Sea Changes In Regulation And The Market: Top Stories Of 2008

When an iconic drug brand drew scrutiny on Capitol Hill for possibly violating FDA's policy against combinations of drugs and dietary supplements, OTC and supplement interests took notice.

"The Tan Sheet" coverage of a House committee's October 2008 queries about Bayer Aspirin with Heart Advantage attracted the most attention from readers during the year, according to a review of Web site activity.

A close second was coverage earlier in the year on analysts' projections for the Rx-to-OTC switch market.

In 2008, the OTC and supplement markets saw notable events - such as changes in FDA's regulation of pediatric cough/cold products - and tectonic shifts, as large drug companies revised strategies to focus more on consumer health care products.

"The Tan Sheet" compiled its top 10 stories for 2008 based on Web site activity as well as editors' picks of important events and issues from the year.

The top trends and events paint a picture of FDA struggling with aging regulatory schemes in the face of evolving science and an expanding world market, a shift toward tighter regulation for drugs and supplements and a growing need for players to be savvier and more innovative than ever before to stay afloat and thrive.

1. Combo Products Draw House's Ire

As part of its investigation of direct-to-consumer drug marketing, the House Energy and Commerce Committee sent letters in October to FDA and Bayer inquiring about Bayer Aspirin with Heart Advantage, which combines aspirin and plant phytosterols and carries cholesterol-lowering claims. The committee told Bayer the product could violate FDA policy, noting the agency had previously warned other firms not to market drug/supplement combinations (¹ (Also see "Congress Presses FDA To Speak Up On OTC/Supplement Combo Products" - Pink Sheet, 20 Oct, 2008.), p. 4).

While Bayer said it advised FDA about the combination product prior to launch, two weeks after hearing from Congress, FDA sent warning letters to Bayer HealthCare that Bayer Women's Low Dose Aspirin + Calcium as well as Bayer Aspirin with Heart Advantage are unapproved new drugs (² (Also see "Bayer Warning Letters Reinforce FDA Ban On Supplement/Drug Combinations" - Pink Sheet, 3 Nov, 2008.), p. 9).

FDA's warnings answered questions from Congress and supplement industry stakeholders on whether the agency will enforce the policy or leave it a gray area.

2. OTC Switch And Diversification

Diversification becomes more important for drug firms in the face of challenges such as a tougher regulatory environment, patent expiry and generic competition.

Rx-to-OTC switches prolong the life of a brand, increase return on investment and broaden a company's portfolio through lower-risk growth opportunities, Morgan Stanley analysts said in a January report (³ (Also see "OTC Switch Offers Firms Opportunities To Diversify Earnings – Morgan Stanley" - Pink Sheet, 4 Feb, 2008.), p. 3). "The Tan Sheet" also looked at potential switch candidates for the near future.

But switches require careful shepherding to be commercially successful, Joe McGovern, a consultant with Atlantis Group Inc., said in an April report that also struck a chord with readers (⁴ (Also see "Early Attention To Marketing Can Make Or Break OTC Switches – Consultant" - Pink Sheet, 28 Apr, 2008.), p. 8).

According to McGovern, an executive for Pfizer Consumer Healthcare before its acquisition by Johnson & Johnson, switches will become more complex and difficult, and their success will continue to depend on incorporating marketing staff from the start of a project. Marketers identify the customer for a planned product, rather than create a market for the product, and tailor the switch project accordingly.

3. Looking Under FDA's Hood On A Switch

A two-part series about FDA's approval of GlaxoSmithKline's switch application for a weight-loss drug, alli (orlistat 60 mg), looked at the real nuts and bolts of a recurring issue with switches: conflicting opinions between Office of Nonprescription Products reviewers and therapeutic division reviewers.

In partnership with Pharmaceutical Approvals Monthly, "The Tan Sheet" examined how the Division of Metabolism and Endocrinology Products and ONP's Division of Nonprescription Clinical Evaluation operated from different perspectives on the weight-loss indication (⁵ (Also see "Switch Case Study: Alli Review Contrasts OTC, Rx Division Perspectives" - Pink Sheet, 31 Mar, 2008.), p. 10).

Before the switch was approved in February 2007, FDA's review was complicated by the lack of clear guidance and consensus on drug therapy for obesity, which was reflected in the two divisions' opinions. DMEP officials questioned whether weight-loss drugs should be available OTC, but DNCE staff contended that the safety and efficacy of an OTC new drug application should not be reviewed at a higher standard of scrutiny than an Rx NDA.

Additionally, in the alli switch review FDA mined adverse events data to identify and evaluate safety signals. Since the Rx 120 mg orlistat drug Xenical was approved in 1999, the agency relied on the adverse event reports system to flag risks linked to the product, especially rare AEs that can be difficult for clinical trials to catch (⁶ (Also see "Switch Case Study: GSK Alli Review Shows FDA Data Mining In Context" - Pink Sheet, 7 Jul, 2008.), p. 6).

4. Pediatric Cough/Cold Challenges Persist

In August, FDA moved to resolve concerns about the safety and efficacy of cough and cold OTCs for children, including those cited in a March 2007 citizen petition, with plans to review monograph language for the products (⁷ (Also see "FDA Call For Pediatric Cough/Cold Input Signals New Rule Is A Long Way Off" - Pink Sheet, 25 Aug, 2008.), p. 3).

At a public hearing FDA conducted in October for input on the rulemaking process, stakeholders noted the agency has strategies outside the regulatory framework available to effect immediate changes it deems necessary (⁸ (Also see "Calls For Cough/Cold Collaboration As FDA Inches Toward Rulemaking" - Pink Sheet, 6 Oct, 2008.), p. 3).

Prior to the hearing, FDA recommended and OTC drug firms agreed to relabel pediatric cough/cold products as "do not use" for children under 4 and to add a warning that products "containing certain antihistamines" listed in the monograph, such as diphenhydramine and brompheniramine, should not be used to sedate children (⁹ (Also see "Firms Consult FDA, Add “Do Not Use” For Under 4 To Pediatric Cold Products" - Pink Sheet, 13 Oct, 2008.), p. 4).

Meanwhile, some firms are stepping up marketing for alternative cold products such as nasal decongestant sprays. Other companies tout that their products do not contain the same substances that FDA advisory committees recommended not be used by young children (¹⁰ (Also see "As FDA Eyes Cough/Cold Changes, Alternative Products Aim For Mainstream" - Pink Sheet, 4 Aug, 2008.), p. 4).

5. Election Results: "More Aggressive" FDA

After the November elections put a Democrat in the White House and increased the party's control of Congress, drug and supplement industry stakeholders and market and political analysts predicted FDA will become more responsive to public concerns and less aligned with industry goals (¹¹ (Also see "With Democrat In White House, “More Aggressive” FDA Comes Into Focus" - Pink Sheet, 10 Nov, 2008.), p. 3).

Barack Obama's election as president also provided fertile ground for predicting who his choice as FDA commissioner would be.

Although several possible candidates favored by the pharmaceutical industry were mentioned soon after the election, more recent discussions largely have focused on industry critics such as Steven Nissen, chairman of cardiovascular medicine at the Cleveland Clinic, and Joshua Sharfstein, the Baltimore commissioner of health. Sharfstein was the point person in the 2007 petition questioning pediatric OTC cough/cold drugs and is a member of Obama's transition team.

6. Competitive Strategy In The Heartburn Market

In 2008, Procter & Gamble faced competition for its proton pump inhibitor Prilosec OTC from private-label products. The firm also moved to cut off a future threat in the nonprescription heartburn drug market from Schering-Plough's application to switch the PPI Zegerid . S-P filed an NDA to switch Zegerid under a licensing agreement with Santarus, which says the OTC product could receive approval and be available early this year (¹² (Also see "P&G Says Zegerid Switch Proposal Should Drop “Immediate Release” Claim" - Pink Sheet, 8 Dec, 2008.), p. 3).

In a November citizen petition, P&G asks FDA not to approve an OTC version of Zegerid with an "immediate release" label claim. P&G says a survey it commissioned showed consumers would select OTC Zegerid over competitors because they would erroneously equate "immediate release" with "immediate relief."

7. Learning From Rx And Managed Care

Managed care plans in 2008 showed growing influence not only on consumers' OTC choices, but also on drug firms' decisions concerning switching drugs to nonprescription, according to Nielsen's health care market research.

Industry giant Johnson & Johnson in June said its consumer products division is leveraging the capabilities of its Rx business infrastructure to grow its brands and create new products (¹³ (Also see "J&J Harnessing Pharma Business Advantages For Global OTC Growth" - Pink Sheet, 9 Jun, 2008.), p. 9). The firm used this infrastructure to work closely with managed care organizations to maximize the impact of its switch of the antihistamine Zyrtec .

Although insurers' reimbursement strategies related to OTC categories are not likely to directly influence drug sponsors' initial decisions on whether to pursue switches, drug firms are in close contact with providers about their pharmacy coverage plans (¹⁴ (Also see "Managed Care Influences OTC Switch With Zyrtec As Model – Nielsen" - Pink Sheet, 5 May, 2008.), p. 6).

Similarly, some managed care plans in 2008 expanded coverage of OTC products for their clients, building on a trend of insurers and payers looking to nonprescription drugs for savings (¹⁵ (Also see "OTC Coverage By Insurers Spreads To Ohio For Part D Clients" - Pink Sheet, 26 May, 2008.), p. 14).

8. Statin Research Exerts Its Pull

Clinical research can reveal the potential direction of the market and future innovations. Players carefully watched how the planets would align for OTC statins with the release of data from AstraZeneca's JUPITER trial on Crestor (rosuvastatin).

JUPITER greatly expands the pool of patients who may benefit from statin use, which could help make the case for a switch in the cholesterol-lowering class in the future (¹⁶ (Also see "The JUPITER Results: Will The Planets Align For OTC Statins?" - Pink Sheet, 17 Nov, 2008.), p. 4).

The results published in November from the AstraZeneca-funded study - the Justification for the Use of Statins in Prevention: an Intervention Trial Evaluating Rosuvastatin - show a benefit of decreased cardiovascular events in a population of people who do not usually qualify for the therapy because of their lack of hyperlipidemia.

The results could support a reworking of clinical guidelines for cholesterol levels, leading to treatment of people with lower cholesterol than currently recommended.

The current 2004 ¹⁷ guidelines of the National Cholesterol Education Program are set to be reevaluated this year, with data to be considered that include JUPITER. New guidelines in turn could shift the risk/benefit in a favorable direction for OTC statins.

9. Monograph Process Congested

The disparity between FDA's OTC monographs and up-to-date communications from the agency can confuse manufacturers, Office of New Drugs Director John Jenkins acknowledged at an industry conference in June. Jenkins said the agency's consideration of changes to the pediatric cough/cold monograph points out the problems created by the unwieldy system (¹⁸ (Also see "Congested OTC Monograph Process Can Leave Manufacturers Confused" - Pink Sheet, 7 Jul, 2008.), p. 3).

Unlike changes to products approved under new drug applications, modifications to OTC monographs are bound by rulemaking requirements. "We've come to realize that the monograph process is not one that allows for rapid changes in response to new information," Jenkins said.

10. OTC As A Key Piece In Tough Times

Despite slumping Prilosec OTC sales, P&G was among the firms that adjusted their strategies in 2008 and focused more on growing their OTC or consumer health businesses.

P&G executives in December said the company's health care segment, which includes the oral care, feminine care and personal health businesses, will become the focal point of its research and development, licensing and acquisition efforts (¹⁹ (Also see "P&G Focuses On Consumer Health, “Deemphasizes” Pharma" - Pink Sheet, 15 Dec, 2008.), p. 6).

CEO A.G. Lafley acknowledged the firm would deemphasize its prescription pharma business in these same areas.

Earlier in the year, Schering-Plough stressed the importance of diversity and the strength of its consumer business as it restructured and cut jobs in response to pressures on its prescription business (²⁰ (Also see "Schering-Plough Cutbacks Underscore Consumer Business Importance" - Pink Sheet, 7 Apr, 2008.), p. 4).

The P&G announcement capped a year in which the consumer health businesses at a number of firms increased in importance for a number of reasons.

For some, consumer was a relatively bright spot in a weak economy. For others, consumer is a foot in the door to emerging markets, and a way forward.

- Malcolm Spicer ([email protected])