Don’t Count on OTC Lipitor as an Rx for Higher PFE Stock

by James Brumley | March 4, 2014 9:34 am

Don’t Count on OTC Lipitor as an Rx for Higher PFE Stock

PfizerLogo e1282588140398 Dont Count on OTC Lipitor as an Rx for Higher PFE Stock

The  aisles at your local drug store are about to see a very  interesting addition, if Pfizer (PFE[1]) has anything to say about it. The  pharmaceutical maker is working to develop a nonprescription version of its  cholesterol drug Lipitor[2].

If  Pfizer can actually do it – convince the FDA that an OTC statin makes sense –  then the benefit to the value of PFE stock is clear. That’s an enormously big “if,”  however, and this saga is going to be far more complex than the company is letting on.

Pfizer’s Path to an OTC Designation for Lipitor

Just to stave off any hysteria before it develops, there’s no need to rush out and scoop up shares of PFE stock right now based on the Lipitor news. It’ll be at least a year before Pfizer is in a position to even ask the Food and Drug Administration for permission to put what will be a milder dose of the cholesterol-reducing drug on shelves for just anyone to buy.

See, although much of the data already compiled about the drug’s performance since it was approved in 1996 will suffice in terms of efficacy and Lipitor’s safety profile, the company will need to prove something to the FDA that’s going to be a very tough sell — it will need to prove that the average consumer can safely use over-the-counter statin without the supervision of a doctor. Indeed, the study (which began in October and will run through the end of the year) isn’t being done in a laboratory or a hospital. It’s being compiled by pharmacies that are just as interested in how well patients understand and follow directions as they are in getting a patient’s cholesterol level to target.

In other words, the study is designed to see if patients an be trusted to self-treat and self-monitor.

Let’s face it: Using Lipitor isn’t something minor like taking a Tylenol for a headache every now and then. It has to be used for a period of time, but there are known, dangerous side effects that could prove deadly if not monitored — weak and sore muscles[3], memory loss[4] and a raised risk of diabetes among them.

Supporters of an OTC version of Lipitor as well as PFE stock owners will be quick to note that the proposed 10 milligram over-the-counter dose is considerably weaker than prescription versions of the drug, and may be safer. Fair enough. But, if it’s a weaker dose, it may be completely ineffective, posing even modest risk without any particular benefit at all.

Handicapping the Odds of Lipitor Becoming an Over-the-Counter Drug

With all of that being said, as exciting as the idea seems, it seems unlikely Pfizer will find favor with the FDA on the matter, for a couple of reasons.

The biggest potential setback is the sheer complication of a patient taking statins and then monitoring the reduction in cholesterol, if any. Tracking the results of an OTC Lipitor requires routine blood tests, which most users can’t or won’t perform on their own. Even with redefined (and allegedly easier) standards of cholesterol monitoring, it’s still asking a lot of a patient.

The second impediment to an approval of an OTC-approved version of Lipitor is a concern that the FDA has already voiced before, when Merck (MRK[5]) and Bristol-Meyers Squibb (BMY[6]) went looking for the FDA’s blessing on an over-the-counter version of their cholesterol drugs, Mevacor and Pravachol, respectively. FDA officials noted nearly a decade ago that there was no empirical evidence that a 10-milligram dose of Mevacor or Pravachol was of any measurable benefit. [7]

Unless Lipitor is radically different than Mevacor or Pravachol — and given that they’re all statins, that’s unlikely — Pfizer is apt to hit the same two walls Bristol-Meyers Squibb and Merck did.

Bottom Line

Kudos to Pfizer for thinking creatively and being willing to do something they’ve seen tried (to no avail) by their competitors. Should the study prove to the FDA that pharmacy shelves are better off with an over-the-counter version of Lipitor than without it, some experts believe it could generate an extra $1 billion in annual sales[8]. That would certainly give PFE stock a shot in the arm, although it’s still the less likely outcome here.

Be that as it may, even if Pfizer wins this battle it could still ultimately struggle to win the war.

Broadly speaking, when the FDA allows an “Rx-to-OTC” switch, it does so for the ingredient or active molecule rather than a specific drug. The explanation from the administration reads as follows:

Because there are over 300,000 marketed OTC drug products, FDA reviews the active ingredients and the labeling of over 80 therapeutic classes of drugs, for example analgesics or antacids, instead of individual drug products. For each category, an OTC drug monograph is developed and published in the Federal Register. OTC drug monographs are a kind of “recipe book” covering acceptable ingredients, doses, formulations, and labeling. Many of these monographs are found in section 300 of the Code of Federal Regulations.

Once a final monograph is implemented, companies can make and market an OTC product without the need for FDA pre-approval. These monographs define the safety, effectiveness, and labeling of all marketing OTC active ingredients.

New products that conform to a final monograph may be marketed without further FDA review.

So even if Lipitor should earn this highly-coveted OTC approval, you can bet Bristol-Meyers Squibb and Merck will have a product sitting right next to it on the shelf sooner or later.

See, even if Pfizer can convince the FDA that Lipitor, an atorvastatin, is different enough from Pravachol (a pravastatin) and Mevacor (a lovastatin) that it deserves its own monograph, the administration would have a hard time explaining why the Merck and Bristol-Meyers Squibb statins don’t also deserve their own over-the-counter monograph. Plenty of patients have found success with those two drugs as well.

Of course, the monograph discussion is apt to be a moot point, as the deck is already stacked against Pfizer on the matter.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

Endnotes:
  1. PFE: http://studio-5.financialcontent.com/investplace/quote?Symbol=PFE
  2. working to develop a nonprescription version of its  cholesterol drug Lipitor: http://online.wsj.com/news/articles/SB10001424052702304071004579410930136742414?mg=reno64-wsj
  3. weak and sore muscles: http://www.lipitor.com/aboutlipitor/sideeffects.aspx
  4. memory loss: http://www.mayoclinic.org/diseases-conditions/high-blood-cholesterol/in-depth/statin-side-effects/art-20046013
  5. MRK: http://studio-5.financialcontent.com/investplace/quote?Symbol=MRK
  6. BMY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BMY
  7. there was no empirical evidence that a 10-milligram dose of Mevacor or Pravachol was of any measurable benefit. : http://online.wsj.com/news/articles/SB106849875515325900
  8. extra $1 billion in annual sales: http://www.marketwatch.com/story/pfizer-aims-to-sell-over-the-counter-version-of-lipitor-2014-03-03

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