WellPoint to Favor Nonprescription Form of Claritin

The multibillion-dollar business of prescription allergy drugs took a sharp turn Friday as WellPoint Health Networks Inc. said it plans to steer allergy patients from prescription medications to over-the-counter versions of Claritin. The announcement came as Schering-Plough Corp. disclosed plans to market Claritin as a nonprescription drug when its patent expires in December.

WellPoint’s action, if followed by other health insurers, could force the marketers of competing drugs Allegra and Zyrtec to offer nonprescription versions before patents on those strong-selling medications expire.

Health insurers would save millions of dollars as a result, but consumers with prescription drug coverage could end up paying more for the popular allergy medications.

WellPoint, the parent of Blue Cross of California, said it will raise the co-payment on monthly Allegra and Zyrtec prescriptions to $30 to $40, up from $17. Schering hasn’t said what it would charge for nonprescription Claritin. But analysts said it may exceed the co-payment on prescription Claritin.

Nonetheless, Claritin users with prescription drug coverage aren’t likely to gripe about paying more for an over-the-counter version, said Peter Boland, a Berkeley-based management consultant and health-care industry analyst. Any increase in price would be offset by the convenience of picking up the medication at the store without first seeing a doctor for a prescription, he said.

Uninsured consumers stand to benefit as the price of nonprescription Claritin is expected to drop significantly from the prescription price of $80 to $90 for a month’s supply.

Claritin and its competitors do not cause drowsiness, a drawback of the antihistamines currently sold without a prescription. Claritin is Schering’s top-selling drug, generating $2.3 billion last year. Americans spend more than $4.7billion on the three medications annually.

Boland expects other insurers to follow WellPoint’s lead, creating a dilemma for Aventis, marketer of Allegra, and Pfizer Inc., which markets Zyrtec. Faced with a higher co-payment, Allegra and Zyrtec users could switch to the cheaper, nonprescription Claritin.

A federal advisory panel, acting on a petition from WellPoint, last May urged the Food and Drug Administration to force Schering, Aventis and Pfizer to sell their allergy medications over the counter. WellPoint, eager to cut costs, argued that the medications were as “safe as taking a sugar pill.” The FDA hasn’t acted on the petition.

Schering, which fought the petition last year, reversed its position as the expiration of its patent on Claritin loomed. Two other drug companies, units of Johnson & Johnson Inc. and American Home Products Corp., have filed applications with the FDA to market generic, nonprescription versions of Claritin.

Schering sued in federal court to block the generics, arguing that the generics violate a separate patent that does not expire until 2004. Johnson & Johnson and American Home Products are fighting the suit. The companies said Friday that competition from Schering in the over-the-counter market won’t change their plans.

Pharmaceutical industry analysts said they did not expect Allegra and Zyrtec to move over the counter, at least not right away. But they said nonprescription versions may appear before their patents expired.

Viren Mehta of New York-based Mehta Partners said he does not expect Zyrtec and Allegra to go over the counter. The patents on those medications expire in 2007 and 2013, respectively. But, he said, the market for those medications just got tougher. “The whole class of allergy drugs faces a significant threat,” Mehta said.

Trevor M. Polischuk, an analyst with Lehman Bros. in New York, said some insurers may be reluctant to raise co-payments, but people who take allergy medications tend to be profitable patients in general. He said they tend not to have serious chronic diseases, such as heart disease, that are expensive for health insurers.

“They might not want to alienate these people,” he said.

Representatives of Kaiser Permanente, PacifiCare Health Systems Inc. and Humana Inc. said they had no plans to increase co-payments on allergy medications.

Besides bumping up the co-payment on prescription allergy drugs, WellPoint said it won’t cover Allegra or Zyrtec unless Claritin does not work for the patient. WellPoint has not yet decided if it will cover Clarinex, a new prescription version of Claritin.

WellPoint shares gained $3.09 to $120.59 and Schering-Plough shares fell $1.96 to $34 on the New York Stock Exchange.