ACNU: Portfolio assessment, prioritization and scenario planning

Photo by James Langley on Unsplash

By: Dan Frey and Todd Greenwood

The most significant change in 70 years

Additional Conditions for Non-Prescription Use (ACNU) — the soon-to-be-published rule from the FDA — is possibly the most significant change to the Food, Drug and Cosmetic Act in the last 70 years. In 1951, the Durham–Humphrey Amendment codified the dual-class system of Rx and OTC drugs. The ACNU rule designates a new type of non-prescription medication pathway for American consumers that will exist alongside over-the-counter drugs. While not a third “behind the counter” class, it will allow consumers to access important drugs without interacting with a pharmacist or other healthcare professional. It will rely on digitally enabled tools to aid consumers in appropriate self-selection and guidance for proper use.

The types of drugs that will be switchable to ACNU include many that are currently available as “pharmacy-class drugs” in other countries. Indeed, today in the U.K., consumers can get medications for cholesterol lowering, hypertension, migraine and other conditions at a pharmacy after passing the qualifications delivered in a pharmacy questionnaire. However, with ACNU, a much broader range of chronic care medications might be made available under the right conditions. About two-thirds of the drugs sold in the United States are directly related to treating chronic health conditions such as diabetes, emphysema and heart disease. Friction and cost in the healthcare system has led to widespread undertreatment and non-treatment. ACNU can help remedy this friction, resulting in enormous public health benefits and significant new business opportunities.

In our prior two articles we explored the basics of the rule and the likely impact on consumers, providers and pharmaceutical companies. This third installment of our ACNU series speaks directly to pharmaceutical executives involved in making initial portfolio-level decisions regarding investment in an ACNU strategy. We will outline the key logistical and business considerations in assessing a company’s product portfolio and suggest how to choose which asset or assets are appropriate for a non-prescription strategy under ACNU.

Beginning the ACNU decision

The decision to invest in an ACNU for one or more assets that a company has the rights to market is a multifactorial decision based on a presumed business case that the company can make for those drugs. Previous Rx-to-OTC brand switches demonstrate that revenue opportunities can be substantial. In the smoking cessation category, studies show that sales of nicotine replacement therapy (NRT) have doubled since its switch to OTC status, with annual sales in the U.S. of about $1 billion. NRT gum, with Nicorette leading the category, accounts for about half of those sales. In the cholesterol-lowering category, a well-known statin brand such as Lipitor could eventually reach a billion in annual revenue once statins are made widely available.

However, before making the investment to develop a validated business case, criteria can be applied to create a product shortlist. We consider two aspects in selecting assets for ACNU consideration, one that asks the question, “Can we?” and the other, “Should we?”:

Feasibility: Feasibility is a series of considerations that ask, “Can we?” In other words, is the FDA likely to approve the drug through the ACNU pathway? Does the drug have characteristics that would make it possible for consumers to correctly select the drug and use it without the active engagement of a pharmacist or other healthcare professionals (HCP)? Feasibility also relates to the logistical challenges. For example, if the drug needs to be maintained and delivered through a cold chain, offering the drug through a non-prescription pathway may make safe delivery impossible.

Desirability: Desirability is about the business case and answers the question, “Should we?” Many drugs may be sufficiently safe to be offered to consumers, but the business case for doing so is not strong enough. Issues such as total addressable market (TAM) unmet need, existing brand awareness and equity, plus COGS and the ability to sell the drug at a sufficient margin — all are part of desirability.

Proving the need for ACNU

Before choosing the ACNU pathway (and not switching as an OTC), the FDA is asking that manufacturers provide evidence as to the necessity of an ACNU. The preliminary rule states, “The applicant demonstrates, and FDA determines, that labeling alone is insufficient to ensure appropriate self-selection or appropriate actual use, or both.” How this will be demonstrated is not explicitly stated, but presumably any applicant that had failed in the past with an Rx-to-OTC switch (typically due to the complexity of self-selection by the Drug Facts label alone) could use that data to show that additional conditions would be needed to ensure self-selection.

Three questions for feasibility

A primary question in feasibility is whether a patient can self-select and use a drug appropriately without the engagement of a pharmacist or other HCP given the aid of a digital tool. These concerns can be summed up as:

• “The right consumer.” Ensure that the drugs end up being selected and used by someone who is appropriate, given their disease and risk. With statins, for example, the FDA wants to ensure that ACNU statins are being made available to people who have appropriate risk factors but that people who have had major cardiac events are being treated more aggressively.
• “The wrong interaction.” Ensure that the product doesn’t end up being used by consumers who are currently using a contraindicated medication. Erectile dysfunction meds are an example here; they are contraindicated for men who are using nitrate medications, as the interaction between PDE5 inhibitors and nitrates can cause a serious drop in blood pressure.
• “The right dosage.” Ensure that a consumer who is new to treatment knows which medication, at which dose, will have the intended therapeutic effect. Hypertensive medications are an example. Although hypertension continues to be challenging to treat, with a significant percentage of patients dropping off treatment, it is probably important for patients to start their journey for treating high blood pressure with a doctor who can choose the right option and treat to target, before offering an ACNU to that patient.

Self-selection considerations

In considering the feasibility of a drug for ACNU, the question is whether a consumer will be able to determine that the drug is appropriate for their use and condition. Even with the assistance of a guided questionnaire, appropriate self-selection relies on the ability of a consumer to accurately answer questions about their diagnosis and their individual health factors.

• Diagnosis. Consumers need to be clear about what medical condition they are treating with an ACNU. In many cases this means that they understand what they have been diagnosed with and can discern which conditions they do NOT have. For example, that they have asthma but not COPD.
• Individual health factors. Some questions like age, gender, pregnancy status and lifestyle factors such as smoking history can be captured accurately, even from those with lower health literacy. However, if accurate self-selection involves knowledge of laboratory test values (such as lipid levels), it is more likely that patients will inaccurately answer questions.
• Prior and concurrent medications. The “do not use” section of a Drug Facts label contains strict warnings if a medication is prohibited due to high risk of adverse events. The “consult a doctor before using” section includes moderate risk concerns. Knowledge of past medication history is essential to guard against adverse reactions and detrimental drug interactions. Applicants can design an implementation plan for FDA acceptance that will rely on objective verification of medication history through checks of pharmacy records (which can be done nearly instantaneously), but if that data is not available, proper and safe self-selection can prove challenging in consumers with low health literacy.

Safety considerations

When reviewing a portfolio of Rx products for ACNU feasibility, concerns over safety factors and risks will immediately eliminate many potential drugs. A few obvious categories of drugs can be taken off the table. For example, any drug that is on a REMS safety program would be automatically eliminated from consideration. Most drugs with black-boxed warnings are unlikely to pass muster with the FDA, but there is some nuance to whether the boxed warning is for something that might be controlled for within an ACNU. We believe other no-gos will include most oncology drugs (due to cost, selection, monitoring and management), as well as all controlled-class substances.

In general, several safety-related factors should be considered in assessing ACNU feasibility:

• Fewer contraindications and controllable safety risks: All drugs, even OTC drugs, have some contraindications and safety concerns in certain populations and under certain conditions. As with OTC drugs, ACNUs need to show that they have an overall favorable risk-benefit profile in an unsupervised setting. In addition, drug side effects should be predictable and manageable.
• Limited risk of off-label use and misuse: There should be minimal potential for intentional drug misuse outside of its label, including chance for abuse or drug dependence.
• Active monitoring not required: Any drug that requires that the patient be monitored through examination, lab tests or direct observation is unlikely to be acceptable for non-prescription by the FDA.
• Dosing/titration doesn’t change during treatment: Drugs in which dosage needs to be carefully controlled would not be candidates.
• Patient can self-administer: Proper dosing and administration and the ease of informing and educating on dosing and administration is crucial. IV infusion drugs are highly unlikely to be ACNUs; however, self-injection drugs could possibly be candidates if accompanied by the right educational support.
• No special handling needed: Drugs that have stability limits and cold chain requirements or need special handling due to safety and toxicity concerns would likely not be candidates.

Desirability

In desirability we are asking, “Should we?” In other words, is there a strong business case for investing in an ACNU? The investment will be significant to do the work and prepare the studies to submit a new drug application (NDA) to the agency. Given that many license holders of ACNU candidates have recently divested their consumer health capabilities, there may be significant investment in rebuilding distribution and commercialization capabilities.

A company that is considering desirability needs to conduct an analysis beginning with market size, growth potential, unmet need and cannibalization risks. Where do the customers come from? Some may be patients who switch from the generic or a branded drug. However, the largest number of consumers may be under-treaters or non-treaters. If priced attractively, an ACNU can offer more effective and affordable treatment options to a broader range of people who are currently using suboptimal approaches.

Optimizing price will also be one of the key factors in maximizing profitability. Fortunately, studies from the Consumer Health Association have shown that consumers are willing to pay significantly more for an ACNU than a typical OTC because of the value of eliminating the need for a visit to the doctor. Indeed, an important factor in desirability is determining the amount of friction that currently exists related to getting a drug. In cases where friction in the Rx patient journey is significant, an ACNU becomes more attractive. Testing consumer willingness to pay with robust methodologies that account for the newness of the ACNU channel will be critical to getting it right.

There are other differences between sales forecasting for an ACNU versus a typical over-the-counter product. Simultaneous Rx and ACNU marketing is an important component of the ACNU rule and could be a significant factor in sales and revenue for a brand. For ACNU brands that are plays for end-of-marketing exclusivity, there are potential halo-effect advantages for the Rx version of the brand when the ACNU is launched. The promotional awareness efforts to draw attention to the ACNU may spill over, leading to a lift on the Rx side. For example, some evidence shows that the launch of Prilosec OTC influenced the market dynamics and sales for the Rx version. Zyrtec also saw a significant increase in overall sales (combined Rx and OTC) after the launch of its OTC version in 2007, which was probably due to both switch and new users entering the market.

Portfolio strategy

While any pharmaceutical company that approaches this new nonprescription market may start with a single ACNU candidate, it is critical to engage in future-state scenario planning in which the market becomes crowded with ACNU drug candidates.

Unlike OTC drugs that have a physical destination where competing products can be picked off the shelf for comparison and consideration, we assume that most ACNU products will be considered and chosen in a digital space. Even if the product is being kept at a drug store, in a kiosk or at the front of the store, much of the process for comparing and selecting will happen on a screen. Several connected digital marketing and consumer experience questions need to be answered to ensure that consumers have the information they need and can easily navigate an important purchase decision for a non-prescription medication.

These considerations about consumer experience are relevant to considering how companies might offer a portfolio of ACNU products and what the strategy should be for creating or bringing together a family of ACNU brands. Portfolio strategy for ACNU should explore whether brands from the same pharmaceutical company should be sold under the same banner, through a central portal, and whether the ACNU “store” should be run by the pharmaceutical company. These questions about portfolio raise issues regarding the online store or destination for an ACNU. In the digital space, how will a consumer learn about an ACNU, where will they go to learn about and consider it, and how will they acquire it?

Final thoughts

The impending ACNU rule presents enormous opportunity for manufacturers, but it is critical to get ahead of the rule and begin future-state planning quickly.

In future articles, we will explore the need and opportunities for manufacturers in developing a digital and data strategy, and designing effective ACNU digital experience for consumers.

Read more insights from ZS.