Dr. Andy

Reflections on medicine and biology among other things

Wednesday, March 02, 2005

Free Market Health Care?

So AstraZeneca is apparently deliberately keeping over-the-counter Prilosec in short supply to increase sales of its much more expensive copycat drug Nexium.

The shortage of Prilosec has been very good for AstraZeneca's bottom line
because it has increased sales of Nexium, a far more expensive prescription
heartburn medicine that AstraZeneca also sells, said Michael Krensavage, a drug
industry analyst at Raymond James.

Most doctors view the two drugs as
essentially identical, yet the cost of Nexium is more than five times that of
Prilosec OTC, about $4 a pill compared with 70 cents.

I am generally a free market type but drug companies pulling crap like this, it doesn't exactly increase my confidence in the market as the solution to our health care problems.

On the other hand, maybe regulation IS the problem:

In most cases when a drug becomes available over the counter, the maker is no longer allowed to sell it by prescription, unless there are differences in the dosage.
But in 2003, the Food and Drug Administration decided to allow AstraZeneca to keep selling prescription Prilosec alongside Prilosec OTC - even though they both contain the same medicine, 20 milligrams of omeprazole - because patients are not supposed to take Prilosec OTC for more than two weeks at a time without a doctor's supervision.
Under F.D.A. rules, that decision gave AstraZeneca three years to sell Prilosec OTC without competition. The over-the-counter version will face no generic competition until 2006, even though prescription Prilosec already faces competition from prescription generics.
As a result, AstraZeneca and Procter & Gamble are able to market Prilosec OTC with no fear of competition from other makers. And the shortage of Prilosec OTC has meant that doctors and patients who want a reliable supply of Prilosec or Nexium can get it only with a prescription.

All these proton-pump-inhibitors (PPIs) seem equally safe and effective. If they just made them all OTC the problem might be solved. Also, why they don't allow generic competition in the OTC market is beyond me.

As the article mentions, when Claritin (loratadine) simultaneously went over the counter and generic, it caused a huge change in the non-sedating anti-histamine market. Insurers stopped paying for both Claritin and Allegra and Zyrtec, its competitiors (Clarinex, a metabolite of Claritin, which is actually a great drug, was a bust). The only exception is if patients have not done well on Claritin.

The end result is not too bad: most patients pay out of pocket for loratadine (either Claritin or generic) but the end cost for savvy shoppers is probably below co-payment levels. Those who really need Allegra or Zyrtec and have doctors willing to appeal can usually get them.

$260millino in 2003 to promote Nexium. Seems ridiculous, but I guess it is no worse than all the ads for Coke and Pepsi.


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