New transparency rules in Canada will affect OTC marketers

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According to our industry contacts, there are some important issues to consider for marketers planning to launch OTC products in Canada. Over the past several months, the Minister of Health has been rolling out a number of initiatives designed to improve the department’s image concerning transparency. The most recent decision will require all drug approvals to be put into a publicly available database, whether these products are marketed or not. While this may or may not help improve the government’s reputation on transparency in some sectors, it is most likely that competitive interests will have the most to gain through this policy.

Until now, only those products that were on the Canadian market were entered into the Drug Product Database. The purpose of which is to allow stakeholders to know whether a product that is being sold in Canada has been approved or not. This database is an excellent tool for compliance officers at both the federal and provincial levels. The change this time is that the government will now place all approved drugs into the database even if the manufacturer has not yet commenced sale.

This new policy will likely change the way companies plan for and market their new products. In some cases a manufacturer will file applications for new products with the intent of rolling them out over a period of time. This allows the marketer some flexibility in planning for administrative delays in approval, seasonality or retail sell-through of older products. Since the products were not on the market, there was nothing for compliance officers to worry about. However, by making such registrations public, competitors will now know what products are coming to the market well in advance of new launches.

This policy has its genesis in the realm of prescription drugs but has been extended to all drug products. Yet there are significant differences between how companies approach the marketing of prescription and OTC products. New prescription drugs have regulatory provisions for protecting new products from competition through data protection or patent laws. Therefore, it could be argued that making competitors aware that a new prescription drug has been approved would not change the ability of those competitors to respond since they must wait for a statutory period anyway.

However, for OTC products, the only market advantage available to companies is usually through the opportunity to hit the market before store brands and other competitors can react with their own offerings. Now the lead time for brand innovators will be largely eliminated through this administrative tool. This is even more important for products being switched from Rx to OTC since there can often be a lag between product approval and final legal status of the new ingredient. Unless there is an offsetting regulation to encourage innovation, this new policy could give the advantage to subsequent entry products after the innovator takes on the burden of satisfying the requirements for a switch.

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