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Thursday, December 15, 2011 - Page updated at 08:00 p.m.
Vets scramble as rivals sell Rover's meds
By Barry Shlachter
FORT WORTH, Texas — Veterinarians, who have traditionally derived about a fifth of their gross income from pet medicines, face ever-new rivals scrambling for a piece of this business in which dog and cat owners may pay markups of 100 to 300 percent on prescription drugs.
It has been years since the entry of mail-order veterinary pharmacies, which have since morphed into online merchants like Wisconsin-based Foster & Smith. But in 2010, Target launched its PetRX pilot program in more than 100 stores in Georgia, North Carolina, Georgia and Minnesota, and other retailers are getting into the business.
"Internet pharmacies are not our real competition, but rather the local discount pharmacies," Tennessee veterinarian Ronald Whitford wrote in an article for veterinary professionals last year. "Any time you cannot dispense with at least a 30 percent markup, you lose! And even then it is not worth the time and effort."
But 30 percent is an excellent profit margin for high-volume chain retailers.
Target's PetRX is now in 670 stores in 25 states, spokeswomen Erin Medsen said.
"The program has been really well-received," Medsen said, noting that Target pharmacists can add flavors like chicken, tuna and roast beef to make liquid medicines more palatable to Rover or Princess. All Target locations with pharmacies not in the program can still dispense drugs for people and pets, she added.
Walgreens has been filling such scrips since at least 2009, when it sold 400,000 in 10 months, according to VIN News Service, which covers the veterinary-medicine industry. A spokeswoman said pets can be enrolled in the chain's family prescription plan, but stores mostly carry crossover drugs suitable for people and some pets.
In the past year, Kroger grocery stores quietly rolled out their own pet-med program, frequently undercutting veterinarians' prices, particularly on drugs in its $4 generic program like common antibiotics for animals and people.
Now a bill before Congress would make it easier for dog and cat owners to get written prescriptions for use beyond their vet's office. To some, all of the new competition has reached crisis proportions.
The profession is at a critical crossroads, Lowell Ackerman, a vet with an MBA who taught at Tufts University, said in a 2011 article titled, "Barbarians at the Gate."
Ackerman said there is no way vets can compete with $4 generics and they shouldn't. Instead, he advises stocking higher-priced, pet-only labeled drugs.
He also recommended that vets set up their own mail-order business, sell pet health insurance, keep the inventory lean and expect to be paid on a professional basis for professional services.
Pet meds are "a very competitive marketplace," said Ralph Winston, a Kroger patient-care staff pharmacist in north Fort Worth.
Kroger's marketing and pharmacy teams decided to market the items in April after managers said patients were asking whether the stores filled pet prescriptions, spokesman Gary Huddleston said.
Such drugs as the steroid prednisone, the antibiotic amoxicillin, and tramadol for arthritis and pain relief are human-pet crossover drugs that sell for $4 as generics, Huddleston said. One veterinary office said it sells the same medicines for $23.
For dog and cat lovers unaware that they can have prescriptions filled elsewhere, or are too embarrassed to ask their vet to write a scrip to be filled by business rivals, Democratic Rep. Jim Matheson, of Utah, would like to make it easier.
House Resolution 1406, which he proposed in April and remains in committee, would obligate a veterinarian to write out each prescription. It also bars the vet from charging for the scrip and from making the customer sign a waiver absolving the practice of liability.
The American and Texas veterinary medical associations have come out strongly against the bill, which would further weaken the industry's hold on these sales.
"Most vets believe clients should get prescriptions filled at the place of their choice," said Elizabeth Choate, director of government relations at the Texas industry group. "But not all pharmacies or online sites are created equal." The bill places undue regulatory burdens on veterinary practices, Choate said.
If a veterinary practice survives the next 10 years, it will do so "by being competitive on all shopped service fees and then increasing markups for every other service," predicted Whitford, the Tennessee vet. Expecting the number of office visits to at least double in a decade, he urged fellow vets to "charge significantly more for sophisticated services.
"Unfortunately, this may put the high-end, sophisticated veterinary care out of reach for most pet owners," he said.
"Competition is out there," said Dan Posey, director of special programs and a clinical associate professor in the large-animal department at Texas A&M's College of Veterinary Medicine. "But Kroger doing a portion of the pharmaceutical business is not a threat to most vets.
"The idea is that the income stream should be services, not pharmaceuticals," Posey said.
"If a person is going to a big-box store or Kroger or buying online, that's all right," he added. "But we want to be in a trusted place to influence that decision — what's best for the pet and best for the owner."
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