Pharmacists and Nonprescription Medication: Paradox and Prospect
Smith, Mickey C, Drug Topics
As most pharmacists know, 1987 marked the first time that they ranked No. 1 in the Gallup Poll survey in terms of "honesty and ethical standards." We were still No. 1 for the next several years. How, then, do we explain a steady decline-from 1986 to 1991-in the percentage of sales of nonprescription medications in pharmacies, that is, until food stores actually surpassed pharmacies in market share of nonprescription medications?
This is just one of several paradoxes that we wish to examine in this lesson. We hope that they will illustrate not only problems but also opportunities, although the life expectancy of these opportunities may be dwindling.
Paradox 1: Pharmacists in community have lost control over OTCs
More than a quarter of a century ago, sociologist Norman Denzin observed that pharmacy had not achieved full professional status because of "failure to maintain control over the 'social object' around which its activities are organized." He meant that the prescribing physician still controlled the choice, but, of course, that control was law.
Paradoxes abound on this issue. In the time since Denzin's paper was written, hospital pharmacists have gained virtual control over the use of legend drugs. Community pharmacists did have control over OTCs at one point, but they delegated that control first to clerks (see Paradox 2) and finally to the customer through self-service.
PROSPECT: Pharmacists have complete control over which OTC products they choose to stock and sell (not totally true in corporate practice). They can exercise that control by a program of critical clinical and business analysis of the merit of each product chosen for sale, combined with a careful program of communication with the clientele.
Paradox 2: Most-respected occupation loses market share in OTCs
As noted before, pharmacists have for several years topped the Gallup Poll as the most respected of any professional occupation. This has made annual pharmacy headlines, and pharmacists are-perhaps-justifiably proud. The proof of the pudding, however ...
During this same time period, pharmacists have experienced a steady decline in their OTC market share. How do we explain this-pharmacists most respected but continuing to lose market share?
Explanation 1. The Gallup Poll is wrong! In spite of its careful methods, it has for several years now reached the wrong conclusion.
Explanation 2. Gallup Poll didn't check the public faith in the checkers of supermarkets. Perhaps these people have become an important source of health information to the people of the United States.
Explanation 3. The American public no longer views overthe-counter medicines as "real" medicine. Therefore, the association between pharmacists and nonprescription medicine is no longer real and relevant. And how did the public reach such a conclusion?
Explanation 4. Supermarkets are convenient one-stop shops for consumers. It is, of course, probable that the convenience of buying OTCs in "one stop" at the grocery store plays a part in this.
Opting for the third explanation, we suggest that the public has been convinced that nonprescription medicines are just another commodity by the nature and scope of advertising. Further, we believe that pharmacy has allowed this to happen because the profession itself has for too long treated nonprescription medicines as a kind of annoying stepchild in the practice of pharmacy.
PROSPECT: While it is late, it is not too late for organized and individual pharmacists to change their ways. This will require, first of all, a change in attitude toward OTCs, to recognizing them as real medicines that deserve and require a pharmacist's professional attention to assure appropriate use. This change in attitude, if effected, must then be communicated to the public in a variety of both obvious and subtle ways.
Among the obvious ways by which we can alter the OTC future is to tell the public that we take OTCs seriously, professionally, and that we believe our services are necessary to their safe, effective, and economical use. This can be done locally by making the message a part of pharmacy promotion and nationally through concerted campaigns to inform the public that pharmacy takes OTC medicines seriously and assumes a professional responsibility for their proper use.
OBSERVATION: Crest toothpaste and later its competitors set great store by and profited from an endorsement from the American Dental Association. While we are not proposing any national endorsement of OTC products, we suggest that pharmacy, as the "drug profession," has too long had a low profile in the OTC medication arena. The Handbook of Nonprescription Drugs notwithstanding, pharmacy is rarely if ever publicly recognized in OTC drug issues. At the very least, our national organizations should maintain an active program of public information demonstrating pharmacy's leadership role in the provision of OTC medicines. (It is notable that manufacturers typically cite "most recommended by pharmacists" statistics based on trade publication surveys in their OTC advertising [see Table 7]). Perhaps more measures-albeit subtle ones-could also be employed. These include a reexamination of the way OTCs are displayed in the pharmacy. If a shelf full of analgesics in the pharmacy looks just like a shelf full of analgesics in a food or variety store, we can hardly expect the customer to draw a distinction. Some ways by which "pharmacy medications" could be distinguished from "food store" medications include:
* Signage making it clear that counseling is available with the medicine
* The obvious presence of a counseling area
* Clerks who show respect for OTCs as health products and who actively seek opportunities to involve the pharmacist in purchase decisions
Paradox 3: Pharmacists fail to train personnel and thereby distinguish their pharmacies from other retail outlets
The one characteristic that distinguishes a pharmacy from any other retail distributor of OTC medications is, of course, the presence of the pharmacist. Mere presence makes little real difference, however, unless the patient takes the initiative to ask for comments or answers to questions. A step toward differentiation of pharmacies from grocery stores would be to train sales personnel to incorporate the pharmacist, when appropriate, into any OTC transaction. (That same clerk may very well have been employed as a "checker" in the food store next door.) The evidence to date suggests little effort in this direction.
In our most recent survey at the University of Mississippi on clerk/technician activities, pharmacists were asked to report on the existence of a policy--formal or informalregarding clerks or technician/clerks making recommendations of OTC medications to customers (Table 1). It is important to note that more independent pharmacies reported having a policy than did the chain pharmacies. There was no significant difference in the presence of a policy by prescription volume.
Of the pharmacists who reported that their pharmacies had a policy on technician OTC recommendations, 98% reported that the policy placed some restrictions on how recommendations could be made by support staff. Overall, 45% of the pharmacies with policies restricted OTC medication recommendations to the pharmacist only. Chain pharmacies tended to be more restrictive than their independent counterparts (i.e., only the pharmacist is allowed to recommend OTC medications). The majority of independent pharmacies, while restrictive, were reported to have policies that allowed support staff to recommend OTC medications to customers with the understanding that it might be necessary to consult a pharmacist in certain cases.
In one national study by the University of Mississippi of staff involvement in OTC recommendation, pharmacists were asked to report whether their pharmacy had any program or procedure for educating clerks or technician/clerks regarding the recommendation of OTC medications. Only 16% of pharmacies were reported to have such a program or procedure. Although there were no significant differences with regard to prescription volume, independent pharmacies were more likely to have an educational mechanism than were chain pharmacies. Independent pharmacies as well as lower-volume stores spend more time in both initial training (first six months) and continuing education for each clerk or technician/clerk than do chain pharmacies and higher-volume stores.
PROSPECT: Trained clerks can be an important and integral part of a program to bring OTCs back to the pharmacy and the pharmacist. But this will require better training and almost certainly some changes in philosophy. Among the topics that should be considered for inclusion in staff training are: Why the current concern about counseling, especially if it has always been a part of your practice. Let them read the provisions of the Omnibus Budget Reconciliation Act of 1990 (OBRA '90), and then answer any questions they might have. * Why counseling is important clinically, legally, and financially. Stress the importance in such areas as side effects; contraindications; drug interactions, especially with OTCs; compliance issues; and the value of patient medication profiles along with the need for complete records. Note: It is not expected that the staff would be trained to counsel on these subjects, but it is assumed they would appreciate their importance for pharmacist counseling.
Pharmacists may find it awkward, but they should take more time to emphasize to all employees the skills and knowledge that pharmacists gain in pharmacy schools. Pharmacists have long complained about being underutilized, yet few may have recruited this quarter of a million pharmacy staff as public educators on the capabilities of pharmacists. The staff of each pharmacy is part of a potential "cheering section" for pharmacy. Literally hundreds of thousands of these people can become an army of educated citizens--churchgoers, club members, parents, grandparents--to publicize and explain the value of comprehensive services from a professional pharmacist.
E.T. Kelly and H.A. Palmer, in an article entitled "Increasing OTC Market Share: Strategies for Pharmacists," underscore the importance of the paraprofessionals and call for a commitment of the "total resources" of the pharmacy to the OTC issue:
Most important for this strategy is that portion of the total product concept that focuses on clerks and technicians. The training aspects of these employees can focus on the proper directing of an OTC and/or OTC question, emphasizing the point in the process where the patient should be referred to the pharmacist. We often forget the technician, who has a handle on the patient population and who can identify the diabetic, hypertensive, or other patient purchasing an OTC who needs further counseling. Clerks should be alert to the multiple longterm purchase of OTC products, particularly decongestants, laxatives, antimicrobials/fungals, antacids, etc. The OBRA counseling requirements create a new opportunity to intervene effectively in self-care selection and utilization.
However they do it, pharmacist and staff must make sure to reflect, every working hour, the understanding that the pharmacy exists because of and for the patient. If the pharmacist doesn't believe that and act on it, others in the pharmacy won't, either.
Paradox 4: Pharmacists could have, but have not, established their own "third class of drugs
Pharmacy, or at least the American Pharmaceutical Association (APhA), has for years lobbied for the establishment of a third class of drugs. Such a class (e.g., insulin preparations) already exists, yet organized pharmacy has neither effectively urged its membership toward a more visible and effective role in OTC control, nor has it provided a research program to demonstrate the importance to public health of such a class of medications.
PROSPECT: More than a quarter century ago, the APhA recommended the establishment of two new classes of drugs-one for which the pharmacist would decide on refills after the initial prescription and another requiring no prescription but available only in pharmacies. The Food & Drug Administration resisted these ideas then and does so now.
Recently, the FDA position received support from a study of the issue by the U.S. General Accounting Office. In its conclusions, the report states: "Pharmacist counseling as it is currently practiced does not support the goals of either a fixed or a transition class. Pharmacists are not regularly counseling patients, maintaining patient profiles, or monitoring for adverse affects."
It has been suggested recently that the FDA establish a "transition class" of medications that undergo the shift from prescription to OTC status; during a predetermined period, these medications would be available only in pharmacies. FDA resists this idea as well. But need pharmacy wait for FDA? Have we not waited long enough?
The author has argued that organized pharmacy could undertake these procedures without directions from FDA. When a legend drug goes OTC, pharmacists could keep it in a special place in the pharmacy--not necessarily out of sight, but perhaps under a sign reading: "This product has recently been released for use without a prescription. Your pharmacist would like to discuss it with you if he/she has not previously done so."
If it were established policy to ask each purchaser if he or she had used the product before, and if the pharmacist had done a modicum of counseling, people might become accustomed to the idea of counseling and would better recognize its value. After an appropriate period-one year, or perhaps two--the medication could be transferred to supermarket checkout status.
Another class of drugs that, to the best of our knowledge, has not been proposed is also available to pharmacy without any support from FDA. This class, which might be called "Not Available in Pharmacies," would include products that, for a variety of clinical or economic reasons, pharmacists determined not to offer for sale, e.g., when sale of DMSO was determined unethical by the American Pharmaceutical Association. While withholding the drug must have a good and valid reason, communicating to our clients that a conscious choice had been made on their behalf not to sell them something should certainly command attention-as well as, perhaps, a new attitude toward the drugs themselves.
Yet another development on the third-class scene is driven primarily by economics and, again, is taking place without pharmacist initiative. The subject is third-party coverage of nonprescription medications. A catalyst to the current activity has been the Rx-to-OTC switch movement.
When a Tagamet, for example, is switched, the pharmacy benefit managers of the world find themselves with two options: Continue to cover the medication (after all, it's the same drug) but realize savings in reimbursement, or discontinue covering the medication under the philosophy that it is no longer a prescription medication.
If the first option is chosen, a third class of drugs will de facto exist for third-party program enrollees; i.e., even though the product is OTC it will be available (and covered) only if obtained in a pharmacy. (The potential effects of the second option are discussed below in Paradox 5.)
There is ample evidence that the Rx-to-OTC momentum has caused third-party payers to reevaluate their reimbursement policy for OTCs. Since the enactment of Medicaid in 1965, many states have implemented limited coverage of OTC products. Consequently, coverage and reimbursement of OTC drug products varies from program to program. According to a Parke-Davis report, the states with the most liberal OTC coverage are California, Delaware, Hawaii, Indiana, Missouri, Nebraska, New Hampshire, Pennsylvania, Texas, and Washington. Selected reimbursement policies appear in Table 2.
Some of the reasons that state Medicaid pharmacy program administrators recommend Medicaid coverage of OTCs include the following:
* It prevents the prescribing of more expensive legend products.
* There is no negative cost effect associated with prescribing shifts.
* There is a need for humanitarian considerations in specific age populations (e.g., artificial tears for the elderly).
* A combination product precludes the need for two products.
Other programs are also considering broadening their OTC coverage, notably the Department of Defense. DOD announced a heavy use of OTCs in its Tri-Service Formulary, including all antihistamines and the only antidiarrheal, topical antibiotic, and nasal spray.
Paradox 5: Third parties may encourage or require members to purchase OTCs that were previously available as Rx only further eroding the pharmacist's income If third parties exercise the second option outlined in the previous section (i.e., not covering newly switched products), pharmacies will be losing all the prescriptions that would have been issued and, in present conditions, would regain less than half of the OTC business that might have resulted.
In fact, the picture might be even worse. We can perhaps benefit from the experiences of our counterparts in the United Kingdom, where the Rx-to-OTC switch has proceeded more rapidly; Zovirax, Pepcid, and Nicorette, for example, have been OTC for some time. The U.K. is also the location of the longest-running managed care programs outside of the communist/socialist world. Notably, the U.K.'s National Health Service has also pioneered the use of restrictive formularies, or as they are termed, "limited lists." When drug products are switched to OTC status, they are dropped from the limited list. The National Health Service is on record as favoring acceleration of the switching process. As one British pharmacist observes: "The government is in no way affected other than finding itself with the happy prospect of a 'win-win' situation. To whatever extent the reclassified [switched] medicine enjoys OTC use, the company will fund the investment [through its promotional expenses], and the patient will pay for it out of his or her own pocket."
An interesting sidelight to the U.K. experience is provided by a June 4, 1994, editorial in Lancet According to this account, the largest savings from Rx-to-OTC switches will result not so much from drug cost declines but from reduction in consultations with physicians. One survey found a potential reduction of 16 consultations a day by general practitioners if full advantage was taken of the self-treatment potential of switched products.
PROSPECT: First, the switch movement is likely to continue, especially with the economic consequences offered to third-party payers. Second, the consequences could go beyond the single product switched. Using a Tagamet OTC as an example again, why should not an aggressive program delete the entire range of Hz antagonists from its formulary when a single product in the class becomes available OTC? They are, after all, usually called prescription drug benefit programs.
Table 3 contains only a selected list of drugs that have been proposed for switching either in the United States or in the U.K. Surely such a list demonstrates the enormous potential for change in the drug market in the future. A complete rethinking by pharmacists of the nature of their practice and of their business will be required in order to avoid disaster.
Paradox 6: The economics of OTCs are virtually ignored by industry critics The news media have long been busy reporting the alleged excesses perpetrated on the American public by the manufacturers of prescription medications. Not recognized, apparently, are some economic facts of life regarding OTCs
An example is provided in Table 4. As the data show, it cost consumers more than half a billion dollars in 1992 just to pay the promotional costs necessary to sell them two and a half billion dollars' worth of some leading OTCs. The Nonprescription Drug Manufacturers Association asserts (and we do not dispute) that by the year 2000, more than $34 billion in savings will result from consumer access to OTC medicines. Not estimated by NDMA are the cost projections for that period-especially the costs of promoting products that have no differential advantage over the competition and the costs of misuse, interactions, and waste.
PROSPECT: There is a very simple economic story here that can be understood by virtually any pharmacy customer. The components are these:
1. With a very few exceptions, OTC medications are available from a variety of suppliers.
2. In order to convince the customer to buy a specific brand from the variety available, the manufacturers of such brands spend considerable amounts of money on promotion, sometimes as much as 40% of the purchase price (Table 4). 3. The customer has to pay the cost of being convinced to buy one brand over another.
4. The pharmacist may have alternative OTC products available that are truly just as good and that do not carry the promotional economic load.
5. In our view, the pharmacist can, therefore, using his/her professional judgment, supply the patient with medication that is as good as the highly advertised brand and at a considerably lower price.
Note: These concepts can be understood, but only if the pharmacist presents them.
Paradox 7: While pharmacies are a vital part of the OTC marketing system, t do not seem to be respected by the people who manufacture these products Pharmacists are traditionally the last and (we feel) most important link in the channel of distribution for nonprescription drugs. Yet this position has not resulted in respect by those who manufacture those drugs. Further, pharmacists seem disinclined to take strong action in response.
From a strictly marketing point of view, pharmacists and drug manufacturers should be cooperating partners in a distribution channel for OTC drugs. This is especially true in light of overwhelming evidence that a pharmacist's advice is usually followed with regard to OTC purchases.
Some marketing practices in recent years have not been well received by pharmacists, and Table 5 shows the results of a national survey conducted by the University of Mississippi. Clearly, some marketing practices are favored, and some are opposed. But what do pharmacists do about it? Table 6 shows that they are willing to take some action or at least resist some practices passively.
PROSPECT: Pharmacists, at least independent pharmacists, must remind themselves that the space on their shelves is valuable. One way of viewing the marketplace is that the manufacturers are "renting" shelf space. The rent is paid through profits made on the products that occupy that space. Higher gross margins and/or more rapid inventory turnover results in higher rent returns. A reexamination of this concept should lead pharmacists to an active OTC marketing program including recommendations, displays, and inventory decisions.
Paradox 8: Faced with declining margins on prescription medications, pharmacists have failed to note the opportunities for increased margins on some OTCs
Faced with declining profits on prescription medicines, pharmacy fails to capitalize on OTC alternatives. Another way of stating this particular paradox is to say that during a period when third-party/managed care programs were taking away profits on legend drugs, pharmacists were giving away profits on nonprescription medications.
PROSPECT: We believe that two steps are necessary to reverse the situation just illustrated by the above figures: First, pharmacists must regain the appropriate share of the OTC market through a variety of means; second, pharmacists must rethink both the clinical and the business management of their OTC products. As more Rx products move to OTC status, and if payers choose either to continue to pay for them or to drop them from coverage, patients must be educated to recognize that OTCs are real medicines and that they come with the same pharmacy supervision offered by their Rx predecessor. Pharmacists must then reexamine inventory policies, deleting unnecessary duplication and promoting quality store brands and generics whenever possible.
Paradox 9: Even when they have an opportunity to select and recommend an OTC product, pharmacists often choose one with a higher cost to the customer and a lower margin for themselves
By their own accounts, pharmacists believe there is an increasing trend by customers to ask advice in choosing OTC medications. In spite of their lower gross margins, higher prices to customers, and the fact that every kind of retail outlet represents a possible competitor, the nationally advertised brands are still recommended most often. (This is changing, but at a glacial pace.) Tables 7 and 8 show, for a selection of product categories, the recommendations pharmacists report making. It should be clear from these numbers that pharmacists have many opportunities to recommend OTC products and that they often recommend a top-selling brand when these opportunities arise.
PROSPECT: Tables 8 and 9 illustrate the hypothetical effects on gross margins of recommending a store brand instead of the national brand some pharmacists report recommending. The acquisition costs and shelf prices are calculated from data on a fairly typical independent pharmacist. The store brand used in the calculations is one supplied to the pharmacy by the wholesaler as a part of a mini-franchise.
Certainly these figures would vary from pharmacy to pharmacy, but they are not atypical. Pharmacists could-and should-make their own calculations based on their own data.
Several points should be made regarding these data:
1. They are hypothetical, but they are based on reports from pharmacists themselves.
2. Only a few categories of medications are reported, so the figures are certainly understated.
3. The figures are based on store brands, which have certain advantages. The differences in gross margins would be even greater if based on generics. Again, the figures are understated.
4. Data are based on independent pharmacies. Certainly the chains can buy store brands at even greater discounts than can independents-- further understatement.
5. These data reflect no extra effort on the part of pharmacists and their staff. In response to a question, pharmacists need only recommend the lower-priced, greater-margin product instead of the branded product. A concerted effort to recommend a store brand or a generic to customers who have requested or selected a national brand should result in even more switches, with the same profitable results.
6. These calculations are based on the premise that pharmacist recommendations for private-labels or generics replace only the two leading national brands in each category. If, however, the assumption was made that all consumer requests were answered with a recommendation for a store brand or generic, then the total additional gross marginal dollars would more than double! Finally, as the data in Table 9 demonstrate, the customer benefits as well in realizing substantial savings.
It is an understatement to say that the nonprescription drug market has changed in recent years. In fact, it bears little resemblance to the market of 20 years ago, and pharmacists have the opportunity of a professional lifetime to redefine their role in this regard. A thoughtful, careful, vigorous response will benefit pharmacists and the people they serve.
Write your answers on the answer form appearing on page 87 (photocopies of the answer form are acceptable) or on a separate sheet of paper. Mark only one correct answer.
This lesson, good for two CE credits, requires a passing grade of 70%. Upon completion of this article, the pharmacist should be able to:
* Identify reasons for the loss of market share in the nonprescription medication field
* Calculate differences in gross profit margins between prescription drugs and store-brand OTCs
* Calculate customer savings from the use of OTC store brands
* Establish policies for personnel regarding recommendations for OTC products
To describe to pharmacists the opportunities, both therapeutic and financial, that remain in the nonprescription market and the means to achieve pharmacy's share…
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Pharmacists and Nonprescription Medication: Paradox and Prospect. Contributors: Smith, Mickey C - Author. Magazine title: Drug Topics. Volume: 140. Issue: 2 Publication date: January 22, 1996. Page number: 78+. © Advanstar Communications, Inc. Jan 2009. Provided by ProQuest LLC. All Rights Reserved.
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