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Medications are generally divided into two groups - over the counter (OTC) medications, which are available in pharmacies and supermarkets without special restrictions, and prescription only medicines (POM), which must be prescribed by a physician. Most of the OTC medications are generally considered safe enough as they do not harm people if taken as instructed.

Many countries, such as the UK, have a third category of medicines, which can only be sold in registered pharmacies, by or under the supervision of a pharmacist. However, the precise distinction between OTC and POM depends on the legal jurisdiction. Medications are typically produced by pharmaceutical firms, and are often patented. However, those that are not patented are called generic drugs. Over-the-counter substances, are drugs and other medical remedies that may be sold without a prescription and without a visit to a medical professional, in contrast to prescription only medicines.

In the United States, the manufacture and sale of OTC substances is regulated by the Food and Drug Administration (FDA). Manufacture must be either pursuant to an FDA monograph, which specifies types of OTC drugs, active ingredients and labeling requirements, or pursuant to a New Drug Application (NDA), for products which do not fit within a specific monograph.

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Because an NDA is extremely expensive to obtain, primarily due to testing requirements and costs, most OTC substances produced in the USA are manufactured pursuant to the applicable monograph. Typical OTC products manufactured and pursuant to an FDA monograph, are sunscreens, anti-microbial and anti-fungal products, external and internal analgesics such as lidocaine and aspirin, psoriasis and eczema topical treatments, anti-dandruff shampoos containing coal tar, and other topical products with a therapeutic effect.

As a general rule, OTC drugs have to be primarily used to treat a condition that does not require the direct supervision of a doctor and must be proven to be reasonably safe and well-tolerated. OTC drugs are also required to have little or no abuse potential, although in some areas drugs such as codeine are available. OTC medications usually require strictly limited formulations or paperwork or identification to be submitted during purchase. Aspirin is one of the oldest OTC drugs still manufactured.

Over time, drugs that have proved to be safe and appropriate for self-medication have been switched from POM to OTC. An example of this is diphenhydramine, commonly known as Benadryl, which once required a prescription but now is available OTC nearly everywhere. More recent examples are the drugs cimetidine and loratadine in the United States. It is somewhat unusual for an OTC drug to be withdrawn from the market due to safety concerns, rather than market forces, though it does happen occasionally. Phenylpropanolamine is one such example.

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Recently many US drugstores have begun moving products containing pseudoephedrine into locations where customers must ask a pharmacist to buy them, and a prescription is not required. This change is being made in an effort to reduce methamphetamine production. Many US states have now passed laws requiring the location of the counter, submission of identification and recordation of purchases.

A prescription drug (POM) is a licensed medicine that is regulated by legislation to require a prescription before it can be obtained. The term is used to distinguish it from OTC drugs which can be obtained without a prescription. Different jurisdictions have varying definitions of what constitutes a prescription drug.

As a general rule, OTC drugs are used to treat conditions not necessarily requiring doctor's care and have been proven to meet higher safety standards for self-medication by patients. Often a lower dosage of a drug will be approved for OTC use, while higher dosages will remain the province of a doctor's prescription. A notable case is that of ibuprofen, which has been widely available as an OTC pain killer since the mid-1980s but is still available in doses up to four times the OTC dose for use in cases of severe orthopedic pain.

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In the United States, the Federal Food, Drug and Cosmetic Act exactly define what medicines require a prescription. Prescription drugs are generally authorized by doctors, though nurse practitioners also are increasingly prescribing drugs. It is generally required that a physician or a nurse practitioner write the prescription; nurses, emergency medical technicians, psychologists (but not psychiatrists, who are MDs), as examples, do not generally have the authority to prescribe drugs.

Unlike many other countries, the United States does not have price controls for prescription drugs, and US drug prices are often perceived as inflated in comparison to other countries. Therefore, most health insurance programs have prescription payment plans where the patient pays only a small co-payment and the pharmacy is reimbursed the rest of the cost by the insurance company.