Allegra to Make Rx to OTC Switch
Some of the biggest "new" product introductions
in HBC over the years have been products that were moved from prescription-only
status to over-the-counter (OTC). The newest popular drug to go the Rx to OTC
route is Allegra, a non-drowsy allergy medication.
The Food and Drug Administration
earlier this week made the decision to grant Allegra OTC status following Zyrtec
in 2008 and Claritin in 2002. The drug will begin selling OTC in March in two
forms. Allegra-D, which contains a decongestant, will be available for those
ages 12 and up. Standard Allegra has been approved for children as young as
two.
Will Giddings, a pharmacist of East Tennessee Discount Drug in Lenoir City,
told the Knoxville News Sentinel that previous Rx to OTC switches have
done really well, including the "Claritin juggernaut."
As a Los
Angeles Times piece points out, OTC Allegra will be a positive
for those without health insurance trying to cover the costs of prescription
meds or those who don’t want to pay for a doctor visit to get prescription.
The same
article points out that consumer costs for prescription allergy medicines have
gone up in recent years as health insurance companies have increased co-pays
to push people to OTC products. A 30-day supply of prescription Allegra costs
$75 on many plans while OTC Claritin for the same time-frame is roughly $24.
The
one downside for consumers is for those with flexible spending or health-saving
accounts. Under new laws, they will no longer be able to use funds from those
accounts to purchase OTC drugs unless having written instructions from a physician
or nurse practitioner.
A generic form of Allegra is at least a year away, according
to reports.
Discussion Questions
Discussion Questions: Will sales of Allegra be on par with previous Rx to OTC switches? Are there “best practices” you would recommend to retailers introducing products moving from Rx to OTC?
With the move to OTC, grocery and convenience stores without pharmacies will be able to carry Allegra. This makes it much more convenient for consumers. However, the traditional drug channel can’t be happy about that.
From the manufacturer’s perspective, moving to OTC will increase sales, sales outlets, and make it more competitive with other OTC drugs that relieve similar symptoms, but as we know with Claritin, it impacts revenue since the item will sell for much less at retail.
Laws will need to change with regards to Flex spending accounts and OTC drugs in my opinion. Asking a consumer to get a written note from their doctor just so it is covered by Flex spending is unrealistic.
I expect OTC Allegra will do well, despite the fact that it will quite obviously further fragment sales in the category.
The present unreasonably high cost of filling Allegra Rx under many medical plans is one reason. The cash price for the OTC version will look like a relative bargain.
Also, as many chronic allergy sufferers know all too well, it’s often advantageous to switch up one’s medication every couple of months. Tolerances seem to develop over time. Having another effective choice readily available will be welcome to many.
This prescription product’s usage certainly suggests that the OTC market opportunity will be strong. Although I agree with other panelists that the dollar sales generated on a per unit basis will be affected, its availability within the category and the consumer’s realization that allergies are a year-long issue, create tremendous upside.
I suspect Allegra will perform very well, attract new consumers to the category and become another Rx-to-OTC switchover success story.
This will be another success story–Allegra has had a lot of good press and promotion, and seems to help a number of people. For allergy sufferers, the ability to purchase OTC is good news, with better relief at better prices. For the manufacturer, more sales–and pharmacies will recover some of their reduced revenue with more sales. This has to be a good move that makes things easier for many people.