June 28, 2000

The Honorable Jane E. Henney

Commissioner

Food and Drug Administration

Dockets Management Branch (HFA-305)

5630 Fishers Lane, Room 1061

Rockville, Maryland 20852

# Re: Over-the-Counter Drug Products \[Docket No. 00N-1256\]

Dear Commissioner Henney:

The Health Insurance Association of America (HIAA) appreciates this
opportunity to comment on the regulation of over-the-counter (OTC) drug
products by the Food and Drug Administration (FDA). HIAA is the nation's
most prominent trade association representing the private health care
system. Our 294 members provide health, long-term care, dental,
disability, and supplemental insurance coverage to more than 123 million
Americans.

## SUMMARY

We commend the FDA for taking this first step to review the regulatory
process for switching drugs to OTC and for recognizing the importance of
considering changes to that process. We urge the agency to consider
reformulating its approach to OTC drugs by assuming an ongoing, active
role in evaluating drugs products to determine whether they may be
safely classified as OTC---both at the agency's own initiative and upon
the petition of stakeholders such as consumers, medical professionals,
researchers, and insurers. We believe that establishing a new, more open
process for conducting such reviews is consistent with the FDA's mission
and responsibilities as defined by Congress and could significantly
benefit the public health by making safer, more effective drugs more
widely available to American consumers at a lower cost.

Until now, the transition of prescription drugs to OTC status has been
driven by the manufacturers of the drugs at issue. Drug manufacturers,
however, may have an interest in delaying an OTC switch to maximize
sales revenues, even though a drug product could be used safely and
effectively by consumers, and at lower cost, without the direct
supervision of a physician. Over the last decade, advances in drug
therapies have meant that pharmaceuticals now comprise a much larger and
still rapidly growing component of health care expenditures and medical
therapies. Moreover, as our system of financing and delivering health
care has changed, high quality clinical data on drug safety and
effectiveness increasingly is available from sources other than the
manufacturer, such as insurers. Given the new importance that drugs have
assumed in our health care system---both in terms of health benefits and
total cost---we believe it is vital to the public health that the FDA
develop a more open and active OTC review process.

In our view, the benefits of establishing such a process would be
substantial, as making drugs available OTC when it is safe to do so
means that consumers may have access to safer, more effective therapies
at a lower cost. When medications are available OTC, costs are reduced
on average both for consumers with health insurance and those without
coverage. In addition, making more effective, safer remedies available
OTC could have a significant positive impact on public health and
safety, as recent research on the dangers of sedative allergy
medications indicates.

In evaluating drug products for OTC status, the FDA's goal should be to
ensure the broadest possible access to safe and effective
pharmaceuticals. The agency's statutory duties with respect to that
evaluation do not extend to protecting the revenues of pharmaceutical
manufacturers from competition. Congress has provided other avenues
through which policymakers may weigh the public interest in allowing
competitive pressures to reduce the price of drug therapies, bringing
greater public access, against the goal of preserving incentives for
pharmaceutical manufacturers to develop such therapies in the first
place. That debate, however, is external and inappropriate to the issue
of whether a drug should be classified at prescription or OTC.

## DISCUSSION

1.  Pharmaceuticals Have Taken On A New Importance In Health Care---But
    At A Cost.

Pharmaceuticals have become a critical component of modern medicine.
Today, drug products play a crucial role in improving the lives and
health of many patients, and new research breakthroughs in the coming
years are likely to bring even greater improvements.

Advances in drug therapies, however, have not come without their price.
Rapid cost increases are making prescription drugs more difficult for
consumers to afford. These costs ultimately come out of the consumer's
pocket---either as direct payment for drugs when insurance is
unavailable or higher copayments and premiums when insurance coverage is
present. Higher costs may also lead consumers to forego important
medications or other health care services.

The growing importance of drug costs to consumers has been well
documented. Because of both increased utilization and cost, prescription
drug spending has outpaced all other major categories of health spending
over the past few years. For example, while hospital and physician
services expenditures increased between 3 and 5 percent annually from
1995 through 1999, prescription drug expenditures have increased at
triple that rate, averaging between 10 and 14 percent. According to
projections by the Health Care Financing Administration (HCFA),
prescription drug spending will grow at about 11 percent a year until
2008, more than double the rate of spending on hospital and physician
services.

A study for HIAA and the Blue Cross and Blue Shield Association by the
University of Maryland's School of Pharmacy found that drug spending
will increase at an even faster pace than the government predicts.
University of Maryland researchers project that the nation's
expenditures for prescription drugs will increase at a rate of 15-18
percent a year over the next five years, more than doubling annual drug
spending from \$105 billion in 1999 to \$212 billion by 2004. According
to the lead author of the study, C. Daniel Mullins, Ph.D., 60 percent of
those expenditures will be caused by increases in the price and use of
drugs already on the market today, while 40 percent will be attributable
to the cost of drugs still under development---so-called "pipeline"
pharmaceuticals. A copy of the executive summary and slides from that
study are attached. We ask that they be made part of the record of this
hearing.

Anything the FDA can do to make important medications more readily
available, safely, and at a reduced cost through reclassification to OTC
status clearly will benefit consumers.

2.  An Active, Open Process For Evaluating Whether Drugs Should
    Classified As Prescription Or OTC Will Improve Public Health By
    Reducing Health Care Costs And Reducing The Cost Of Health
    Insurance.

Evaluating the classification of more drugs and, when appropriate,
moving them to OTC status will reduce health care costs in two ways:
First, when safe OTC products are available, consumers avoid the
substantial cost of a doctor visit and other health care expenses
associated with obtaining a prescription medication that could be used
safely and effectively without the oversight of a physician. It is
estimated that the prudent use of OTCs directly reduces other health
care expenses---such as physician office visits for minor conditions and
more expensive therapies that are clinically inappropriate---by over
\$30 billion per year.[^1] Those savings reduce the insurance premiums
and copayments consumers pay and permit more consumers to afford
insurance than would otherwise be the case.

Moreover, according a study for the Consumer Healthcare Products
Association (CHPA), insured consumers on average realize a net savings
when they have access to an OTC medication to treat a minor illness.
According to CHPA, the average cost of an OTC medicine is about \$5.
Weighting costs to account for insurance coverage and copays, consumers
pay \$21 on average for a prescription drug and \$16 for a visit to a
doctor's office. A consumer therefore saves about \$32 per illness when
an OTC product is available---not an insignificant sum when one
considers that nine out of ten persons suffer from a least one condition
of illness during any four-week period.[^2]

Second, making drugs available OTC may expose those products to healthy
price competition, again permitting consumers to obtain the product at a
substantially lower cost and reducing overall health care and health
insurance expenditures. Researchers for USA TODAY recently compared
domestic and international prices for the allergy medication Claritin,
which is sold over-the-counter in most industrialized countries except
the United States. According to their findings, Claritin is available at
substantially lower prices where it is sold OTC. For example, a month's
supply of Claritin costs \$13 in Australia and \$17 in Canada.[^3] In
contrast, the cost of a month's supply of Claritin in the U.S. is
\$62.[^4] Because of these price differences, it is estimated that
American consumers and third-party payers pay, at minimum, an added
\$1.3 billion per year to obtain Claritin, plus another \$1.3 billion
for doctors' visits to get a prescription.[^5]

3.  An Active, Open Process For Evaluating Whether Drugs Should Be
    Classified As Prescription Or OTC Will Improve Public Health By
    Making Safer, More Effective Therapies More Widely Available.

Claritin and other non-sedating allergy medications provide an important
example of why the FDA should assume an active role in evaluating
whether prescription drugs can be used safely and effectively as OTC
products and why the agency should make that process more open to all
stakeholders. According to a recent study published in the *Annals of
Internal Medicine*, sedating antihistamines widely purchased
over-the-counter to treat the symptoms of allergies can impair driving
ability more than alcohol, even if users do not feel drowsy.[^6] An
editorial accompanying the article suggests that the potential danger
posed by sedating allergy medicines makes non-sedating drugs, which are
now available in the U.S. by prescription only, the preferred therapy
for patients who drive.[^7] Researchers for USA TODAY estimate that
sedating antihistamines cause an average of 600 auto fatalities a year
and that an additional 47,750 persons are injured in traffic accidents
caused by these medications each year.[^8] Indeed, according to
Schering-Plough, the manufacturer of Claritin, "sedative antihistamines
increase the risk of a road traffic accident by a factor of six."[^9]

Clearly, the FDA could do much to improve the public health and safety
by taking an active role in assessing whether medications like
non-sedating allergy remedies can be used safely and effectively on an
OTC basis and by ensuring that stakeholders other than drug
manufacturers have an opportunity to participate in that process.

Changes in health care finance and delivery over the last two decades
also weigh in favor of a more open OTC review process that takes into
account information from a range of stakeholders. As our health care
system has changed, high quality clinical data on the safety and
effectiveness of prescription drugs increasingly is available from
sources other than drug manufacturers---for example, insurers. We urge
the agency to re-craft its process for evaluating an OTC switch to
ensure that data from these sources is given ongoing and prompt
consideration.

4.  An Active, Open Process For Evaluating Whether Drugs Should
    Classified As Prescription Or OTC Is Consistent With The FDA's
    Mission And Responsibilities As Defined By Congress.

In establishing the FDA, Congress determined that:

> The \[Food and Drug\] Administration shall---

(1) promote the public health by promptly and efficiently reviewing
    clinical research and taking appropriate action on the marketing of
    regulated products in a timely manner;[^10]

In addition, Congress instructed the agency to carry out this duty, as
determined appropriate by the Secretary of Health and Human Services:

> . . . in consultation with experts in science, medicine, and public
> health, and in cooperation with consumers, users, manufacturers,
> importers, packers, distributors, and retailers of regulated
> products.[^11]

We believe that the establishment of a new, more open process to
evaluate whether prescription drug products may be moved to OTC status
is entirely consistent with this mission. Indeed, in our view, the FDA
has a responsibility to initiate such a process without delay.

The standards for classifying a drug product as prescription or OTC
established under section 503(b) of the Federal Food, Drug, and
Cosmetics Act look solely to the issue of whether the drug may be used
safely and effectively without the supervision of physician. Nowhere
does the statute contemplate that the protection of manufacturer
revenues should be a consideration in this determination. Moreover,
Congress has provided other avenues for federal policymakers to weigh
whether, and to what extent, drug prices should be insulated from
competition. Accordingly, we believe that any consideration of this
issue within the context of OTC review is inappropriate.

CONCLUSION

Until now, the transition of drugs from prescription to OTC status has
been driven by the manufacturers of the products at issue.
Manufacturers, however, may have economic incentives to avoid moving
drugs to OTC status. For this reason and because drug therapies have
become a more important and much larger component of health care, we
believe it is appropriate for the FDA to reformulate its approach to OTC
transitions by crafting an active review process that looks not only to
the manufacturer, but to all stakeholders, including consumers, medical
professionals, researchers, and insurers. In our view, consumers stand
to benefit substantially from such a process by gaining access to safer,
more effective medications at a lower cost.

We applaud the FDA for holding these hearings and seeking public comment
on this important issue. Subsequent to hearing all views, we urge the
FDA to initiate a rulemaking to revise its OTC review procedures without
delay.

If you have any questions about these comments or would like additional
information, please contact Dean Rosen at <drosen@hiaa.org> or
202-824-1850.

Sincerely,

Charles N. Kahn III

President

[^1]: Tim R. Covington, "OTC Drugs: An Undervalued Opportunity?" *Drug*
    Topics, vol. 144, no. 10 (May 15, 2000).

[^2]: Michael H. Cooper, "The Economics of Self-Medication," *Social
    Policy and Administration*, vol. 19, no. 3 (Autumn 1985).

[^3]: Dennis Cauchon, "Why Allergy Drugs Cost So Much," *USA TODAY*,
    page 1A (April 12, 2000).

[^4]: *Id.*

[^5]: *Id.*

[^6]: John M. Weiler, et al., "Effects of Fexofenadine, Diphenhydramine,
    and Alcohol on Driving Performance," *Annals of Internal Medicine*,
    132:354-363 (March 7, 2000).

[^7]: Sean Hennessey, "Nonsedating Antihistamines Should Be Preferred
    Over Sedating Antihistamines In Patients Who Drive," *Annals of
    Internal Medicine*, 132:405-407 (March 7, 2000).

[^8]: Dennis Cauchon, "Why Allergy Drugs Cost So Much," *USA TODAY*,
    page 1A (April 12, 2000).

[^9]: *Id* (quoting Schering-Plough press materials)*.*

[^10]: Federal Food, Drug, and Cosmetic Act, § 903(b)(1) (21 U.S.C.A. §
    393(b)(1)).

[^11]: Federal Food, Drug, and Cosmetic Act, § 903(b)(4) (21 U.S.C.A. §
    393(b)(4)).