As consumers increasingly want to take a more active role in their healthcare, they have a desire for more convenient, accessible, and affordable alternatives to prescription (Rx) medications. Switching an Rx drug to an over-the-counter (OTC) product can provide a considerable opportunity for sponsors to expand their consumer reach and gain access to benefits that come with participation in the OTC market. However, to meet the increasing demands and expectations of a consumer-centric healthcare model, drug sponsors must contend with nuances in drug development beyond the historic Rx-to-OTC formula. Said differently, sponsors must consider how the Rx and OTC drug markets operate differently and have different access points and market parameters.
Many Rx-to-OTC switches to date have been for antifungal, antihistamine, and decongestant products. Nevertheless, recent decisions have shown the U.S. Food and Drug Administration's (FDA) willingness to expand the scope of switches to new therapeutic categories, including the Narcan® and Opill® Rx-to-OTC switches. The Opill® switch, in particular, provides a vivid example of this expansive view. FDA's July 13, 2023, approval of the norgestrel 0.075 mg tablet as the first OTC progestin-only oral contraceptive was revolutionary, and our research shows that many others are in development. Further, FDA's proposal regarding OTC products with an additional condition for nonprescription use (ACNU) shows that the Agency is being approached by companies with expansive, new ideas and technologies to address consumer demand.
As the market for Rx-to-OTC drugs is becoming increasingly competitive—particularly for sponsors seeking a first-in-product-class switch with potential exclusivity—a sponsor must act quickly but thoughtfully to evaluate whether a product is suitable for switching and how to maximize the benefits of a switch. This requires that drug sponsors consider five key points.
1. Products Suitable for a Switch
To convert an Rx drug to OTC status, the product must be shown to be safe and effective for use by a consumer without supervision by a licensed healthcare professional. Products most suitable to be switched are those that have sufficient safety and efficacy data (including acceptable safety margins) and have appropriate labeling that is understandable by consumers and permits safe use without physician intervention in today's evolving consumer environment.
FDA will consider the totality of the available evidence, including public health policies, to make a determination about a product's suitability for switching. For example, when evaluating the Rx-to-OTC application for Opill®, FDA conducted various benefit-risk analyses with respect to the potential medical, economic, and societal public health benefits of a switch. This evaluation included consideration of at least a moderate, and perhaps a large, reduction in unintended pregnancies that would result from approval. FDA also considered the various effects of a switch approval (e.g., increased access to birth control that otherwise is unattainable due to lack of providers who can prescribe prescription birth control) and a switch disapproval (e.g., loss of income due to time needed to obtain a prescription).
As the Rx-to-OTC switch market becomes increasingly more attractive, sponsors should think about which therapeutic drug categories are ripe for OTC consumer use. Sponsors should also assess how existing public health policies may impact a potential switch.
2. Data Needed for a Switch and Potential Exclusivity
Consideration of the type and amount of clinical and non-clinical data that FDA will require to approve a switch is imperative to positioning a product for market success. These considerations are especially true if a sponsor is pursuing exclusivity resulting from a first-in-product-class switch. Sponsors need to consider thoroughly what data will be required—both for the switch approval and for the exclusivity the sponsor is seeking.
As step one, a sponsor can primarily rely on the safety and efficacy data in the Rx new drug application (NDA) or the finding that it is safe and effective for Rx use. The sponsor will then need data demonstrating that a consumer can safely use the drug when relying solely on the OTC labeling. This safe consumer use data can be addressed through a label comprehension study, self-selection study, or actual use study. These studies must include an adequately sized and demographically diverse population with varying levels of literacy, must minimize bias, and must use test labeling that is nearly identical to what the final product labeling will look like.
Exclusivity awarded to a switched drug will help solidify the position of the "new" OTC drug in the market for a period of time, thus maximizing consumers' exposure to that product before OTC competition emerges. In fact, while OTC monograph procedures can be used to facilitate a switch, such procedures have yet to be used. This fact, combined with the potential for three (3) years of exclusivity that come with an Rx-to-OTC switch via the traditional NDA procedures, shows the value of exclusivity to Rx drug sponsors seeking access to the OTC market.
To seek the three (3) years of exclusivity potentially provided with a switch, a sponsor will need to conduct and provide new clinical studies that were essential to the switch approval. While this may seem straightforward, sponsors should consult with FDA about what studies it will consider "essential" to approving the switch. But it is important to recognize that the decision on exclusivity is never final until the approval of the switch occurs. Moreover, based upon our experience, this exclusivity decision is grounded in law and not dependent upon the division within FDA responsible for reviewing the switch application. In other words, FDA's Office of Chief Counsel is likely to have the final say.
Overall, sponsors should engage in early and frequent dialogue with FDA, including the Office of Nonprescription Drugs and the Office of Generic Drugs, to discuss an appropriate development program, studies needed to support the switch, and studies required to obtain exclusivity.
3. Type and Extent of Switch
As consumer demand for OTC drug products increases, so too does competition—especially among sponsors seeking a first-in-product-class switch. Exactly how a sponsor plans and executes a switch can have a big impact on the marketplace.
For example, a sponsor may seek a switch by filing a supplement to its existing Rx NDA. If the switch is approved with the required data to obtain exclusivity, then the OTC product will have a period of exclusivity before the sponsor of an abbreviated new drug application (ANDA) can amend its product labeling and market the OTC drug under its existing ANDA. The Rx ANDA product will also be required to leave the market unless the switch is only a partial switch, as noted below.
However, if the switch sponsor instead chooses to file an entirely new OTC NDA, then any existing Rx ANDA sponsors will be required to withdraw from the market and file a new OTC ANDA that cannot be approved until the switch sponsor's OTC drug exclusivity has expired.
A sponsor must also consider whether to seek a switch for all existing indications or only some, and whether its switch will make other changes to the indications, dosage strength, or intended consumer population. The sponsor's decision in this regard will impact whether both the Rx and the OTC drug can remain on the market at the same time.
Under current FDA rules, an Rx and OTC drug may only be marketed simultaneously if a "meaningful difference" exists between the two products, such as indication area, strength, dosage, or patient population. FDA has proposed that the simple existence of an ACNU for an OTC product can allow for such product to be on the market at the same time as an Rx drug having the same active ingredient, dosage form, strength, route of administration, and indication. In other words, the existence of an ACNU can establish a "meaningful difference" that makes the Rx drug safe only under professional supervision for certain conditions of use on the one hand, and the OTC product safe absent professional supervision on the other hand. Thus, both products can be marketed simultaneously.
The timing of any switch filing can be critical as well. By regulation, FDA will not review a 505(b)(2) application if the drug product can be reviewed as an ANDA. Moreover, the intricacies of the filings, exclusivities, and any patent notifications are still evolving.
In light of these considerations, Rx drug sponsors must carefully evaluate not only the current Rx competitive landscape and whether the drug is appropriate for switching, but also how to maximize market share through exclusivity and potential simultaneous Rx and OTC drug marketing.
4. Market Strategy
Although FDA approval decisions are formally divorced from insurance coverage, payment, and reimbursement issues, a switch will nonetheless have a broad impact on market availability and consumer access. Therefore, an appropriate review and analysis of the current and future competitive landscapes for any specific Rx-to-OTC product is vital.
The OTC and Rx markets are vastly different with respect to product distribution and pricing. When moving to the OTC market, a sponsor is generally no longer required to negotiate with payers and pharmacy benefit managers over reimbursements, drug formularies, and rebates. Instead, sponsors must compete for shelf space as there are generally only a few OTC products within a specific drug category available at any one pharmacy, drug store, or convenience store. Additionally, sponsors must determine the best price for their OTC product to ensure shelf space in consumer purchasing outlets and to maximize consumer willingness to purchase the product.
Sponsors interested in a switch must therefore consider the differences in market economics, including projected sales volumes, prices, and any health plan coverage, and whether pursuing a switch may be a strategically sound approach in light of the desired patient/consumer population and market dynamics.
5. Limiting Liability
Finally, sponsors should recognize the differences in drug advertising and promotion for Rx and OTC drugs, as these factors may drive enforcement priorities and enforcement discretion. Likewise, litigation risks from competitors and consumers may look different in each market.
While Rx drug advertising is regulated by FDA, OTC drug advertising is regulated by the Federal Trade Commission. Although both agencies require that product claims be truthful, substantiated, and not misleading, each agency has its own advertising enforcement priorities. Sponsors must also be aware that Lanham Act lawsuits could be filed, or quasi-legal advertising challenges could be brought by competitors to the National Advertising Division of the Better Business Bureau.
Sponsors that want to pursue an Rx-to-OTC switch should not discount the possible legal challenges they may face and be prepared should one arise.
Navigating the Rx-to-OTC switch landscape takes careful planning and execution. Buchanan's FDA regulatory attorneys are available to answer your questions about how to develop a switch strategic plan that can maximize opportunities and reduce risks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
