NCPA - National Center for Policy Analysis

Over-the-Counter Remedies

September 6, 2011

Pharmaceutical companies face significant challenges in the immediate future.  Patents for seven of the world's top-selling brand-name drugs -- including the top two, Lipitor and Plavix -- are set to expire over the next 14 months, says Sally C. Pipes, president and CEO of the Pacific Research Institute.

  • About 4.3 million Americans take Lipitor.
  • Each year, Pfizer takes in nearly $11 billion on sales of the drug.
  • After the patent expires, those revenues will dwindle virtually overnight, as generic competitors enter the marketplace.

Consumers, of course, benefit from generic competition by paying lower prices.  But the high prices of many patent-protected drugs generate the revenues needed to underwrite the massive research and development expenses that the inventors of brand-name drugs incur.

The looming patent expirations -- combined with those massive drug-development expenses -- is causing many pharmaceutical firms to shed jobs.

  • Merck recently announced that it would eliminate 13,000 jobs by 2015.
  • This year, the pharmaceutical sector as a whole has slashed 5,000 jobs -- on top of 54,000 in 2010 and 61,000 in 2009.

Selling their wares over the counter -- rather than by prescription, as in the past -- may help some brand-name firms weather this economic storm.

The advantages for the brand-name companies are obvious, but patients would stand to gain, too.

  • For starters, over-the-counter medications tend to be cheaper than prescription drugs and can even be less expensive than generics.
  • That convenience factor is significant, too.

The U.S. Food and Drug Administration and some doctors are concerned that in the absence of a doctor's supervision, high-risk patients would end up undertreated, while low-risk patients would end up taking a drug they didn't need.  But new technologies like prescription cards can allow patients to be monitored without direct physician supervision.

Source: Sally C. Pipes, "Over-The-Counter Remedies That Would Reduce Health Care Costs," Forbes, August 29, 2011.

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