expensive branded or generic prescription medicines to treat self-manageable conditions.
- Each dollar spent on OTC medicines saves more than $7 for the U.S. healthcare system.
- Medical devices (both for treatment and diagnosis) create an additional $8 billion in potential savings by reducing the need to see a physician.
- Approximately 90% of consumers who treat a condition with OTC medicine would seek professional medical treatment if OTC medicines were not available, creating enormous burden on the U.S. healthcare system.
- About $34 billion savings in productivity annually (lost time from work)
Savings associated with the high accessibility of OTC medications in the U.S. are a direct result of consumers’ ability to readily purchase products without having to see a doctor, obtain a prescription and then go to a pharmacy to get it filled. It’s also important to consider the time saved in avoiding a clinic visit usually during working hours and filling a prescription — an estimated two hours of lost work on average. In total, OTC medicines provide an additional savings of approximately $34 billion in potential productivity benefits annually.
OTC products increase access to medicine, empower the consumer to take control of their health, and provide more choices while eliminating the some of the friction currently in the healthcare system.
Since 2001, there have been more than 25 Rx to OTC switches in categories ranging from chronic conditions such as allergy and heartburn to contraceptives and weight loss. Consumers have come to trust these products, with more than 50% of U.S. households using them exclusively to treat conditions like allergy and heartburn.
It’s important to consider all the costs incurred to the consumer when obtaining a prescription medicine in comparison to an OTC medicine as outlined above. If all costs are considered, the OTC offering saves the consumer money, time, and reduces healthcare system costs.
Should an individual have insurance, then prescription drug costs may be comparable in some cases to respective OTC products. However, one must consider the added time and costs involved to go to a physician to obtain a prescription, which would thereby increase the total cost incurred by the consumer.
Therefore, the bottom line is Rx to OTC switches do result in significant cost savings both to the consumer and the healthcare system.
