Locking Up Life-Saving Drugs

Prescription laws make us sicker and poorer.

Kerry Howley from the August/September 2005 issue

(Page 2 of 4)

Fifty years later, the prescription system is almost universally accepted as a policy vital to the protection of public health. The system is justified by the assumption that consumers can't possibly know enough about powerful drugs to treat themselves safety and effectively, that they need to be monitored for progress, and that they need to be warned about potentially lethal drug interactions.

Yet a cursory look at the lists of drugs still requiring prescriptions and those available over the counter belies the notion that drugs are so classified based purely on safety concerns. Acetaminophen causes thousands of cases of liver damage every year yet is available over the counter; the birth control pill, for no conceivable medical reason, is not. Claritin, Schering-Plough's popular antihistamine, has been over the counter for years; Clarinex, a virtually identical drug from the same maker, is prescription-only. Statins, remarkably safe by any standard, require a prescription, while patches packed with nicotine line drugstore shelves.

The system that puts drugs over the counter is driven by profits and patents. Patents--legal monopolies--exist to drive innovation in the drug industry. In order to protect the intellectual property packed in every pill, pharmaceutical companies are granted exclusivity for 20 years from the date they file for a patent. In an industry where the next big thing typically costs between $300 million and $500 million to deliver, patents help keep companies afloat. But as long as there's no competition, drug companies have no incentive to put their products over the counter.

"Merck would never have even considered switching Mevacor before the patent ran out," explains Joshua Cohen, a senior research fellow at the Tufts Center for the Study of Drug Development. "They want to ride the wave of that monopoly as long as they can."

Due to the complexities of patents and health insurance, pharmaceutical companies often find it in their best interest to restrict access to their products. Keeping drugs prescription-only masks costs within the cloak of the insurance system, allowing drug makers to set prices based on what insurance companies, not individuals, will bear. Patients with health insurance, shielded by coverage for doctor's visits and prescription drugs, never see the total bill for their medications, and prices are rarely a factor in their decisions.

Once a patent runs out, however, the situation changes, and the FDA--not the self-interest of the pharmaceutical company--becomes the major hurdle to going over the counter. With a patent expiration looming, pharmaceutical companies can profit from a switch to over-the-counter status by regaining control of the market before generic makers jump in and gobble market share. They then must appeal to the FDA for permission to take their drugs to consumers.

While only 10 percent of health care costs derive from prescription drugs, the potential savings from over-the-counter switches are huge. When Claritin went over the counter in 2002, the price for a year's supply plummeted from $1,066 to $365. The cost was still more than the direct price most patients with drug coverage paid when a prescription was required, but the switch made the drug available to people who otherwise could not afford it, especially given the cost of a doctor's visit. Furthermore, wiping out unnecessary doctor's visits, eliminating the paperwork involved with unnecessary prescriptions, and putting drug prices in front of consumers, thereby forcing them to be cost-conscious, lowers overall health care costs and ultimately reduces insurance premiums. A 1997 study by Kline & Company, a market research firm, found that American consumers saved almost $13 billion a year by using over-the-counter medicines switched from prescription-only status. In his 1983 study, MIT economist Peter Temin found that doctor visits for the common cold fell by 110,000 a year between 1976 and 1989 as the FDA switched cough and cold medicines to over-the-counter status.

Locked Out

The prescription system is inefficient at every turn, but its costs weigh on no one harder than the 24 percent of Americans without drug coverage. In addition to paying full price for doctors' visits, those without health insurance are most exposed to the dramatic difference in price between over-the-counter and prescription drugs. The full retail price for Mevacor is about $800 per year. Patients with insurance that includes drug coverage don't see the full price, usually paying only a nominal fee. Nor do insurance companies, who receive huge rebates from manufacturers in exchange for buying in bulk. Sky-high prices are a problem for the 15 percent of Americans who lack health insurance and the 9 percent who are insured without drug coverage.

According to a 2001 survey by the Washington, D.C.-based Center for Studying Health System Change (HSC), about 23 million American adults--12 percent of the adult population--had to forgo at least one prescription medication because of cost concerns that year. Kenneth Thorpe, chair of the Department of Health Policy and Management at Emory University, says the system is especially hard on those with chronic conditions. "We know patients with cancer who don't have insurance use far fewer prescription drugs than those who do," he says. "It's plausible that if the drugs were cheaper and over the counter, they would use them."

As the system stands today, drugs for chronic conditions, such as insulin and statins, are almost universally prescription-only. Over-the-counter drugs are typically intended for less serious, more easily diagnosable ailments, such as allergies or headaches. "We live in an age where more people are living with chronic conditions, and the uninsured just have a ton more hurdles that they have to get over to get the care they need," says Alwyn Cassil, spokesperson for the HSC.

Back in 1998, WellPoint Health Networks, a California-based HMO, got tired of paying inflated prices for Claritin. The HMO filed an unprecedented "citizen's petition" with the FDA to force the drug into over-the-counter status, in a move that could have saved the health care system $2 billion. Schering-Plough had been touting the safety of Claritin for years; the company's ads explicitly state that the side effects are those of a sugar pill. Robert Seidman, WellPoint's chief pharmaceutical officer, reasoned, "If they're marketing these like candy, then they should be sold like candy."

Schering-Plough countered by claiming that over-the-counter Claritin would be a "major health risk." In a New York Times report, a company spokesman earnestly chastised WellPoint for "trivializing the importance of the patient-physician relationship."

An FDA advisory committee agreed with WellPoint, voting 19-4 that nonsedating antihistamines like Claritin, Aventis SA's Allegra, and Pfizer's Zyrtec were sufficiently safe and effective for over-the-counter consumption. The safety issue was thus off the table, but legal issues remained. WellPoint insisted that the FDA was legally required to convert the drug to over-the-counter status. Schering-Plough's attorneys argued that drug companies possess a property right in a drug's approval and forcing the switch would violate that right.

Stuck between the interests of pharmaceutical companies and insurers, the FDA did nothing for four years. It was Schering-Plough that ultimately brought Claritin over the counter as its patent expiration neared, but not until the company had exhausted every avenue trying to extend the duration of its monopoly. The Hatch-Waxman Act, passed in 1984, gave Claritin two more years of exclusivity past the original expiration date of 1998. An addendum to the 1994 GATT treaty tacked on another 22 months. The FDA added six more months when Schering-Plough agreed to conduct pediatric trials of the drug. Between 1996 and 2002, Schering-Plough attempted a half dozen dilatory legislative tactics. But in 2002 the game was up. Schering-Plough, suddenly less concerned about the "major health risks" it had cited earlier, asked the FDA to make Claritin an over-the-counter drug.