Allergy switches biggest story of next season

Drug Store News, March 5, 2007 by Michael Johnsen

The most significant event that occurred during a soft 2006-07 cough and cold season was the shift of the decongestant pseudoephedrine behind the counter in all 50 states. To be sure, some states still require more strict regulations on the sale of PSE, but at least now PSE is behind the counter in a legislative effort to thwart homegrown methamphetamine makers.

The biggest event that will occur in the 2007-08 cough and cold season, whether it's a virulent season or not, will be the introduction of the first family of allergy medicines to challenge the juggernaut Claritin--Johnson & Johnson will switch the second-generation antihistamine Zyrtec, presently distributed by Pfizer as a prescription allergy remedy.

That means any manufacturer looking to grab space in the cough/cold/allergy aisle today needs to have a very compelling story, because any future space created by the continued rationalization of PSE products behind the pharmacy counter is going to be quickly swallowed up by the multiple facings that are sure to be afforded J&J and its future Zyrtec franchise.

The patent-protecting Zytrec (cetirizine) expires late December this year, and if Schering-Plough's switch of Claritin is any example, J&J is likely to be prepared to switch the antihistamine on, or close to, that day in December. The Food and Drug Administration's Nonprescription Drugs Advisory Committee--the panel of doctors that recommend whether prescription drugs are appropriate to be sold over-the-counter--meets in March, and again in April, although specific meeting agendas have not yet been posted online.

However, the same FDA advisory committee already recommended Zyrtec for sale as a nonprescription allergy remedy in 2001, along with Claritin and Allegra.

For the 12 months ended December 2006, Pfizer reported $1.6 billion in U.S. sales of Zyrtec and Zyrtec D (a combination of cetirizine and pseudoephedrine), up 15 percent from 2005 annual sales. Meanwhile, sales of Claritin and Claritin D were up 6.3 percent, reaching $255.5 million for the 52 weeks ended Jan. 28 across food, drug and mass (minus Wal-Mart) according to Information Resources Inc. Calculating a 25 percent market share for Wal-Mart would place the total dollar value of Claritin at around $340.7 million in U.S. mass markets.

While Zyrtec is considered to be a part of the other non-sedating, second-generation antihistamines--Claritin, Clarinex and Allegra--there is a slight sedation associated with the use of Zyrtec. Presently, Zyrtec is marketed as the allergy medicine for both indoor and outdoor relief.

Zyrtec may not have long on the shelf before the other antihistamines join the brand in the nonprescription sector. Sanofi-Aventis and Teva presently are battling over the patents protecting Allegra in court. Should Teva win, Allegra may switch to OTC sooner than later. Schering-Plough's Clarinex also is expected to face generic competition as soon as this year. The first of its patents expire in March, according to the FDA's Orange Book. For now, however, Schering-Plough is not interested in switching Clarinex.

During a January conference call with analysts, Schering-Plough chairman and chief executive officer Fred Hassan played down any plans to switch Clarinex, the company's next-generation Claritin prescription product, later this year when Johnson & Johnson potentially switches the allergy medicine Zyrtec. "We do have the option to do an OTC switch," he said. "This ... is a very valuable part of our strategy.... But at this point we are going forward with Clarinex as a prescription product."

Assuming that Zyrtec D (cetirizine and pseuodephedrine) is switched alongside Zyrtec, it may mark the second time a medicine switches from prescription to directly behind the pharmacy counter (the first being the emergency contraceptive Plan B). Before the 2006-07 season officially kicked off, the government not only mandated placement and sales restrictions on the sale of PSE, but also required identification checks and for the purchase to be recorded in a log book (with the exception of PSE sales of less than 60 mg).

The PSE ruling certainly levels the playing field. Prior to the legislation there were approximately 20 states with no PSE sales regulations. But there are a dozen or more states that carry more restrictive placement and distribution restrictions on the sale of PSE, so retailers and suppliers still have to be cognizant of local restrictions. For example, nine states currently classify PSE as a schedule V controlled substance. While schedule V drugs can be sold without a prescription, there are additional supply chain regulations associated with the distribution of schedule V drugs.

With the migration of PSE products behind the counter, sales of these products are dropping. Sales of PSE medicines already were down 46.5 percent across food, drug and mass (minus Wal-Mart) for the quarter ended September 2006, according to ACNielsen data. That precipitous drop is expected to continue as PSE products are housed behind the counter. Converting consumers to a PSE purchase has become a more expensive proposition for suppliers as advertising calling for consumers to go directly to their pharmacy counter to purchase PSE, in other words changing consumer behavior, will have to be delivered at greater frequencies in order to redirect that consumer from the cough and cold aisle to the pharmacy line.