Which Switch Fits?

January 11, 2016By Behind the Shelf Blog, Industry Intuition

by Dave Wendland

The number of and success of Rx-to-OTC switches has fluctuated over the years. While there seems to be an uptick of these transitions recently, in fact there haven’t been nearly as many as we saw in the '80s and '90s. Opportunity certainly exists, but what are the challenges or risks?

The average U.S. household spends about $340 per year on over-the-counter (OTC) products, with annual nationwide spending totaling $2.9 billion, according to the Consumer Healthcare Products Association (CHPA). Drugs that started as prescriptions and transitioned to OTC accounted for 19 percent of OTC sales. These transitions can be an important revenue-boosting opportunity for business.

Since 1976, 106 prescription medications have gone from Rx to OTC. Why so few? Simply put, there’s a lot more to the process than moving the package from the pharmacy to the drug store aisle. However, it is important to note those 106 medications account for more than 700 stock-keeping units (SKUs) at retail taking into consideration sizes, flavors, and forms.from Rx to OTC

Here are five things that can make or break a switch to non-prescription status for the manufacturer bringing it to market:

  1. Consumer marketing expertise – for most prescription-based manufacturers the difference between OTC and medical marketing is like entering a foreign country.
  2. Consistent messaging – no longer is the physician guiding the patient to the product, therefore messaging must be clear, concise, and ubiquitous.
  3. Consumer awareness – once the message is determined, choosing an effective array of media channels is essential.
  4. Reasonable price point – introducing an OTC item without first understanding what product(s) the consumer may already be using to address their needs and retail prices of those products is a recipe for disaster.
  5. Education – at the center of the success of any of these switches is education for the consumer, pharmacist, physician, and payer community. Sharing knowledge will increase sales performance in the market.

Once introduced, OTC medications face new challenges competing not only against other pharmacological formulations, but also against other OTC products, functional foods, and nutritional options. As medications are considered for over-the-counter sales and manufacturers begin developing their strategy, it is essential to remember that ‘patients’ become ‘consumers.’

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