Spring arrived in New Haven last weekend, heralded by shirt-sleeve weather, the green shoots of tulips in my front yard, and some unwelcome scratches in my eyes and throat. To enjoy the former and rid myself of the latter, I popped a Claritin, the drug that makes life on the East Coast possible for me. For now, Claritin is only dispensed at licensed pharmacies, and only to people who've incurred the cost and inconvenience of a doctor's visit. Next spring it may be available next to Benadryl on the shelves of your favorite pharmacy, supermarket, or corner store. The story behind the change offers a window into the dysfunctional and paternalistic protection racket that passes for pharmaceutical regulation in the United States.
The fuss started last May with a hearing at the Food and Drug Administration. WellPoint Health Networks, a California-based HMO, had petitioned the FDA to switch the status of Claritin and its competitors. These non-drowsy drugs, WellPoint and others claim, are actually safer than the over-the-counter alternatives, which often double as sleeping pills. "The FAA says if a pilot takes Benadryl, he can't fly for eight hours," WellPoint CEO Leonard Schaeffer told Health Affairs last August. "If a pilot takes Claritin, get in your seat and take off." The prescription status costs the HMO $45 million a year for the pills, which sell for over $2 a pop. Its customers, the HMO figured, were shelling out another $45 million in co-pays, an estimate that doesn't account for the hassle and inconvenience of having to get a doc's permission to take one a day to keep the itching, sneezing, and scratching at bay.
WellPoint's move marked the first time a non-manufacturer of a drug petitioned for such a status change. The FDA advisory panel voted overwhelmingly to recommend the change for the drugs, which brought in more than $5 billion in 2001. Schering-Plough, which manufactures Claritin, was not amused. "We believe that the prescription status of these medications is necessary to protect and optimize public health," the firm's chief medical officer told the advisory panel. The company also worried with furrowed brow what the move would mean for patients. "Such a switch would force patients to self-diagnose, self-treat and pay the entire cost of their allergy medications, thus raising serious questions about the quality of care and costs for those patients," fretted a Schering-Plough press release.
Faced with the choice of pleasing drug companies or consumers, the FDA chose inaction, a non-move that paid off. (WellPoint filed its request way back in July 1998.) Then, on March 8, 2002, Schering-Plough changed its position and asked for an expedited status switch, one it expects to be complete in late November.
No, Claritin hasn't gotten any safer. Its patent is set to expire in December, opening it up to generic competition in the prescription market. (Schering-Plough is currently in court attempting to protect its Claritin patent through October 21, 2004.) It is also pushing Clarinex, a new product that's approved for both indoor and outdoor allergies, in the prescription market. Coaxing docs to switch Claritin customers to Clarinex has allayed the corporation's concerns about ordinary folks self-diagnosing and reaching into their own pocket for Claritin.
This is a blatant example of a company gaming the regulatory system to ensure profits at the expense of its customers. I don't hate the pharmaceutical industry, which produces products that make life better for millions of people. But it's also extremely dependent on the government, which helps fund its basic research and then grants it monopoly patents. The industry also benefits from perverse incentives built into the tax-code subsidized third-party payer system, which makes most drug customers insensitive to a product's real costs.
That's why Schering-Plough can argue that deregulating Claritin would cost consumers money. Even though its price per month would drop from the $60 charged in the United States to a level closer to the $11 over-the-counter price in Canada, direct out-of-pocket costs for consumers with top-tier drug coverage would increase. One reason why medical care is so darn expensive in the United States, as health analysts have often noted, is because people spend so little on it.
The larger issue, as former Reason editor Virginia Postrel observes, is who controls access to your medicine. The FDA never had a mandate to hide pills behind the pharmacy counter, to force people to see doctors, to protect drug company interests, or to make pharmaceuticals cheaper. Its only job was to help make them safer. Some say a company ought to be able to determine how it distributes its products. That's fine, but this industry relies on, and hides behind, government restrictions to limit access and keep prices high. For safe, simple, and easy-to-understand drugs, such restrictions are wrong.