While the majority of consumers regularly rely on nonprescription medicines for self-care, the use of over-the-counter products intensified even further during the COVID-19 pandemic. Since the start of Rx-to-O-T-C switching more than 40 years ago, many obvious switch candidates — from pain relievers like Advil to allergy meds like Claritin, Zyrtec and Flonase — have already made the transition. But shifting self-care behaviors, a changing regulatory environment and continuing health care innovations are now creating a new landscape that could soon spur another wave of Rx-to-O-T-C switches.

Katie McNichol

The United States spends more per capita on health care than other developed countries — and it’s an issue that continues to accelerate. According to the Centers for Medicare and Medicaid Services, U.S. health care spending grew 9.7% in 2020 alone, reaching an average of $12,530 in health care costs per person. As we struggle right now with rising inflation, it’s easy to forget that the overall inflation rate that same year was just 1.2%.

As rising health care costs become an ever-growing barrier obstructing people from the care they need, Rx-to-O-T-C switches can play a role in fostering more affordable health care access. The Consumer Healthcare Products Association has found that each dollar spent on O-T-C medicines saves more than $7 for the U.S. health care system, and that the availability of O-T-C medicines expands health care access to over 27 million consumers.

A newly accommodating regulatory environment

In acknowledgement of these benefits and of the potential of new technologies to facilitate safe O-T-C use of more medications, the FDA has recently displayed increased regulatory receptivity to potential switches for a growing range of medication categories. Since 2015, this has included approvals of products such as nasal steroids, eye allergy drops, topical analgesics, topical lice therapies and other categories that have traditionally been “switch-limited” by concerns related to the systemic absorption of topically applied products.

In recognition of the role technology can play in facilitating safe O-T-C use for a wider range of products, the FDA also updated its Nonprescription Safe Usage Regulatory Expansion (NSURE) guidance in 2012. It notes that expanded labeling and technologies such as mobile applications, website information, videos and other aids can help consumers make safer purchase decisions.

Areas of promise

Switch development is always a heavy lift that requires a huge investment, years of planning and multiple successful clinical trials. As a result, there may be limited potential for more new medications in crowded O-T-C categories such as allergy, topical analgesics and smoking cessation. But the changing regulatory environment and safety-enhancing technology options are also opening the potential for entirely new categories that have never before offered products without a prescription. Some of these category-creating switches could drive substantial growth that’s large enough — $200 million or more — to incite other brands to launch O-T-Cs in the same class.

Following are just some of the potential future switch categories identified by Kline & Co.’s 2020 Rx-to-OTC Switch Forecasts:

• Acne.
• Allergy (oral, nasal and eye drops).
• Asthma (leukotriene inhibitors).
• Benign prostatic hyperplasia (BPH).
• Cholesterol reduction.
• COX-II inhibitors.
• Digestives (IBS).
• Eczema/psoriasis.
• Erectile dysfunction.
• Hearing aids.
• Influenza.
• Migraine.
• Narcotic overdose antidote.
• Oral contraceptives.
• Osteoporosis medications.
• Overactive bladder.
• Pink eye treatments.
• Sleeping aids.

A risk/reward calculation

The wisdom of pursuing any individual product switch typically depends on how the regulatory risk and development costs stack up against the potential business opportunity.

A prototypical example of a high-risk, low-return switch prospect would be a narcotic overdose antidote. It would require a challenging regulatory approval and apply to a limited set of potential patients. A low-risk, high-return example would be something like a nasal allergy product with limited safety concerns and a huge potential O-T-C market.

In this changing environment, some high-risk, high-return options such as erectile dysfunction drugs, cholesterol reducers and COX-II inhibitors offer the potential of outsize returns but also will require enormous investment and commitment for a successful switch. So deep-pocketed companies with a history of successful switches and strong O-T-C capabilities are the most likely to invest in bringing these new categories to the O-T-C market.

Smaller companies may also benefit from switching additional follow-on drugs. Products such as new O-T-C topical products in existing categories or new switches from companies focusing on niche therapeutic areas may offer more limited returns at less risk. But these kinds of switches can still generate sufficient returns to be a difference-maker for smaller manufacturers.

An area of ongoing ­industry growth

In 2021, overall O-T-C sales grew 5.9%, while the switch segment grew by a larger 8.3%. And while they accounted for about 20% of overall O-T-C sales, switches drove 28% of O-T-C industry growth in 2021. While many of the easiest Rx-to-O-T-C switches have already happened, technology advancements and a looser regulatory approach could facilitate both additional follow-on O-T-C approvals and more complex switches.

These shifts figure to make Rx-to-O-T-C switches a promising and ongoing growth engine for manufacturers in the years ahead. As consumer interest in self-care explodes in lockstep with health care costs, these switches can also be a way for the industry to support better consumer health by increasing the accessibility and affordability of many important medications.

Katie McNichol is client insights principal for health care at IRI.