Planning for a paradigm shift in the realm of over-the-counter medications

The blockbuster drugs of the 1990s came off-patent, became generic, and now several of them have become available OTC. Others are expected to join the ranks in the next few years.

This shift, combined with the increasing focus on electronic health records (EHRs) for longitudinal patient medication profiles and continuing pressure on the healthcare industry to take costs out of the system, drives the following questions for health plans, employer groups, and pharmacy benefit managers (PBMs):

When one considers that most OTC medications have been available for nearly 20 years on the prescription market, practitioners have a lot of experience with known side effects. Because of this familiarity, OTC medications are among the safest available. By that logic, the safety concerns expressed are not about the medications themselves, but about ensuring proper usage of OTC products. From any perspective, patient safety is improved when a physician monitors OTC usage.

A recent survey sample of Minnesota residents found that about half of the respondents were taking OTC products and/or supplements of which their health plans had no knowledge because, unlike medications covered by a benefit plan, these purchases do not go through the claims processing systems.

Additionally, not everybody thinks about reporting OTC utilization to his or her physician. Imagine the potential drug interactions that cannot be caught during claims processing because there are currently no records in the system of OTC usage.

Not every OTC medication is a candidate for inclusion in a benefit design or formulary. However, classes such as non-steroidal anti-inflammatory drugs (NSAIDs), proton pump inhibitors (PPIs), and antihistamines should be considered. When Blue Cross and Blue Shield of Minnesota incorporated Prilosec OTC (omeprazole, Procter & Gamble) and OTC Claritin (loratadine, Schering-Plough) into benefit designs, a margin of safety for members was added by increasing awareness of OTC medication use and potential interactions.

With the advent of EHRs, the visibility of OTC products in the caregiving process will be more critical. When you consider a patient who is monitored by a personal physician but crosses the boundary into a hospital emergency department, the ability to transmit a full record of that patient's medication history, including OTC products used for chronic conditions, is essential to ensure quality care and avoid adverse drug events resulting from incomplete records.

DOING THE MATH

Covering certain OTC products obviously can save plan members money, but payors can also realize savings. An OTC strategy should encourage the use of an OTC product over a generic or brand prescription drug unless the prescription strength is clinically necessary. With regard to the cost savings argument, if the member can make the case to a physician for the prescription version of a drug rather than the OTC version, the plan or employer group is paying for an increased drug cost and for the office visit as well.

Case in point: When a member has the choice between paying $20 out-of-pocket for a 28-day supply of 20 mg of Prilosec OTC or paying a co-pay of $10 or less for a 30-day supply of 20 mg of generic omeprazole, the member will often push for the generic, which can still cost the plan in excess of $50 for a 30-day supply.

In January, Blue Cross and Blue Shield of Minnesota implemented a benefit that covers Prilosec OTC. First-month savings were significant. Projected savings are $20 million annually, assuming the fills are for 28 days at retail and that 25% of those previously taking prescription PPIs opt for the OTC product. With a 100% conversion, the savings would be $80 million annually.

The Regence Group and Blue Cross and Blue Shield of Michigan cover Prilosec OTC, according to David L. Clark, RPh, MBA, vice president of pharmacy. "Prilosec OTC is covered at a generic co-pay," he said. "It has saved our plans $4 million and our members more than $1 million." They are not considering adding other OTC medications at the current time.

"We apply the generic co-pay level; however, we currently have a program in place that waives the co-pay for Prilosec OTC through June 2006," said Jim Grzegorczyk, director of pharmacy services, Blue Care Network of Michigan. Prilosec's PPI market share is more than 25% for the plan.

Grzegorczyk said that in the first 6 months of covering Claritin OTC, savings were 50 cents per member per month and market share as of the first quarter was 40%.

"We continue to see high market shares for these products almost 2 years later," he said.

OPT IN OR OPT OUT?

How are some of other Blue plans handling PPIs and non-sedating antihistamines on their formularies? In late 2003 when Prilosec was about to go OTC, the Blue Cross and Blue Shield Association asked its health plan association members about their plans to adjust formularies.

Of the 13 plans that responded, 33% were excluding 20-mg omeprazole and were not adding Prilosec OTC to their formularies; 50% were keeping the generic product on their formularies.

When this group was queried in the spring of 2006 to determine if they had changed their positions, most had not. Although no one had added an "OTC tier" to their formularies, some had implemented benefit designs to cover OTC medications. Others had yet to take that step but had modified their formularies to be "OTC aware."

For example, Norman Canterbury, director of managed pharmacy clinical services for Arkansas Blue Cross and Blue Shield said: "We do not cover any OTC products. We have only 2 PPIs [Prevacid and Nexium] available on the third tier, and we do not cover omeprazole. Because Prilosec OTC is available for much less than the co-pay, our PPI expenditure dropped 50% when this action was taken. Members must have decided Pri-losec OTC was a good buy."

Blue Cross and Blue Shield of Illinois has taken a different approach. They currently provide coverage for insulin but no other OTC products, according to Kevin Slavik, pharmacy director.

"However, we will be implementing additional OTC coverage for some employer groups, and after evaluation, determine if coverage of OTC products should become available as a standard plan option," he said.

EMERGING MARKET FACTORS

Although any changes in moving newly released OTC medications to benefit designs or formularies is presently being driven by health plans, other emerging market factors could influence how plans and employer groups think about coverage for OTC products. For example, Blue Cross and Blue Shield of Minnesota has received numerous inquiries about OTC coverage, usually from employer groups that know Medicaid and some Part D plans can cover OTC medications.

In addition, some states are evaluating their pharmacy practice guidelines to determine how to revise them to accommodate changes in dispensing OTC products. This change is being driven by the addition of OTC medications to formularies and by the move to put pseudoephedrines behind the counter. Another industry trend in some states, including Minnesota, allows pharmacists to prescribe OTC products for public program recipients.

FROM BLOCKBUSTER TO OTC?

According to WR Hambrecht & Co, the 7 blockbuster drugs going off patent in 2006 are worth an estimated $21 billion. It's likely that some of these blockbusters will go generic and also could be offered in an OTC version in the future. For example, there is speculation in the marketplace that statins such as simvastatin (Zocor, Merck) could be approved for OTC use.

2006 list includes:

The list for 2007 and 2008 includes:

Additionally, current "low-cost" drugs because of plan restrictions, such as weight-loss agents, also may go OTC. In this context, plans and PBMs have just a few years to evolve an OTC strategy before the market starts dictating what that strategy should be based on the practices of a few first movers or regulatory bodies.

FORMULATING AN OTC STRATEGY

Similarly, operational groups within health plans and PBMs will need to begin planning support for OTC products at the formulary level, rather than the benefit design level, and begin migrating systems, pharmacy network relationships, and operational processes accordingly. The new paradigm will affect the health plan's or PBM's view of formulary and benefit design and also the standard operating practices for retail pharmacists, physicians, and how members purchase their OTC drugs at the pharmacy.

That leaves the final question: What criteria dictate which OTCs to include or exclude from a formulary? As the industry moves into this new paradigm, there will be debate within P&T committees to address that issue. Getting there will require a shift for those accustomed to distinct lines between prescription medications and OTC products that used to focus only on the treatment of short-term, minor ailments. Dossiers of information probably will not exist for these individual agents as OTC products, but the cumulative experience that exists in managed care will help in determining the best ways to approach the situation.

Dr Heaton is director of pharmacy at Blue Cross and Blue Shield of Minnesota, Eagan, Minn.