As politicians and voters squared off this fall, a little bill sat in committee on Capitol Hill, awaiting action that in all likelihood won’t happen. If it expires, it will probably be reintroduced at the next Congressional go-around in 2013. But even if it dies on the vine, the bill has opened debate on an issue that affects virtually every pet owner — the cost and availability of veterinary medications — and promises to keep the discussion going for years to come.
If passed, the legislation (officially known as HR 1406: Fairness to Pet Owners Act of 2011-IH) will require vets to give clients a written copy of all prescriptions. It also will require them to notify clients, in writing, of the client’s option to have the prescription filled elsewhere, and to confirm (via fax or other means) any prescriptions sent to outside pharmacies. This is not a novel concept; a majority of veterinarians already do this for those who request it. The act would, however, make it mandatory for vets to provide the prescriptions without being asked.
The bill is modeled on the Fairness to Contact Lens Consumers Act of 2003, which required eye doctors to give their patients a copy of their prescriptions, thus breaking the medical monopoly on those lucrative little bits of polymer. This “prescription portability” was credited with changing the entire contact-lens market, giving consumers freedom to comparison shop (making prices more competitive) and also improving the quality and safety of the products themselves by streamlining the supply chain and distribution system. In the world of veterinary medicine, prescription portability would, at least in theory, reassure bargainhunting consumers that they’re shopping around in a truly open (and safe) marketplace.
HR 1406 was introduced April 2011 under the sponsorship of Representatives Jim Matheson (D-UT) and Lee Terry (R-NE) and was immediately sent to the Health subcommittee of the House Committee on Energy and Commerce, which must approve the bill before it can be voted upon by Congress. But because 2012 is an election year — one that most certainly hasn’t been dominated by debates over pet prescriptions — few observers predict any action. The legislative monitoring service GovTrack gives the bill a 1 percent chance of passing before the end of the 2012 session; not great odds, obviously, but not particularly bad, either, given that only about 4 percent of the bills introduced in 2009–2010 were enacted.
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“Most often, bills like this take five to seven years to get passed,” says Andrew Binovi, federal legislative manager of government relations for the ASPCA, which is supporting the bill. Alyson Heyrend, communications director for Rep. Jim Matheson, adds, “There is no action expected on the bill before the end of the session — it’s an election year. But we’ll most likely be reintroducing the bill next time. It’s a good bill, good for pet owners, good for consumers. In this economy, every little bit helps, and lots of people aren’t even aware that they have options when it comes to pet medications.”
A Pocketbook Issue
The subject of pet medications has been getting attention in other parts of the government as well. The Federal Trade Commission held a public workshop on the topic in October, and is expected to issue a report on its findings sometime in 2013. In its official statement, the FTC calls the price of pet meds “an important pocketbook issue for many consumers,” noting that the 62 percent of American households with pets spend roughly $7 billion annually for prescription and over-the-counter drugs for their companion animals.
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.
Competition — and Choices
According to Bruce Rosenbloom, chief financial officer of PetMed Express Inc., parent company of the online retailer 1800-PetMeds, pet owners today spend about $3.8 billion annually on prescription drugs for their companion animals, and vets make about 67 percent of those sales. (Packaged Facts’ estimate of vets’ share of drug sales is roughly the same.) PetMed Express’s research shows that big retailers like Target, Walmart and Walgreens sell about 22 percent of pet medications through their retail and online stores, while web and mailorder retailers like 1800-PetMeds and Amazon account for the remaining 11 percent.
All of these outlets offer incentives to pet owners. Kroger, for example, sells a long list of generic pet drugs, including some of the most-prescribed for dogs — pain-relievers like tramadol and meloxicam and antibiotics like amoxicillin and cephalexin — at $4 per 30-day supply. Target’s PetRx program, available in more than 1,200 of its instore pharmacies, can fill veterinary prescriptions for animal-specific medications, and all Target pharmacies will fill pet scripts for human drugs (they offer many $4 generics, as well). At Walgreens, you can add your dog to your $35-a-year family membership in the discount pharmacy program. With that, you get reduced prices on pet prescriptions and access to over 400 generic medications priced at $12 for a 90-day supply. Stop ‘n Shop and Winn-Dixie stores fill human-equivalent scripts, and have arrangements with online pet pharmacies to get your dog’s meds to you in one to two days.
For those who’d rather shop online, there are currently 18 web-based pet pharmacies accredited with the National Association of Boards of Pharmacy through its Veterinary-Verified Internet Pharmacy Practice Sites (Vet-VIPPS) program, each of which has its own offers and incentives. (There are also countless websites that aren’t accredited — or properly licensed — which the Food and Drug Administration and other groups strongly suggest you avoid.)
All this competition is good news for consumers, says ASPCA’s Binovi, because it guarantees that pet owners will be able to fill prescriptions as cheaply as possible. “There are big benefits here for both pets and their guardians,” he says. “It’s not that the veterinarians were a problem, just that this bill would harmonize all the different state laws to guarantee that everyone has better access to these medications.”
Keeping the cost of pet ownership down is especially important in this economy, he adds. “We know that economics weighs into the decision to adopt an animal and even, in some cases, to surrender an animal to a shelter.” There are no statistics on the number of owners citing the high cost of prescription drugs — or any other expense associated with keeping a pet — as the reason for surrender, but it’s not a great leap to suggest that someone who’s facing serious financial problems might see the family dog as an expense that could be eliminated. And even for an owner who’s not in dire straights, every little bit helps. “It’s always good to have more choices and better access, no matter what you’re buying,” he says.
You can verify an online vendor’s Vet-VIPPS standing on the NABP website: nabp.net.