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This article was originally published in The Tan Sheet

Executive Summary

RX-TO-OTC SWITCHES REPRESENT "LOST SALES SITUATION" FOR WHOLESALERS unless industry members expand their OTC distribution businesses, Procter & Gamble USA Health Care Products President Thomas Moore told the National Wholesale Druggists Association annual meeting in Honolulu Nov. 17. With Rx-to-OTC switches likely to increase in coming years, Moore said, wholesalers need to "go after OTC share, particularly in new retail channels." Switches of prescription drugs to over-the-counter status "will substantially change our business in the years ahead," Moore predicted. "Don't believe for a second," he cautioned, "that cost conscious managed care organizations aren't going to use consumer purchased OTCs as a first line of therapy . . . whenever possible." He suggested to the wholesaler audience that they take a cue from the manufacturers who are investing "in the lower profit -- but more reliable profit -- of OTCS." A survey of NWDA members released during the annual meeting showed that wholesalers and manufacturers expect OTCs to continue to represent about 10% of wholesalers' product mix in coming years. "That doesn't need to be the case," Moore declared. "Counseling, availability and service can prevent that expectation from coming true." One technique wholesalers should examine as a means to increase their role in OTCS, Moore suggested, is "buckling" OTCs to prescriptions. For instance, Moore said, a pharmacist filling a prescription for an antibiotic to treat strep throat could suggest a lozenge or throat spray for immediate pain relief. Another example, Moore added, would be "buckling OTCs to combat minor Rx side effects from indigestion to constipation." Another opportunity for wholesalers to participate more strongly in the OTC sector, NWDA President Ronald Streck told the association Nov. 15, is through point-of-sale scanning technology. "We must help our customers acquire and utilize the technology at an affordable price," Streck said. "Pharmacy, working with their wholesale and manufacturer partners, would have the information necessary to grow their OTC, health and beauty care, and service merchandise business," Streck said. "As more prescription drug products are switched to OTC, community pharmacy could increase [its] front end business and hedge against potential reductions in prescription drug margins."

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