Thursday, August 04, 2011

Is Over-the-Counter Lipitor in the Cards? One year's sales could cover original R&D costs!

The Wall Street Journal (see here) reports that Pfizer is considering seeking approval from the FDA to sell Lipitor over-the-counter (OTC). Although OTC sales of Lipitor are likely to be only a fraction of the the annual $10 billion in global Lipitor sales currently enjoyed by Pfizer, OTC Lipitor may generate up to $1 billion in annual sales. That's almost enough to cover the original costs of bringing Lipitor to market in the first place; that is, if you accept the industry's estimate of $800 million to $1.2 billion as the cost of development for an Rx drug.

How did I estimate the annual sales of OTC Lipitor? I used the Claritin Rx-to-OTC switch as a model. According the the WSJ article:
"Merck's Claritin OTC generated $401 million in sales for 2010. In comparison, annual sales of the prescription version of Claritin once exceeded $3 billion before the drug lost U.S. patent protection nearly a decade ago"
$3 billion in 2000 dollars is worth about $3.9 in 2010 dollars. Therefore, $401 million represents about 10% of pre-OTC income. If the same OTC/Rx sales ratio holds true for Lipitor, Pfizer can potentially sell $1 billion worth of OTC Lipitor in the first year (keep in mind that Claritin treats seasonal allergies and sales probably spike in the spring, whereas Lipitor sales would be sustained all year long).

But it is unlikely that Pfizer will depend entirely on OTC Lipitor sales to maintain this all important anti-cholesterol brand. It may do what Merck did after Claritin went OTC, which was to develop a new Rx formulation of the drug; ie, Clarinex.

Is Pfizer currently working on a new formulation for Rx Lipitor? I have no idea. It did, however, fail spectacularly to bring a new anti-cholesterol drug (torcetrapib) to market in 2006 (see "torcetrapib: '$800 Million' Failure but Kindler Safe"). Perhaps, after recent cutbacks, Pfizer no longer has the R&D resources to be as innovative as it once was.

One other thing to consider is this: the WSJ articles points out that Merck has been unsuccessful in its attempt to switch its anti-cholesterol statin drug Mevacor from Rx to OTC. FDA shot them down 3 times. The argument against OTC statins such as Mevacor (and presumably Lipitor as well) is that these drugs can be highly toxic to the liver if not used properly and require periodic blood tests to monitor such problems.

Adding to the debate is a benefit/risk analysis of statins based on a little-known but useful statistic, the number needed to treat. You can read more about that here: "The Statin Lottery: Number Needed to Treat Statistic". According to Dr. Jerome R. Hoffman, professor of clinical medicine at the University of California at Los Angeles, people could do as well dieting and exercising to lower cholesterol while avoiding the cost and potential side effects of taking a statin every day. BTW, people pay out of pocket for OTC drugs that were covered by insurance when the drugs were Rx. Those costs could exceed copays.

I note with interest that Pfizer is currently in the middle of a direct-to-consumer (DTC) advertising campaign that disses diet and exercise as a way to lower cholesterol; see "New Lipitor Ads Dis Exercise & Healthy Diet. Are You Kidding Me?". I wonder if the target of this ad campaign is the FDA rather than the general public? Hmmmm....

[This post originally appeared in Pharma Marketing Blog
Make sure you are reading the source to get the latest comments.]

3 comments:

  1. John: Great post. I had suggested this awhile back with the caveat that in order to keep taking the medication it would mean that some chain drug stores would have to offer blood tests to ensure that there is no liver damage.

    Still the question becomes: what is better for consumers ? I believe, at a time when less people are going to their doctor, that Lipitor should go over the counter. It is far safer than some other OTC drugs on the market. I also believe that Viagra should go OTC as well so men can purchase it without having to overcome the embarrassment issues that prohibit use.

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  2. Rich,

    As always, thanks for your comments.

    Some random thoughts:

    Consumers (and their sexual partners) can clearly see the benefit of Viagra whether it's Rx or OTC. Plus, you don't take Viagra every day -- unless you are very sexually active or believe what some physicians are recommending. Which means side effect issues may be less of a concern. Therefore, I see a case for OTC Viagra -- isn't it sold "behind the counter" in the UK?

    For statins, however, I have doubts that people would monitor their blood even if test were offered in pharmacies. It's an added cost! The competition with Rx generics would be fierce.

    Regarding costs, I am sure Pfizer would charge a premium for OTC Viagra because demand would be very high. For OTC Lipitor, on the other hand, competition (from OTC Mevacor, for example -- if FDA says OK to Lipitor OTC it must also OK OTC Mevacor) would force the price pretty low and benefit consumers willing to take the risk. I'm sure we'll see even more advertising if and when this happens. So it's all good for pharma marketers!

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  3. The makers of Lipitor also have a "copay card" which offers copay rebates when you purchase Lipitor through your insurance.

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