In their TV ads and promotions, the makers of Claritin and Allegra boast that their allergy drugs' side effects are comparable to those of a sugar pill. Now the nation's fourth-largest health insurer is challenging them to put their money where their mouth is.
In an unprecedented move, WellPoint Health Networks has been urging the Food and Drug Administration to make Schering-Plough Corp.'s Claritin, Aventis Pharmaceutical's Allegra and Pfizer's Zyrtec available over the counter against the drugmakers' wishes. The Thousand Oaks, Calif.-based insurer contends the antihistamines are safe enough to be bought directly by consumers without a doctor's prescription-and at no cost to insurers.
If WellPoint prevails, it could save health plans billions of dollars while cutting deeply into the drug companies' profits. The impact on consumers, however, is less clear: The 50 million Americans who suffer from allergies would gain convenience. But they would likely lose their insurance coverage and have to pay out of pocket for drugs that now cost as much as $75 for a 30-day supply.
"It's a war between two very wealthy industries, and consumers are caught in the middle," said Sidney Wolfe, M.D., director of the Washington-based Public Citizen Health Research Group, which hasn't taken a position on the issue.
The FDA is in the "concluding phase" of drafting its response to WellPoint's petition and could make its final ruling "within weeks," said Robert Seidman, WellPoint's chief pharmacy officer.
So far, WellPoint seems to be winning the battle. In May, an FDA advisory panel overwhelmingly recommended that the agency approve the health insurer's request. The 23 medical experts decided that each of the allergy drugs meets the three criteria for an over-the-counter switch: The drug is safe, patients can diagnose their own condition and patients can comply with the treatment regimen without a doctor's oversight. The FDA is not required to follow the panel's recommendation, though it usually does.
But the war-which has as much to do with profits as it does with patient safety-is far from over. The drugmakers already are threatening to sue the FDA if it prematurely strips the medications of their patent protection. And some doctors and consumer groups are speaking out against the financial repercussions that such a ruling could have on patients.
WellPoint's request is unconventional, to say the least. Under the FDA's guidelines, any third party can file a petition requesting that a drug be switched to over-the-counter. But until now, only drugmakers have done so-and then only when a drug is about to lose its patent and face generic competition. Claritin has several patents, some of which don't expire until 2018; the two other drugs have at least 10 years of patent life ahead.
Both sides have painted the over-the-counter issue as one of patient safety. Seidman contends that the three prescription medications have fewer side effects than existing nonprescription allergy drugs such as Pfizer's Benadryl and Schering-Plough's Chlor-Trimeton. He points out that the drugs are already sold over-the-counter in 17 countries and that there have been no reported safety problems.
WellPoint backed up its petition with an independent review of more than 70 studies of antihistamines. The review said that both nonprescription and prescription drugs are comparable in relieving allergies, but that the current over-the-counter drugs are far more likely to cause drowsiness, driving impairment and heart problems.
"Claritin is one of the safest drugs in the world," Seidman said. "The requirement to see a doctor has nothing to do with health and everything to do with marketing."
But William O'Donnell, spokesman for Kenilworth, N.J.-based Schering-Plough, argues that freely dispensing allergy drugs could open a Pandora's box of health problems. The biggest risk, he said, is that consumers may mistake allergies for asthma, a disease that can kill if not treated properly.
"Allergies are a complex and potentially serious condition that require a high level of medical care," O'Donnell said. "We believe that self-diagnosis and self-treatment may often be inappropriate."
The American Academy of Allergy, Asthma and Immunology, which represents 6,000 specialists, opposes the switch, arguing that it would compromise the role of physicians in managing patients' care and reduce incentives for drugmakers to come up with future generations of even better medications.
Behind all the consumer advocacy rhetoric, however, is a high-stakes battle over the companies' bottom lines.
WellPoint, which insures 9.8 million people nationwide, filed its petition in July 1998 after a review of its formulary revealed that spending on the three allergy medications had jumped 612% from 1993 to 1998. Last year, WellPoint covered 800,000 prescriptions for the antihistamines at a total cost of $90 million.
The American Association of Health Plans, the Health Insurance Association of America, and the Blue Cross and Blue Shield Association have endorsed WellPoint's bid.
Health insurers argue that increased drug spending-which climbed 18.8% to $131.9 billion last year-has forced them to shift more costs onto consumers in the form of higher copayments or reduced benefits. They blame direct-to-consumer advertising for the double-digit increases and argue that all those ads extolling the virtues of Claritin, Allegra and Zyrtec have enticed record numbers of consumers to ask for the costly medications.
But if the drugs were moved to over-the-counter status, health plans would no longer have to pick up the tab under their pharmacy benefit programs. WellPoint estimates that an over-the-counter switch would save it $45 million a year in direct drug costs and another $45 million in unnecessary doctor's visits.
Not surprisingly, the drugmakers are fighting the petition tooth and nail. They have made billions of dollars by keeping their drugs in the lucrative U.S. prescription market and far from the fiercely price-competitive over-the-counter market. That's because they can charge far higher prices when insurers pay most of the bill.
Last year, Schering-Plough generated $2.6 billion, or 30% of its total revenue, from U.S. sales of Claritin. Aventis' Allegra and Pfizer's Zyrtec brought in $955 million and $702 million, respectively. That compares with total sales of $640 million for all over-the-counter antihistamines combined, according to AC Nielsen.
The problem is that no one knows how much the allergy medications would cost consumers if the FDA allows them to be sold on drugstore shelves. Today, HMO members generally make copayments of $10 to $35 for a month's supply; insurers pay the rest. The uninsured and those without drug coverage pay full price, typically from $60 to $75.
Critics argue that enrollees' out-of-pocket costs would rise as they are forced to pay retail prices rather than copays.
But Seidman argues that switching the drugs to over-the-counter status would force the drugmakers to slash their products' prices to compete with older nonprescription antihistamines, which typically sell for about $6.50 for a month's supply. He estimates that the drugs could go for as little as $15, pointing out that they currently sell for about that much in Canada, Australia and parts of Europe. zxxx
Enrollees also would save on the cost of copays for doctor's visits, he said.
A recent study released by Harris Interactive seems to support the notion that the drugmakers would have to drop their prices to maintain sales. In a survey of 4,000 allergy sufferers, only 32% said they would be willing to pay more than $25 for a month's supply of Claritin, Allegra or Zyrtec if the drugs were no longer covered by insurance. Forty-three percent said they would be willing to pay $11 to $15. The rest wouldn't pay more than $10.
The report does, however, add that consumers are "notoriously bad predictors of their own future behavior"-that they may react negatively to price increases and yet still continue to buy as much of the product as they had previously.