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This article was originally published in The Tan Sheet

Executive Summary

EUROPEAN SWITCH ENVIRONMENT REMAINS MOST "CONSERVATIVE" IN FRANCE, GERMANY relative to other Western European countries, Bayer AG Director of Strategic Business Development-Self- Medication Business Group Georg Frank, PhD, observed at the Nonprescription Drug Manufacturers Association's Research & Scientific Development Conference in Washington, D.C. on Nov. 18. The French and German markets are the largest in the Western bloc, each with total nonprescription sales of approximately $ 4 bil. in 1992, including ethical OTC sales. Frank pointed to the present German regulatory system as a barrier to moving Rx drugs over the counter, explaining that companies "have to find the right OTC indication, then . . . have to come up with the clinical studies, the petition of safety, the filings, so I don't think [a number of switches] will be happening soon in Germany." France has a "good [European Community] approval reputation" due in part to its "strict and difficult environment," Frank stated. He added that the Rx-to-OTC switch potential in that country "is currently limited." However, he predicted that the environment would improve "after 1995," following EC regulatory harmonization. The "delisting of semi-ethical brands" from government reimbursement rosters "will have more impact on the OTC market than ingredient switching," Frank asserted. To support his view, Frank cited figures showing that 89% of the estimated 24% sales growth in the European OTC market in the next five years will come from delisted products while only 11 % of the projected growth will come from ingredient switching. Frank predicted that Germany will probably control health care costs by fixing Rx prices and delisting drugs rather than through an aggressive switch policy. His comments run counter to recent comments by German Bundestag member and Deputy Chairman of the Committee for Health Walter Altherr, MD, who indicated that the German government is very interested in switching more prescription ingredients to OTC ("The Tan Sheet" Nov. 8, p. 1), As examples of the difficulties faced by switch products in Germany, Frank pointed to the experiences in that country with ibuprofen and terfenadine. Switched in 1989, OTC ibuprofen had gained only a 2.3% share ($ 6.5 mil. sales) of the self-medication pain relief market at the end of 1992. Since the switch, prescription sales of ibuprofen have continued to outstrip the OTC analgesic. Terfenadine, which was switched in 1986, has captured only 17.2% of the self-medication hay fever segment. The prescription version of that product is also surpassing the OTC in sales growth. The German government "would rather get rid of the reimbursements for all those semi-ethical products" which are reimbursed if the consumer obtains them through a doctor's prescription, according to Frank. Germany began delisting drug products by indication in 1983 and released another "negative list" in 1991; combined government savings from the two actions came to approximately $ 235 mil., Frank said. In addition, Frank noted that Germany also is saving "a lot of money" through government-mandated prescription prices. The Bayer exec sounded a cautious note on the growth potential of the self-medication segment of the European OTC market. Although European manufacturers remain hopeful for growth in the OTC market, he pointed out that past growth predictions have still not materialized. Comparing the self-medication levels in various countries in 1989 with those in 1992, Frank noted that the levels either remained the same or dipped slightly. In France, 19% of 1989 total retail pharmaceutical sales were self-medication products not reimbursed by the government. By 1992, 18% of sales were self- medication products. In Germany, self-medication levels remained flat from 1989 to 1992 at 15% of sales. In the U.K., sales of self-medication products were 14% of the 1989 total and 13% of the 1992 total. Spain's self-medication sales held steady at 10% in both years, while Italy's dipped from 9% to 8%. However, Frank observed that four out of the 10 leading pharmaceuticals in the global marketplace are potential switch candidates: Glaxo's Zantac (rantidine) and SmithKline Beecham's Tagamet (cimetidine), both anti-ulcerants; Ciba-Geigy's nonsteroidal anti-inflammatory Voltaren (diclofenac sodium); and Burroughs Wellcome's herpes treatment Zovirax (acyclovir). Both SmithKline and Burroughs Wellcome have submitted switch applications for their products in the U.S. B-W filed an NDA for acyclovir in August ("The Tan Sheet" Oct. 25, p. 22); in September the Nonprescription Drugs Advisory Committee voted against the switch of cimetidine ("The Tan Sheet" Sept. 13, pp. 1-8). The U.K. is positioned to take the "European lead function" with its high number of on-going switches, Frank observed. Predicting that the differing OTC policies and environments in the European countries will be difficult to reconcile through harmonization, Frank cited a U.K. survey that found that "harmonizing . . . with the European neighbors would have been a disaster." Frank noted that common OTC ingredients in the U.K., such as ephedrine, diphenhydramine and codeine, "would have had to move back into prescription control." Frank concluded that "Europe is a long way from harmonizing its decisions on Rx-to-OTC switches . . . the decisions remain national for years to come." Frank also suggested that the cultural and commercial "successes" of herbal products in France and Germany could act as a disincentive to OTC development and switching for European manufacturers. When introducing an herbal to the market, companies "are not really required to come up with clinical data or a similar presentation of the data [to] ibuprofen, or certain other [drugs]," Frank explained. "You can take into consideration much more the experience of those products over the last hundred years or so."

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