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Making Pet Meds More Affordable

Like everything else in Washington, the Pet Owners Act has both fans and foes. According to the Center for Responsive Politics, eight organizations are registered to lobby on HR 1406, including Walmart and the National Association of Chain Drug Stores. “This bill allows consumers a choice when it comes to prescription medications for their pets, and Walmart supports efforts that give our customers a say where they purchase medicines and enable them to save money,” says Molly Philhours, a media relations rep. This support is hardly surprising, as the act would be a boon for Walmart and other big retailers, drug and grocery stores, says David Sprinkle, research director for Packaged Facts, a market research firm. “What we’re seeing is a natural progression, as the pet-health market moves toward greater parallelism with human healthcare.”

However, the number of pets covered by health insurance is miniscule, arguably making the out-of-pocket cost of a pet’s prescription drugs an even bigger concern for consumers than their own meds. “Less than 1 percent of the cats and dogs in America are insured, so this is a huge issue for owners,” says Laura Bennett, CEO of Embrace Pet Insurance. “Even if this bill doesn’t go through, it’s already had a big impact.”

Bones of Contention
The bill’s biggest opponent is the American Veterinary Medicine Association, which has registered to lobby on it and is urging its members to voice their opposition. “We’re not opposed to our clients having their pets’ prescriptions, or filling them at accredited pharmacies, but we’re against the legislation because it’s redundant,” explains Ashley S. Morgan, DVM, AVMA’s assistant director of governmental relations. “We don’t need a federal law to mandate something that most vets have been doing on their own for some time.” She notes that 26 states already have laws that require essentially the same thing as the new bill stipulates, and that most consumers are well aware of the wide availability of pet prescription fulfillment options.

The proposed legislation has another downside for vets: loss of revenue. While the impact will vary among individual practices, Morgan says, most veterinarians today make between 14 and 28 percent of their income from in-house drug sales. In addition, vets typically charge fairly high mark-ups, an average of 129 percent over wholesale, according to the American Animal Hospital Association. Many also charge a “dispensing fee,” typically an average of $9 per script. Morgan adds that the proposed law would drown vets in paperwork, and require clinic staff to spend an inordinate amount of time communicating with outside pharmacies. Most veterinarians will be forced to pass those extra expenses on to their clients.

Until fairly recently, veterinarians were the sole source for prescription pet medications. But with the advent of online pet pharmacies, such as Drs. Foster and Smith (which began selling medications and other pet care products through its catalog in 1983 and online in 1998), price-conscious owners started taking their drug business elsewhere. And in 1994, with the passage of the Animal Medicinal Drug Use Clarification Act (AMDUCA), veterinarians could prescribe certain approved human drugs for animals. In many cases, this gave veterinary clients an option to choose between the animal and the human drug, and to buy those drugs from outside pharmacies.

But this just means that vets are behind the times when it comes to setting their prices, says Bennett. She notes that many veterinarians deliberately undercharge for some services to keep clients happy; like restaurateurs who exponentially mark up the wine they sell to make up for value-priced entrees, these vets count on the sale of medications to make the balance sheet work. “If you’ve been relying on drug sales all this time, this is a wake-up call,” she says.

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