Firms eye nonprescription drugs
By M. Freudenheim (NYT News Service 9/30/94)

In a surge of activity not seen in years, at least 7 big pharmaceutical companies are pressing for federal permission to sell some of their most important drugs without a doctor's prescription.

With profit margins on prescription drugs already squeezed by the growing pressure to lower health care costs, the companies are scrambling to win FDA approval for OTC versions of prescription drugs.

This strategy is especially attractive for drugs whose patents have expired, making them vulnerable to brutal price slashing as generic copies come on the market.

By selling milder versions of these drugs, and advertising heavily, manufacturers create new products that often have bigger revenues than the original drugs ever did.

An FDA advisory panel recently recommended that conditional approval be given to two new nonprescription heartburn medicines. Each is a milder version of a widely used ulcer drug: Tagamet from SmithKline Beecham and Pepcid from Merck & Co. Applications are also pending for OTC versions of important drugs made by Johnson & Johnson, Upjohn and Wellcome Holdings.

Glaxo Holdings plans to file next month for a nonprescription version of its ulcer treatment, Zantac, the world's best-selling drug. And Marion Merrell Dow says it will formally request OTC approval later this year for Nicorettes, an aid in stopping smoking.

"We are breaking new ground, and the activity level is very high," said Dr. Michael Weintraub, director of the FDA's Office of OTC Drug Evaluation. "It's one of the phenomena of the '90s."

Although federal officials do not provide numbers, industry experts say that at least 16 new OTC medications are awaiting approval by the FDA, a process that can sometimes take years.

The new products would join a market for OTC drugs that already totals $12.2 billion in the U.S. and $18 billion overseas. Drug makers spent $1.57 billion last year advertising these medications, Michael Perlmutter, a pharmaceutical consultant at Kline & Company, said.

In a triumph of marketing, Warner Lambert multiplied the sales of the antihistamine Benadryl tenfold in 9 years to an estimated $155 million this year, up from $14 million in the 12 months before nonprescription Benadryl was introduced in 1985.

The OTC products often greatly expand a market. Johnson & Johnson reported that 18 million women were using OTC treatments, like its Monistat 7, for vaginal yeast infections; in 1991, when only prescription versions were available, 12 million women used them.

And Tylenol, which went OTC when Dwight D. Eisenhower was president, is now the nonprescription champion with $855 million in U.S. sales, helped by an ad budget of $144 million last year.