FIRE IN THE BELLY, MONEY IN THE BANK

By LEON JAROFF

SUDDENLY A ROAR ISsues from the TV set. On the screen, a giant tongue of flaming gases erupts from the sun, and one bold statement after another is superimposed on the solar surface: "The idea behind it led to the Nobel Prize in Medicine," reads the first, followed by, "It's the most prescribed medication of its kind." As the sun is gradually eclipsed, the boasts continue: "It helps block production of stomach acid." "It's the world's first acid blocker." Then, against the glowing corona of a totally eclipsed sun, "And now it's available without a prescription." Finally the eclipsed image resolves into the illustration on a drug package labeled Tagamet HB, under which is inscribed, "Now for heartburn."

This rousing commercial, Tagamet's first, and others saturating the networks are the opening guns in what promises to be an unprecedented war for the minds of heartburn sufferers. The combatants are pharmaceutical companies jockeying for position in a new, lucrative over-the-counter market for drugs that provide long-lasting relief from heartburn, a condition that at least occasionally affects as many as one-fifth of all Americans. Their weapons, in addition to TV commercials, include a plethora of print advertisements--as well as suits and countersuits in the courts. Their goal: to capture the largest possible share of the nearly $5 billion U.S. market for heartburn drugs.

Relief from heartburn has been provided for more than a century by antacids that include such familiar brands as Tums, Rolaids, Maalox and Mylanta, products that annually rack up sales approaching $1 billion in the U.S. alone. These antacids, which bring relief within minutes, work by neutralizing the stomach acid that causes heartburn. But because the stomach continues to produce acid, they remain effective for only a few hours.

That is why, beginning in the late 1970s, pharmaceutical companies started offering such new drugs as Zantac, Tagamet, Pepcid and Axid, available only by prescription for those with serious heartburn or ulcers. While these brands took as long as an hour to kick in, they actually blocked the production of stomach acids and could protect against heartburn for as long as 12 hours. Despite their prescription-only status, these drugs quickly won favor, and today account for $3.7 billion annually in U.S. sales.

Now, spurred by the expiration of patent rights on the acid blockers and growing competition from lower-priced generic drugs, the pharmaceutical firms are seeking and winning approval from the Food and Drug Administration for over-the-counter sales of somewhat milder versions of the blockers. At stake as the companies tout these products, say industry analysts, is an additional $1 billion in sales for heartburn medications. "This is a blockbuster," says Paul Kelly, president of Silvermine Consulting Group, in Westport, Connecticut. "It's the most dramatic medical launch since Advil." Two acid blockers, Tagamet HB and Pepcid AC, have begun battling it out for market share, and two more--including the British colossus Zantac in over-the-counter form--will be joining the fray by next year.

Introduced in the U.S. by SmithKline Beecham in 1977 and under patent protection for 17 years, Tagamet was the pioneer acid blocker. Worldwide it has earned the company a total of $14 billion and was the first drug ever to chalk up $1 billion in sales in a single year. But in the late 1980s, anticipating the worst when its Tagamet patent ran out in 1994, SmithKline began conducting clinical trials and seeking FDA approval of an over-the-counter version. The wisdom of that decision became evident when Tagamet sales plummeted from $600 million in 1993 to only $400 million last year after the drug lost its patent protection in May and became vulnerable to competition from less expensive generic varieties.

But Johnson & Johnson/Merck, producer of Pepcid, beat SmithKline to the punch. It won FDA approval of its over-the-counter version, Pepcid AC, and began marketing it in June. Between its introduction and August, when Tagamet HB first appeared in pharmacies, Pepcid AC gained a 22% share of the entire antacid market. "Pepcid had a window of opportunity, and it exploited it well in the marketplace," says Silvermine Consulting's Kelly. "That's an amazing accomplishment." Amazing, and expensive. J&J/Merck and SmithKline are each spending some $100 million in marketing campaigns for their new acid blockers.

Competition heightened soon after the debut of Tagamet HB, when SmithKline filed suit against J&J/Merck in federal district court in Manhattan. The company sought "to stop defendant from deceiving the public and undermining the launch of Tagamet HB...through false and misleading television commercials" and advertisements. The suit cited such claims as "8 out of 10 doctors and pharmacists chose Pepcid AC over Tagamet HB..."

Not to be outdone, J&J/Merck countersued in September, charging SmithKline with "false advertising" and asking for "corrective advertising and punitive and actual damages." Their suit noted, for example, that SmithKline falsely claimed that Tagamet HB and SmithKline's Tums work faster, and that doctors prefer Tagamet HB to Pepcid 7 to 1.

In mid-October Federal Judge Harold Baer Jr. decided that the first casualties of the heartburn wars would be the overblown claims, ordering both sides to withdraw or modify those that could not be proved. He later ordered SmithKline to correct a letter it had sent to doctors and pharmacists to "ensure that [they] had not been misled" about the lawsuits between SmithKline and J&J/Merck.

Both sides quickly complied, accepting the ruling philosophically and seemingly without rancor. "It's not unusual for one company to think the other's advertising is off base," says Jack Ziegler, president of North America SmithKline Beecham consumer health care. "We view Johnson & Johnson/Merck's advertising as inappropriate, as they view ours. Unfortunately this leads to lawsuits."

Yet Pepcid's quick strike, Tagamet's ambitious counterattack and the row over advertising may look like mere skirmishes when Zantac 75 enters the fray. This acid blocker is the over-the-counter version of Zantac, the top-selling prescription drug in the world and the pride of Britain's Glaxo-Wellcome pharmaceutical stable. Prescribed for 240 million patients around the globe, Zantac last year generated $3.6 billion in sales, $2.1 billion in the U.S. And last month the over-the-counter Zantac 75 received a recommendation from an FDA advisory committee, virtually assuring its imminent approval for sale in the U.S.

"All this warfare [between Pepcid and Tagamet] is to shore up the battlements before Zantac," says Susan Coleman, managing partner of NCI Consulting in Princeton, New Jersey. When Zantac 75 wins approval for over-the-counter sales in the U.S., she predicts, "World War III starts." She notes that while other over-the-counter acid blockers had been on the British market for a year before Zantac 75 appeared in January, it took only three months to overwhelm the competition. "Zantac on the market will be a significant competitor," says Robert Kniffin, vice president of Johnson & Johnson's external communications. "We shall see." (As if Zantac 75's entry were not enough, another candidate in the same acid-blocker category, Eli Lilly's Axid, has also won tentative FDA approval for over-the-counter sale.)

All the firms in the fray or about to enter it are only too aware that their new heartburn drugs are bound to cannibalize their traditional antacid products. In touting Tagamet HB, for example, SmithKline has to avoid invidious comparisons with Tums, its antacid moneymaker, while J&J/Merck must tiptoe around any comparisons between Pepcid AC and its antacid, the much advertised Mylanta. Meanwhile, Switzerland's Ciba-Geigy has other worries. Though it has no acid blocker available that could bite into sales of Maalox, its bread-and-butter antacid, its competitors' new drugs almost certainly will.

Though hurt by the onslaught of acid blockers, the lower-priced and faster-acting antacids will almost certainly maintain a respectable market share. Tums, for example, costs less than 3-c- a tablet. That compares with more than 40-c- for a one-a-day Pepcid AC tablet or a Tagamet HB two-tablet dose, although both products currently offer substantial rebates. Still, booming sales of the new acid blockers seem to show that heartburn sufferers are not troubled by sticker shock. At a Duane Reade drugstore in Manhattan, Darlene Jackson, 35, picked up a box of Tagamet HB and noted the higher price but decided to buy it anyway. "If it works," she said, "it's worth it."

Reported by Lawrence Mondi and Stacy Perman/New York

With reporting by LAWRENCE MONDI AND STACY PERMAN/NEW YORK