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THE PET MEDICATIONS INDUSTRY: ISSUES AND 

PERSPECTIVES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, 

AND TRADE 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

APRIL 29, 2016 

Serial No. 114–142 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

MICHAEL C. BURGESS, Texas 

Chairman 

LEONARD LANCE, New Jersey 

Vice Chairman 

MARSHA BLACKBURN, Tennessee 

GREGG HARPER, Mississippi 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

GUS M. BILIRAKIS, Florida 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

FRED UPTON, Michigan (ex officio) 

JANICE D. SCHAKOWSKY, Illinois 

Ranking Member 

YVETTE D. CLARKE, New York 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

BOBBY L. RUSH, Illinois 

G.K. BUTTERFIELD, North Carolina 

PETER WELCH, Vermont 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 1 

Prepared statement .......................................................................................... 2 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, opening statement .............................................................................. 3 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 4 

Prepared statement .......................................................................................... 5 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 6 

Prepared statement .......................................................................................... 7 

WITNESSES

Tara Koslov, Deputy Director, Office of Policy Planning, Federal Trade Commission .................................................................................................................. 8 

Prepared statement .......................................................................................... 11 

Answers to submitted questions ...................................................................... 78 

Nathan Smith, Vice President of Strategy and International, True Science, 

LLC ........................................................................................................................ 38 

Prepared statement .......................................................................................... 41 

Answers to submitted questions 1 ................................................................... 91 

John de Jong, DVM, Chair, Board of Directors, American Veterinary Medical 

Association ............................................................................................................ 48 

Prepared statement .......................................................................................... 50 

Answers to submitted questions ...................................................................... 92 

SUBMITTED MATERIAL

Statement of the Animal Health Institute, April 29, 2016, submitted by 

Mr. Burgess .......................................................................................................... 69 

Letter of April 28, 2016, from George P. Slover, Senior Policy Counsel, Consumers Union, to Mr. Burgess and Ms. Schakowsky, submitted by Mr. 

Burgess ................................................................................................................. 73 

Letter of April 28, 2016, from Jean E.Sander, Dean, Center for Veterinary 

Health Sciences, Oklahoma State University, to Mr. Mullin, submitted 

by Mr. Mullin ....................................................................................................... 77 

1The information has been retained in committee files and also is available 

at http://docs.house.gov/meetings/IF/IF17/20160429/104877/HHRG-114- 

IF17-Wstate-SmithN-20160429-SD054.pdf. 

(1) 

THE PET MEDICATIONS INDUSTRY: ISSUES 

AND PERSPECTIVES 

FRIDAY, APRIL 29, 2016 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND

TRADE, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:52 a.m., in room 

2322, Rayburn House Office Building, Hon. Michael C. Burgess 

(chairman of the subcommittee) presiding. 

Members present: Representatives Burgess, Lance, Guthrie, Bilirakis, Brooks, Mullin, Upton (ex officio), Schakowsky, Clarke, 

Ca ́ rdenas, Welch, and Pallone (ex officio). 

Also present: Representative Schrader. 

Staff present: Mike Bloomquist, Deputy Staff Director; Elena 

Brennan, Staff Assistant; Leighton Brown, Deputy Press Secretary; 

Rebecca Card, Assistant Press Secretary; Graham Dufault, Counsel, Commerce, Manufacturing, and Trade; Melissa Froelich, Counsel, Commerce, Manufacturing, and Trade; Giulia Giannangeli, 

Legislative Clerk; Paul Nagle, Chief Counsel, Commerce, Manufacturing, and Trade; Mark Ratner, Policy Advisor to the Chairman; 

Olivia Trusty, Professional Staff Member, Commerce, Manufacturing, and Trade; Dylan Vorbach, Deputy Press Secretary; 

Michelle Ash, Democratic Chief Counsel, Commerce, Manufacturing, and Trade; Jeff Carroll, Democratic Staff Director; Elisa 

Goldman, Democratic Counsel, Commerce, Manufacturing, and 

Trade; Dan Miller, Democratic Staff Assistant; Caroline ParisBehr, Democratic Policy Analyst; and Andrew Souvall, Democratic 

Director of Communications, Outreach, and Member Services. 

Mr. BURGESS. The Subcommittee on Commerce, Manufacturing, 

and Trade will now come to order. And the Chair will recognize 

himself for 5 minutes for the purpose of an opening statement. And 

I do want to welcome everyone here this morning. I certainly want 

to welcome our witnesses. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

This morning, we will receive testimony from our witnesses 

about the status of the pet medication industry. It is important to 

start this process by understanding the status quo of the industry. 

From that point, we will build the necessary base to carefully examine whether additional Federal involvement is needed in the 

2 

veterinary prescription medication space. The pet medication industry is an established market, and it continues to grow. 

In calendar year 2015, United States pet owners spent over $14 

billion on pet supplies and over-the-counter medications. An additional $7 billion was spent on prescription medications. Pet care is 

a notable component of the family budget for well over two-thirds 

of the United States households. 

Last year, the Federal Trade Commission wrapped up a 

multiyear study of competition in the pet medication industry. And 

perhaps this morning, the Federal Trade Commission’s witness can 

speak to the state of the industry with regard to prescription portability and distribution practices. 

In the report, the Federal Trade Commission noted that more 

study could be helpful in a number of areas, including pricing, dispensing errors, and the secondary distribution system. 

This morning, it would be helpful to understand whether any of 

that additional study has been undertaken to date. The veterinarian-pet ownership relationship is an important one, and another 

part of what we will explore today. I understand that Representative Chaffetz has introduced a bill to federally mandate the release 

of prescriptions that has been referred to this subcommittee. States 

have long held the bulk of authority over veterinary practice, and 

over 30 States have passed legislation dealing with prescription 

portability. I do remain concerned that this legislation, like legislation passed years ago mandating similar procedures for contact 

lenses, unduly interferes with the relationship between the doctor 

and their patient. Procedures currently exist in all 50 States to address the claims, issues, raised by the proponents of this legislation. 

So mark me as skeptical that a Federal approach rather than 

one that works with State regulators truly creates an environment 

that is beneficial to consumers and their pets. 

As we have done with other issues with State involvement, and 

as a matter of federalism, it is important to understand how States 

have addressed any of the issues raised with prescription portability and what their level of involvement has been. 

[The prepared statement of Mr. Burgess follows:] 

PREPARED STATEMENT OF HON. MICHAEL C. BURGESS

Good morning. This morning we will receive testimony from witnesses about the 

status of the pet medication industry. 

It is important to start this process by understanding the status quo of the industry. From that point, we will build the necessary base to carefully examine whether 

Federal involvement is needed in the veterinary prescription medication space. 

The pet medications industry is an established market and continues to grow. In 

2015, U.S. pet owners spent over $14 billion on pet supplies and over-the-counter 

medications, and an additional seven billion dollars on prescription medications. Pet 

care is a notable component of the family budget for the 65 percent of U.S. households that own a pet. 

Last year, the Federal Trade Commission wrapped up a multiyear study of competition in the pet medications industry. I hope the FTC’s witness can speak to the 

state of the industry with regard to prescription portability and distribution practices. In the report, the FTC noted that more study could be helpful in a number 

of areas including pricing, dispensing errors, and the secondary distribution system. 

It would be helpful to understand whether any of that additional study has been 

undertaken to date. 

3 

The veterinarian-pet-owner relationship is an important one and another part of 

what we will explore today. 

I understand Rep. Chaffetz has introduced a bill to federally mandate the release 

of prescriptions that has been referred to this subcommittee. States have long held 

the bulk of authority over veterinary practice and over thirty States have passed 

legislation dealing with prescription portability. 

I remain concerned that this legislation, like the legislation passed years ago 

mandating similar procedures for contact lenses, unduly interferes in the relationship between a doctor and his patient. Procedures currently exist in all 50 States 

to address the claimed issues raised by the proponents of the legislation. I am skeptical that a Federal approach, rather than one which works with State regulators, 

truly creates an environment beneficial to patients. 

As we have done with other issues with State involvement, and as a matter of 

federalism, it is important to understand how States have addressed any issues 

raised with prescription portability and what their level of involvement has been. 

Mr. BURGESS. I will conclude my opening statement with that, 

and I will recognize the subcommittee ranking member, Ms. 

Schakowsky of Illinois, 5 minutes for an opening statement. 

OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. I must disclose 

that I have a personal interest in this topic. My husband and I 

have two very energetic rescue dogs at home, siblings named 

Franklin and Eleanor. And like any pet owner, that means, of 

course, we need to buy heartworm prevention and other pet medications. 

Ellie actually has Addison’s disease. She has to take a pill every 

day and a shot every month to keep her healthy. Pet owners like 

me spend a combined total, as the chairman said, of $7 billion. I 

feel like I definitely pay my share on pet medications in 2013. And, 

now, compared to the spending on human prescriptions, that number is pretty small. But it is a significant cost for pet owners. We 

need to consider whether consumers are well-served by the existing 

market. 

Right now, the majority of pet meds are bought directly through 

a veterinarian. There may be some good reasons for this, getting 

prescriptions right at the vet may be more convenient. The pet 

owner may also want the vet to administer the medication in some 

cases. And when consumers prefer that convenience and service, 

they should buy their pet’s medication through the vet. But that 

said, the pet medication industry needs fair competition. 

The Federal Trade Commission looked at competition in the pet 

medication industry in a 2015 report, hoping to hear more about 

that. The report concluded that portable prescriptions, having your 

choice of where to buy your pet’s medication, allows for more choice 

and would likely lower prices. Expanded consumer choices already, 

the direction we are heading, some States already require prescription portability in some form. Many vets provide prescriptions upon 

request, and a growing number of consumers are choosing to fill 

their pet’s prescriptions through retailers and online pharmacies. 

The question is whether we are currently getting the full benefit 

of competition. Consumers need to be aware of the choices that 

they have, and that choice needs to be real. Portable prescriptions 

4 

do little good if the medications themselves are not available outside the vet’s office. 

The FTC highlighted exclusive distribution policies as a potential 

impediment to competition. There is also the related issue of 

whether generic medications are widely available in the first place. 

We need competition not only among the sellers of prescriptions, 

but among the makers as well if we want to see more savings for 

consumers. 

Now, as a dog owner, I am very mindful of safety. As we have 

this debate, I want to make sure that medication is safe to be dispensed to my pets. I call them my kids. I believe there is a responsibility for whoever sells medication to fill prescriptions accurately 

and provide the necessary information to pet owners. The FTC report lays out a good framework for today’s hearing. I am interested 

to hear about the current state of the pet medication industry, how 

we can improve the market for pet owners as well. 

I look forward to hearing from our witnesses, and I thank you 

for your testimony. 

And thank you, again, Chairman Burgess, for holding this hearing. 

I yield back. 

Mr. BURGESS. The gentlelady yields back. The Chair thanks the 

gentlelady. 

The Chair recognizes the gentleman from Michigan, chairman of 

the full committee, Mr. Upton, for 5 minutes. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well, thank you, Mr. Chairman. 

Yes, this hearing is on pet medication industry. It is certainly an 

interesting look at large industry that most of us, as has been described already, have a very personal connection to. From dogs and 

cats to guinea pigs, fish, turtles, horses, you name it, millions in 

Michigan and across the country have opened their home to pets 

of all shapes and sizes. 

In my personal office, just down the hallway, we have always 

been a nine-to-Fido office. In fact, all four of my offices today have 

four-legged critters, and we have done that all the years on the 

Hill. 

So, today, we have Gideon. We have a Silky Terrier, Boston Terrier, Pomeranian named Scout, who really got a buzz cut yesterday. 

I almost didn’t recognize him. 

But our beloved pets provide a constant source of joy and levity 

as well as companionship and unconditional love. And I forgot to 

bring my box of dog biscuits in this careful container that I allow 

my constituents to feed our friends as well. 

But to fully appreciate how large the marketplace is, and how 

important veterinarians are to keeping our companions healthy, all 

you have to do is stop and think about how many of our friends, 

loved ones, colleagues, and neighbors have pets. Two-thirds of 

American households have a pet. And in 2015, those same families 

spent over $60 billion on food supplies, medications. 

There is an entire ecosystem from manufacturers, distributors, 

retailers, veterinarians, pharmacies, all the way up to pet owners 

5 

themselves. It is no surprise that over 700 public comments were 

filed after the FTC’s workshop examining the industry back in 

2012. Folks care about their pets, for sure. 

But the stats reveal visits to the vets are down. The economy is 

still on shaky ground. After a lackluster recovery, affordable options for chronic and acute medical conditions are a kitchen-table 

issue. Pet safety is also of highest importance. 

I should also note that one of our State universities, Michigan 

State, is one of the premier institutions in terms of training vets 

to get to the marketplace. 

We should strive to strike a balance between consumers having 

the marketplace of options to choose from to make sure that their 

pet’s safety receives the care that it needs, but doing so without 

breaking the bank. We also need to make sure that consumers 

have the information that they need to make an informed decision 

with their vets about the best care for their pets. 

So I am interested in hearing from all witnesses about the state 

of the pet medication industry today, what the States are doing to 

address these issues, and what we can learn from the FTC’s deep 

dive into the nuances of this industry. I want to be clear that just 

as our pets are part of our extended families, our vets are a trusted 

part, too, of that equation to keep them healthy and happy. 

Today, we are here to listen, understand what role, if any, the 

Federal Government ought to play. I think we can all agree that 

the health and safety of the pets is a top priority for folks not only 

in Michigan, but around the country. 

And I yield back. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Today’s hearing on the pet medication industry is an interesting look at a large 

industry that most of us have a personal connection to. From dogs and cats, to guinea pigs, fish, and turtles, you name it—millions in Michigan and across the country 

have opened their homes to pets of all shapes and sizes. 

In my personal office, we have always been a ‘‘nine to Fido office’’ where more 

often than not in my years on the Hill, we have had four-legged friends greeting 

folks from Southwest Michigan. These days we have Gideon—a silky terrier, 

Bugsy—a Boston terrier, and a Pomeranian named Scout. Our beloved pets provide 

a constant source of joy and levity as well as companionship and unconditional love. 

To fully appreciate how large the marketplace is and how important veterinarians 

are to keeping our companions healthy, all you have to do is stop and think about 

how many of our friends, loved ones, colleagues, and neighbors have pets. Twothirds of American households have a pet and in 2015 those same families spent 

over $60 billion on food, supplies, medications, etc. 

There is an entire ecosystem—from the manufacturers, distributors, retailers, veterinarians, pharmacies, all the way to the pet owners themselves. It’s no surprise 

that over 700 public comments were filed after the FTC’s workshop examining the 

industry back in 2012. Folks care about their pets. 

The stats reveal visits to the veterinarian are down. The economy is still on shaky 

ground after a lackluster recovery. Affordable options for chronic and acute medical 

conditions are a kitchen table issue. Pet safety is also of highest importance. 

We should strive to strike a balance between consumers having a marketplace of 

options to choose from to make sure their pet safely receives the care it needs, but 

doing so without breaking the bank. We also need to make sure that consumers 

have the information they need to make an informed decision with their veterinaries 

about the best care for their pets. 

I’m interested in hearing from all the witnesses about the state of the pet medication industry today, what the States are doing to address these issues, and what 

6 

we can learn from the Federal Trade Commission’s deep dive into the nuisances of 

this industry. 

I want to be clear that just as our pets are a part of our extended family; our 

veterinarians are a trusted part of the equation to keep them healthy and happy. 

Today we are here to listen and understand what role, if any, the Federal Government should play. I think we can all agree that the health and safety of the pets 

is a top priority for folks in Michigan and families across the U.S. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. The Chair recognizes the gentleman from New Jersey, 

ranking member of the full committee, Mr. Pallone, 5 minutes, 

please. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Mr. Chairman. 

Today’s hearing is an opportunity to learn more about the 

present state of the pet medications industry and about the choices 

that are currently available to pet owners. And as has been stated 

by my colleagues, many pet owners consider their pet to be a member of their family. Since everybody is talking about their pets, I 

will have to add that our dog, Valetta, is certainly a member of the 

family. Although, I have to say, she likes my wife a lot better than 

me. 

Mr. BURGESS. We all do. 

Mr. PALLONE. Thank you. Thank you, Mr. Chairman. 

So, in any case, access to safe, effective, and affordable health 

care for their pets is important. In 2015, U.S. families spent more than $60 billion on their pets, 

and a significant portion of those dollars were in the growing pet 

medication market. The pet medication industry is in a period of 

transition, both over-the-counter and prescription pet medications 

have become more widely available, including through online pharmacies and big box stores. Although retail options have expanded 

within the industry, many stakeholders believe that the existing 

system for distributing pet medications has not evolved accordingly. 

In 2012, the Federal Trade Commission held a public workshop 

to explore the changes taking place in the pet medications market. 

The workshop received input from a variety of participants, including veterinarians, pet owners, drug manufacturers, drug distributors, retailers, and regulators. Some stakeholders argue that exclusivity agreements between drug manufacturers and distributors 

can artificially inflate prices and limit consumers’ access to medication choice. 

For example, some retail outlets report difficulties ensuring that 

they have brand medications available for customers, and some 

veterinarians report difficulties ensuring generic medications are 

available at their clinics. Others reported that consumers are not 

being sufficiently informed of the options available to them when 

purchasing pet medications, including the option of receiving a 

written copy of their pets’ prescription from their veterinarian. 

After holding the workshop and reviewing stakeholder comments, the FTC issued a report in 2015 on the pet medications industry. It highlighted the troubling lack of generic pet medications 

7 

available for purchase, and explained that increased availability of 

generic pet medications could produce significant savings for consumers. 

The comparison to the human medication market is notable. Of 

the top 20 human medications that lost patent protection between 

2005 and 2007, 100 percent had a generic version made. Of the top 

20 pet medications during that time, only 20 percent went generic. 

So we know that generics have a profound impact on health care 

by drastically lowering drug prices and improving access to effective treatment. FTC’s report suggests a number of areas for further 

study regarding pet medication, distribution, that may be causing 

inefficiencies and disincentivizing the development of new generics, 

and I encourage the FTC to proceed with that study. 

So I am hopeful that this hearing could also address other challenges facing the pet medications industry. I look forward to hearing from our witnesses on how we can work to ensure affordable 

pet medications for all pet owners. 

And I yield back, Mr. Chairman. 

[The prepared statement of Mr. Pallone follows:] 

PREPARED STATEMENT OF HON. FRANK PALLONE, JR. 

Thank you, Mr. Chairman. Today’s hearing is an opportunity to learn more about 

the present state of the pet medications industry and about the choices that are currently available to pet owners. 

Many pet owners consider their pet to be a member of their family. Access to safe, 

effective, and affordable health care for their pets is important to them. In 2015, 

U.S. families spent more than $60 billion on their pets, and a significant portion 

of those dollars were in the growing pet medication market. 

The pet medications industry is in a period of transition. Both over-the-counter 

and prescription pet medications have become more widely available, including 

through online pharmacies and big-box stores. Although retail options have expanded within the industry, many stakeholders believe that the existing system for 

distributing pet medications has not evolved accordingly. 

In 2012, the Federal Trade Commission held a public workshop to explore the 

changes taking place in the pet medications market. The workshop received input 

from a wide variety of participants, including veterinarians, pet owners, drug manufacturers, drug distributors, retailers, and regulators. 

Some stakeholders argued that exclusivity agreements between drug manufacturers and distributors can artificially inflate prices and limit consumers’ access to 

medication choice. For example, some retail outlets report difficulties ensuring they 

have brand medications available for customers, and some veterinarians report difficulties ensuring generic medications are available at their clinics. 

Others reported that consumers are not being sufficiently informed of the options 

available to them when purchasing pet medications, including the option of receiving a written copy of their pet’s prescriptions from their veterinarian. 

After holding the workshop and reviewing stakeholder comments, the FTC issued 

a report in 2015 on the pet medications industry. It highlighted the troubling lack 

of generic pet medications available for purchase and explained that increased availability of generic pet medications could produce significant savings for consumers. 

The comparison to the human medication market is notable. Of the top 20 human 

medications that lost patent protection between 2005 and 2007, 100 percent had a 

generic version made. Of the top 20 pet medications during that time, only 20 percent went generic. 

We know that generics have a profound impact on health care by drastically lowering drug prices and improving access to effective treatments. FTC’s report suggests a number of areas for further study regarding pet medication distribution that 

may be causing inefficiencies and disincentivizing the development of new generics. 

I encourage the FTC to proceed with that study. 

I am hopeful that this hearing can also address other challenges facing the pet 

medications industry. I look forward to hearing from our witnesses on how we can 

work to ensure affordable pet medications for all pet owners, and I yield back. 

8 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. This concludes member opening statements. And the 

Chair would remind all members that pursuant to committee rules, 

members’ opening statements will be made part of the record. 

We want to thank our witnesses for being here this morning and 

taking the time to testify before the subcommittee. 

Today’s hearing will consist of two panels. Each panel of witnesses will have the opportunity to give an opening statement, following which there will be questions from members. Once we conclude with the questions of the first panel, we will take a brief recess to set up for the second panel. 

Our first witness for today’s hearing is Ms. Tara Koslov, the Deputy Director of the Office of Policy Planning at the Federal Trade 

Commission. 

And we appreciate you being here this morning. And, Director 

Koslov, you are now recognized for 5 minutes for purposes of opening statement. 

STATEMENT OF TARA KOSLOV, DEPUTY DIRECTOR, OFFICE 

OF POLICY PLANNING, FEDERAL TRADE COMMISSION 

Ms. KOSLOV. Chairman Burgess, Ranking Member Schakowsky, 

and members of the subcommittee, thank you for the opportunity 

to appear before you today. I am Tara Koslov, Deputy Director of 

the Federal Trade Commission’s Office of Policy Planning. I am 

pleased to join you to discuss competition perspectives on the pet 

medications industry. The Commission has submitted written testimony describing the FTC’s recent work in this area, including our 

October 2012 workshop, staff’s reviewing consideration of over 700 

public comments received in response to the workshop, and ultimately, our May 2015 staff report. 

My oral testimony and responses to questions reflect my own 

views, and not necessarily those of the Commission or any individual Commissioner. 

If your household is among the 65 percent in the U.S. with a pet, 

you know firsthand that pet medications are a major and growing 

expenditure for many American consumers. Pet owners spend over 

$7 billion per year on prescription and over-the-counter pet medications. And this figure is expected to grow to over 8 billion by 2018. 

Most consumers purchase pet medications from their trusted veterinarians typically at the end of an office visit. Over the last decade, however, many more retail pharmacies and other retail outlets 

have been competing with veterinarians to sell pet medications. 

These new market participants include a number of online pharmacies that are owned and operated by licensed veterinarians and 

focus solely on filling veterinarians’ prescriptions. 

Existing competition between veterinarians and other retailers 

already appears to have led to lower prices for certain pet medications as well as better service, greater convenience, more choices, 

and other consumer benefits. But recognizing the size of the industry and the large number of affected American consumers, FTC 

staff has examined two interrelated issues that may still impact 

competition for the sale of pet medications. 

The first issue is whether consumers know about and have access to portable prescriptions. That means a consumer can obtain 

9 

a prescription from her veterinarian, then use it to purchase pet 

medications somewhere other than her veterinarian’s office. 

Based on our findings, the Commission believes that consumers 

likely would benefit from increased pet medication prescription 

portability, which would enhance competition between veterinarians and other retailers of pet medications. Consumers are especially likely to benefit if they can shop around for the lowest prices 

and greatest convenience when purchasing preventive pet medications or long-term therapeutic treatments for chronic conditions. 

In contrast, portable prescriptions may not be appropriate for 

certain acute care and specialty medications that can only be properly dispensed by veterinarians. Also, consumers may be less likely 

to comparison shop in an urgent care situation when a pet needs 

immediate short-term treatment. 

The FTC staff report analyzes various arguments for and against 

automatic prescription release, whereby veterinarians would always be required to provide a portable prescription regardless of 

whether the client requests one. 

As the report notes, many veterinarians already honor their clients’ request for portable prescriptions as required by some State 

laws and ethical codes. 

Some veterinarians may affirmatively offer portable prescriptions 

as well. But complaints persist that not all requests are honored. 

Also, many consumers still don’t know that they can ask for a portable prescription. Other consumers may know but are uncomfortable asking, especially when their veterinarians require fees or liability waivers or make disparaging statements about competing 

retailers. 

As the report explains, FTC staff are skeptical of some of the alleged health and safety concerns cited by opponents of prescription 

portability. 

To the degree that these concerns are legitimate, existing regulatory measures may be sufficient to address them. We are aware 

of arguments that automatic prescription release may erode veterinary practice revenues, and force veterinarians to compensate by 

increasing their service fees. But as our report details, it is difficult 

to reconcile this argument with simultaneous claims that consumers already are aware of and have complete access to portable 

prescriptions, and that pet medication prices already fully account 

for the competition that exists between veterinarians and other pet 

medication retailers. 

Thus, we believe that the greater prescription portability likely 

would enhance competition for the sale of pet medications and that 

consumers would benefit from this competition in the form of lower 

prices. 

The second issue FTC staff have examined is that most manufacturers of pet medications have exclusive distribution policies to 

supply pet medications only to veterinary practices. Such policies 

may adversely affect competition. It appears that many nonveterinary retailers have trouble purchasing pet medications directly 

from manufacturers or their authorized distributors. 

Often, these retailers must rely on secondary supplies, who typically buy excess products from veterinarians. Although consumers 

likely benefit from lower prices than if exclusive distribution were 

10 

being strictly enforced, this secondary distribution system may be 

inefficient, and prices might be even lower if there were no such 

constraints. 

As the report highlights, enhanced prescription portability, may 

increase consumer demand to buy pet medications from nonveterinary retail sources. This, in turn, might incentivize manufacturers 

to change their distribution policies in response to consumer 

choices. Continued growth of retail distribution could, as a result, 

increase competition and lead to even lower prices for pet medications in both veterinary and retail channels. 

Thank you for the opportunity to share the Commission’s views 

and to discuss our efforts to promote competition and protect consumers. I am happy to respond to your questions. 

[The prepared statement of Ms. Koslov follows:] 

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Mr. BURGESS. The Chair thanks the gentlelady for your testimony. And we will move into the question portion of the hearing. 

I will begin by recognizing myself for 5 minutes for questions. 

Director, you mentioned the issue of liability for writing a prescription. Is that actually at issue? In the course of your study in 

preparing the report last May, did you come across issues of liability that a veterinarian might encounter for either writing or not 

writing a prescription? 

Ms. KOSLOV. So liability for not responding to a request for a prescription? 

Mr. BURGESS. I guess I was thinking along the lines of professional liability, for the prescription either not being filled in a timely fashion or filled correctly. Were there medical practice, or veterinary practice questions that occurred? 

Ms. KOSLOV. So as we explained in the report, our understanding 

is that a veterinarian would not be liable if a pharmacy made an 

error in filling a portable prescription. The existing regulations 

that govern the pharmacist would cover that if it wasn’t dispensed 

as written. 

Mr. BURGESS. And that would be just part of the normal practice 

of the dispensing agency, correct? 

Ms. KOSLOV. That is correct. It would be the same as it is for a 

human prescription. If you take a prescription to a pharmacist, 

they are required to dispense it as written. 

Mr. BURGESS. So why would it come up that someone would ask 

someone to sign a release of liability if the prescription was not dispensed at the office? 

Ms. KOSLOV. So as we explained in the report, we are not sure 

why there would be a request for release of liability, because it is 

our understanding that the existing regulations would already 

cover it, and you would not need an additional layer of liability release. 

Mr. BURGESS. That would be my thought as well. 

So the subcommittee really appreciates the amount of time the 

agency spent putting the report together. Obviously, it was a significant report. 

Seven hundred public comments; is that correct? 

Ms. KOSLOV. Over 700, yes. 

Mr. BURGESS. For some people to get a context, is that an unusual amount of comments, or is that about standard when you do 

an investigation like this? 

Ms. KOSLOV. So it is fairly standard. It was a little bit higher 

than average for this type of workshop. There were a number of 

comments that we received that were similar to each other. It is 

our understanding that perhaps a number of veterinarians may 

have all been encouraged to send in comments, and they all did. 

So that was one large group, but then we received a large number 

of substantive comments from a variety of stakeholders as well. 

Mr. BURGESS. So the conclusion of all of that, and you put together the report, is there any type of economic analysis that you 

at the FTC do as far as the implications of the report that you are 

dispensing? Do you consult with any other agencies or anyone else 

in the administration, the Bureau of Economics, Office of ManageVerDate Mar 15 2010 10:05 Sep 01, 2016 Jkt 037690 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X142PETMEDSASKOK081716\114X142PETMEDSPDFMADE W
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ment and Budget, about the cost of implementing the procedures 

in the report? 

Ms. KOSLOV. Sure. So when we initiate a process of designing a 

workshop and holding a workshop and then generating a report, 

the staff team always includes a number of people from our Bureau 

of Economics. That is just our standard practice within the agency. 

And so our pet meds workshop team did include people from the 

Bureau of Economics. The report itself does reflect significant economic analysis by our staff internally, in particular, trying to understand the extent to which prescription portability might impact 

the economics of veterinary practices and also trying to understand 

how economic theory would predict how prescription portability 

might impact prices for pet medications. 

Mr. BURGESS. And what are the general conclusions of the Bureau of Economics? 

If you can summarize them? 

Ms. KOSLOV. Sure. So I would absolutely refer you to the report 

for greater detail. It is woven in throughout the report. 

On prescription portability, this is ultimately all about consumers. It is all about giving consumers information so that they 

can exercise their choices in the marketplace. That is kind of the 

fundamental principles of competition that work throughout our 

economy. We would think it would work the same here. If consumers have more access to information and more choices in the 

marketplace, they are more likely to go out and use that information to generate competition, and that should tend to drive down 

prices. 

We think it already has. We see for some pet medication products where veterinarians may already be facing competition from 

alternative retail distribution, that has tended to bring down 

prices, and so we would expect to see more of that. 

As far as the impact on veterinary practices, if they were to lose 

revenues from the sale of pet medications, because we understand 

that is a portion of their revenues right now, I think the average 

is probably about 20 percent of their revenues come from pet medication sales. So if they are going to lose some of those sales, they 

might need to adjust their service fees and raise them to compensate. 

On the other hand, if, as we have heard, there is already a significant amount of competition and veterinarians already are building that competition into the price at which they sell their medications, then we would not necessarily expect them to lose very much 

revenues, because their prices already would reflect that competition. 

Mr. BURGESS. If I could just—in your report, one of the statements made is more information regarding the secondary distribution system for pet medications could allow for deeper analysis of 

the economic product and safety concerns. 

In the years since this report was published, have you, in fact, 

done that deeper dive? 

Ms. KOSLOV. We have continued to observe what is going on in 

the secondary distribution market. 

26 

Mr. BURGESS. And is there any supplemental statement that the 

FTC has at this point, a year later, from where you were last May 

when this report was issued? 

Ms. KOSLOV. We do not have a supplementary statement. As best 

as we can tell, things have not changed very much in the year 

since the report was issued. 

Mr. BURGESS. And I thank you for your prompt answers to the 

questions. 

Ms. Schakowsky, you are recognized for 5 minutes, please. 

Ms. SCHAKOWSKY. As you said, currently, most major manufacturers of pet medications use third-party distributors to market 

their products rather than selling directly to veterinarians or alternative retailers. Distributors explain that there are thousands of 

individual veterinary clinics across the country, and it is hard for 

manufacturers to reach them without a centralized distributor. 

We have also heard that many manufacturers and distributors 

have signed exclusivity agreements that limit what products distributors can carry and who they can sell those products to. 

Now, the FTC has found that exclusivity agreements are common 

in the pet medications industry. Could you tell us more about what 

the terms of these types of agreements usually require? 

Ms. KOSLOV. So we have not had access to or looked closely at 

individual contracts, so, I can’t tell you precisely what the terms 

of those are. Our general understanding, based on the workshop 

record and our additional research is that a manufacturer might 

reach an agreement with the distributor, that that distributor 

would either only carry that manufacturer’s product, or the distributor would carry that product but not a competing generic product. 

Ms. SCHAKOWSKY. So how do these agreements affect the ability 

of veterinarians and alternative retailers to offer their customers 

choices between branded products, or between branded or generic 

products? 

Ms. KOSLOV. So we do think that these exclusivity arrangements 

do have an effect on possible penetration of generic competition. So 

there are a few factors that affect generic entry, and one of them 

would be that if you don’t have a sizable enough market for generic 

drugs because consumers aren’t getting prescriptions for them, 

there might not be a big enough market to attract generic entry. 

As you are well aware, on the human side, we have the Hatch 

Waxman system, which provides for automatic substitution of generic drugs. We also have the situation where we mostly have insurance. And so our insurance providers are constantly putting 

pressure to drive down drug prices, and that tends to lead to more 

of us seeking generic drugs or being required to use generic drugs. 

We don’t have those two factors at play in the pet med industry. 

So those are two other factors that affect generic entry. 

Ms. SCHAKOWSKY. OK. So I think you have answered this. We 

want generic drugs makers to get their products to veterinarians 

and retailers to have access to both branded and generic animal 

drugs. How can we help pet owners have that choice? 

Ms. KOSLOV. So the position that we have taken in our report is 

that by enabling greater prescription portability and giving consumers more access to these choices in the marketplace, that, ultiVerDate Mar 15 2010 10:05 Sep 01, 2016 Jkt 037690 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X142PETMEDSASKOK081716\114X142PETMEDSPDFMADE W
27 

mately, that will generate more consumer demand for these alternatives, including, perhaps, more consumer demand where consumers would ask, is there a safe generic alternative? But they 

would have a conversation with their veterinarian as part of that 

trusting relationship and start to explore those options and that, 

in turn, might put more pressure on manufacturers and on the 

marketplace to create more generic alternatives. 

Ms. SCHAKOWSKY. I am looking at this chart, I don’t know who 

prepared it, potential savings for pet owners. And we are looking 

at, like, Rimadyl, generic savings, 53 percent over what would happen at the veterinary clinic, typically. So, you know, there is a lot 

of money to be saved, potentially. 

In the FTC report, you noted that requiring automatic prescription release without addressing the effects of exclusivity agreements would not solve the greater issue facing the pet medications 

market. 

Can you explain why? 

Ms. KOSLOV. The interdependence between those two issues, as 

I explained in my oral remarks, if you have greater prescription 

portability, but the distributors of the medications don’t have access to enough supply to fill the prescriptions, then all the prescription portability in the world won’t really help consumers. So we do 

see it as interrelated. 

Ms. SCHAKOWSKY. So is there a way to increase the demand for 

generics without changing the current distribution system and the 

distribution channel? 

Ms. KOSLOV. I think that by educating consumers about these options in the marketplace and, again, encouraging them to have 

these conversations with their trusted veterinarians, these are deep 

relationships between people who care deeply about the health of 

the animal. Access to affordable medications is a huge part of taking good care of your pet, and so I think if more consumers have 

those conversations with their veterinarians and talk about the 

price constraints they are facing, what options do I have out there 

in the marketplace, what can we do that is safe for my animal, I 

think that those conversations will ultimately start to affect the 

marketplace based on consumer demand. 

Ms. SCHAKOWSKY. Thank you so much. 

I yield back. 

Mr. BURGESS. The gentlelady yields back. The Chair thanks the 

gentlelady. 

The Chair recognizes the gentleman from New Jersey, the vice 

chairman of the subcommittee, Mr. Lance, 5 minutes for questions, 

please. 

Mr. LANCE. Thank you, Mr. Chairman. 

And good morning to you, Director. 

As I understand the issue, the bill that has been drafted may be 

based upon the model used regarding contact lenses. And the 

thought was that this would increase access to contact lenses 

through online sales. 

But there have been some negative consequences, in my judgment, in that space, mainly, as online retailers may have abused 

the law to market and sell contact lenses to consumers without 

28 

prescriptions, and that may have put consumers at risk by lessening the doctor-patient relationship. 

And I am concerned that if we replicate that model, there may 

be concerns of safety regarding family pets. And I am interested in 

your views on that. And I am also interested in what the agency 

is doing regarding contact lenses. This is a significant issue in the 

district I represent. We are the medicine chest of the Nation in 

North Central New Jersey. 

Ms. KOSLOV. So we do see analogies between the situation with 

contact lenses and the situation with pet medications. 

Mr. LANCE. Yes. 

Ms. KOSLOV. We enforce the contact lens rule. We have seen in 

that market that enhanced prescription portability has really 

opened up an entire marketplace and options for consumers. So we 

think, generally, there has been significant benefits for consumers. 

I recognize the safety concerns that you are citing. As a matter of 

fact, just recently, in the last couple of weeks, the FTC did send 

out a series of warning letters related to enforcement of the contact 

lens rule. 

Some of those enforcement letters, warning letters, went to sellers of contact lenses who might not be following the contact lens 

rule because they are filling expired or invalid prescriptions. However, a number of those warning letters also went to prescribers 

who may not be honoring the prescription portability requirements 

of the contact lens rule. So we are looking closely at that issue on 

both sides. But, obviously, safety is always a consideration. 

Mr. LANCE. And do you believe that you would be able to give 

Congress a follow-up report on what is occurring regarding the contact lens situation? 

Ms. KOSLOV. We continue to look closely at contact lenses. There 

is a rulemaking proceeding open right now, because the contact 

lens rule is up for review. So as part of that process, we have solicited and received a large number of public comments. 

Mr. LANCE. I believe in that space, you have received between 

600 and 1,000 comments. Is that accurate? 

Ms. KOSLOV. That sounds about right. 

Mr. LANCE. Thank you. 

Mr. Chairman, I would like an analysis of this issue in relationship to the contact lens issue, because I believe there are many 

similarities. And I hope as the discussion moves forward, we can 

examine this space based upon the experience in another space. 

I yield back the balance of my time. 

Mr. BURGESS. The gentleman yields back. I thank the gentleman. 

The Chair next recognizes, I believe, it is the gentleman from 

California, Mr. Ca ́ rdenas, 5 minutes for questions. 

Mr. CA ́ RDENAS. Thank you very much, Mr. Chairman. 

Ms. Koslov, thank you for conducting the public workshop to advance the understanding of this important issue. 

Our family has three family members that are directly affected 

by today’s committee topic. And our Chihuahua-Yorkie mix, Sophie, 

who thinks she is a person, really appreciates this. She will act like 

she understands everything we are saying. Our chocolate Lab, 

Coco, who knows she is a dog. She is much more well-balanced, 

29 

and then also, our cat, Gracie, who knows that she rules the house, 

they all appreciate it, and so do the rest of the family. 

Our entire family appreciates that this committeeis carefully 

evaluating the pet medication industry today. In your testimony, 

Ms. Koslov, you discuss automatic prescription releases, and I have 

some questions. 

Did the workshop that the Federal Trade Commission conducted 

conclude that automatic prescription release is the best way to give 

a pet owner their portable prescription? 

Ms. KOSLOV. The report did not make a judgment on what the 

best way would be to approach this, but we did conclude that greater prescription portability would be a very important way to enable 

greater competition in the marketplace. 

Mr. CA ́ RDENAS. OK. Did the workshop evaluate what the costs 

passed on to veterinarians for automatic prescription release might 

be? 

Ms. KOSLOV. There is an extensive discussion in the report of potential costs and benefits, including costs that might be incurred by 

veterinary practices, yes. 

Mr. CA ́ RDENAS. OK. And, apparently, there is a great interdependence between prescription portability and product distribution. Is this second distribution system resulting in higher prices 

for pet owners? What is the effect there? 

Ms. KOSLOV. So we don’t know the extent to which the secondary 

distribution system—we have not been able to quantify the extent 

to which that might be an increase in prices. Based on our economic modeling and our understanding of the dynamics of the industry, we certainly think that the way the secondary distribution 

system is operating right now is not as efficient as it would be if 

distributors had to write access to drugs from manufacturers, and 

that there is room to push prices down if we could fix some of the 

problems there? 

Mr. CA ́ RDENAS. If product distribution remains the same, how 

much will portable prescriptions actually be used? What is the extrapolation there? 

Ms. KOSLOV. Portable prescriptions are already being used. 

There are a number of situations where veterinarians do honor the 

requests of their clients. There are also a number of times where 

a veterinarian doesn’t carry a particular drug, and they offer a prescription to their client. So this is already going on. I think additional prescription portability would enhance competition and lead 

to even greater competition in that space. I think if consumers are 

asking for more product, ultimately, manufacturers may need to 

rethink how they are handling distribution, which may lead to 

more product flowing into the secondary distribution network. 

Mr. CA ́ RDENAS. So on that point, in order to enhance choice, 

should manufacturers be able to sell directly to alternative retailers? 

Ms. KOSLOV. Manufacturers can choose however they would like 

to sell their products. 

Mr. CA ́ RDENAS. Today? 

Ms. KOSLOV. Today. They choose today. They will continue to. 

They can unilaterally decide what is most efficient for them, what 

is most cost-profit maximizing for them. I think as the marketplace 

30 

changes and evolves, I think many manufacturers may be rethinking their own economic model, their product structure, and trying 

to figure out how to respond to the changes in the marketplace. 

Mr. CA ́ RDENAS. I have a good friend, Cesar Milan, who knows a 

lot about dogs. And he told me something interesting, that when 

he went to Germany, he found out that if you have a pet, the pet 

doesn’t need a license; the human being needs a license to learn 

how to have that pet become a family member. I thought that was 

incredibly advanced. 

That being said, did your report in any way analyze what best 

practices around the world might help us understand the dynamics 

that they figured out over there that we might learn from? 

Ms. KOSLOV. So we did not look at that licensing issue. We did 

look generally—— 

Mr. CA ́ RDENAS. What I am saying, on this subject matter, like, 

for example, Germany, maybe they have crossed this kind of dialogue and these kinds of regulations, et cetera, in their own country. That is what I mean. With all due respect, I think us, as Americans, we think that we have done everything first or better than 

everybody in the world. But when it comes to pets, maybe we can 

learn from other countries. That is my point. 

Did your analysis look at any other world practices? 

Ms. KOSLOV. So we did look at practices in a number of other 

countries. In particular, we looked at the U.K., because it was an 

area that they were interested in as well. The FTC has extraordinary close and productive working relationships with our competition counterparts in other countries, and so we actually were 

talking to our counterparts in the U.K., because they were looking 

at the issue around the same time. 

Mr. CA ́ RDENAS. Were we able to learn from them, and did any 

of that information get into the report? 

Mr. BURGESS. Mr. Ca ́ rdenas, your time is about to expire. We are 

deep into a vote. The bells are not working in here, because of the 

construction. I apologize to members that we have let things go, 

but I wanted to let your question time go through. 

Mr. CA ́ RDENAS. Thank you so much. 

Mr. BURGESS. But we are going to take a brief recess, and we 

will reconvene immediately after the vote series. It will not take 

long. 

[Recess.] 

Mr. BURGESS. I will call the subcommittee back to order. And 

thank everyone for their forbearance during the vote series, and 

thank people for coming back. 

We were in the portion of the member questions when we adjourned. So the Chair at this point would like to recognize the 

gentlelady from Indiana, Mrs. Brooks. Five minutes for questions, 

please. 

Mrs. BROOKS. Thank you, Mr. Chairman. 

Like so many Americans, and even like some of the panel that 

we have heard from or members that we have heard from today, 

animals have been an integral part of my life since childhood, including the 10 1⁄2-year-old dog, Scout, yellow lab, more than just a 

companion or a hunting dog with my husband, but truly a member 

of our family. And like a family member, we need to make sure 

31 

that he has the medicines, all the up-to-date vaccines to keep him 

healthy and active. 

But I also know, because Indiana is the home of Elanco, one of 

the Nation’s largest animal health distribution and manufacturing 

companies, that it takes a lot with respect to create medications 

and vaccines and so forth for our treasured pets. Whether it is 

price competition, medications, vet laws, I know these things not 

only affect consumers, but they also affect the manufacturers and 

the scientists in Indiana developing these products. So I am looking 

forward to hearing not only from you, but to the second panel as 

well. 

Ms. Koslov, were you able to gather the information? And what 

have you done with respect to the analysis of the, I believe, about 

36 States right now by either the State or independent licensing 

boards or the self-policing associations, what can you tell us about 

whether or not veterinarians are actually withholding prescriptions 

from pet owners across the country? I mean, when 36 States already have laws on the books and in place, can you share with us 

a bit more about what practices you are most concerned about? 

Ms. KOSLOV. So it is our understanding that a number of States 

do have these laws on the books, and we realize that many veterinarians are honoring their client’s requests for prescriptions. However, there are some States that do not have these rules in place. 

Moreover, there are no States that require a veterinarian to affirmatively offer a prescription. 

And in our experience, based on the anecdotal evidence and the 

testimony at the workshop, we think there are a large number of 

consumers who just aren’t aware that they have the right to ask 

for a prescription and that would give them the opportunity to shop 

around in the marketplace. And so we are looking to enhance that 

part of the market as well. 

Mrs. BROOKS. And I am sorry, I haven’t studied all 36 States’ requirements, but certainly of the 36 States, people who ask for a 

prescription, though, in all likelihood, the veterinarian is required 

to provide one. Would that be correct? 

Ms. KOSLOV. It is our understanding that they would be required 

to provide one. However, we have received a number of anecdotes 

and comments, as part of the workshop, that some consumers are 

not, in fact, getting prescriptions when they ask for them. 

Mrs. BROOKS. But then wouldn’t that be a licensing problem or 

something that the consumer would then be able to file a complaint 

with the licensing board, if that were to take place, at least in the 

36 States? 

Ms. KOSLOV. So consumers could choose to file some sort of complaint with the licensing board, or in some States it might actually 

be a law or a regulation. So it could be the board or it could be, 

if it is an ethical code in the State that requires veterinarians to 

do it, there might be other places they could complain. 

Mrs. BROOKS. And do you know if those complaints have been 

filed in the 36 States, and if so, how many? 

Ms. KOSLOV. So we did not do an exhaustive study of how many 

complaints were filed in each State. 

Mrs. BROOKS. Have any been filed in those 36 States? 

32 

Ms. KOSLOV. I am not aware of whether any have been filed in 

those States. I know that we did receive a number as part of our 

comment process. 

Mrs. BROOKS. But would that number be in the 36 States or are 

they in the other States that haven’t yet moved in that manner 

with respect to regulations? 

Ms. KOSLOV. I don’t know which States they were in. 

Mrs. BROOKS. Has the FTC ever done any consumer campaign to 

inform consumers that they can ask for a prescription? 

Ms. KOSLOV. So the day that we issued the pet medications report last May, we actually did issue, at the same time, a consumer 

education piece that came out through our Bureau of Consumer 

Protection. We also shared it with a number of stakeholders in this 

industry and encouraged them, veterinarians and other consumer 

interest groups, so that consumers would get better information 

and be educated about their opportunities. 

Mrs. BROOKS. And you are aware of concerns by the FDA regarding medications obtained online for pets, and we are also aware of 

some safety issues regarding something that Congressman Lance 

from New Jersey brought up with respect to contact lenses obtained online. 

Has the FTC taken any steps to educate consumers about safe 

sources of whether it is contact lenses or whether it is online pet 

medications, and if so, can you please explain what the FTC has 

done with respect to online purchases of medications? 

Ms. KOSLOV. Yes. In that consumer education piece that I just 

mentioned, one of the guidance pieces that we gave to consumers 

was that it would be helpful to look for a vet that is accredited 

pharmacy if they are looking at purchasing pet medications online. 

That accreditation process involves a number of safety mechanisms 

to ensure the authenticity of the medications and just to make sure 

that the process is as safe as possible. So we did encourage consumers to look for that certification. 

Mrs. BROOKS. And is the FTC conducting any investigations of 

online purchases? 

Ms. KOSLOV. I can’t comment on any nonpublic investigations 

and whether we are doing them or not. We are generally aware 

that there is a robust online marketplace for pet medications, and 

we are doing our best to keep an eye on it. 

Mrs. BROOKS. Thank you. I yield back. 

Mr. BURGESS. The Chair thanks the gentlelady. The gentlelady 

yields back. 

Seeing no other members of the subcommittee, it would now be 

my great honor to recognize a member of the full committee, Dr. 

Schrader from Oregon, 5 minutes for questions. 

You may have to move to a microphone that is actually working. 

I promise I didn’t turn yours off. And thank you for being here, 

Doctor. 

Mr. SCHRADER. Thank you very much, Mr. Chairman. 

And, Ms. Koslov, I appreciate you being here. A difficult position, 

FTC trying to talk about health safety and price competition at the 

same time. 

I guess to make a comment here, I mean, in your own report, you 

acknowledge that there is increased competition in the veterinary 

33 

prescription marketplace. Prices are going down already. PetMed 

Express claims to have 2.5 million customers, 50 percent of the 

business being prescription meds. 

I guess I would ask, Where is the problem here? Where is the 

problem here? 

Ms. KOSLOV. We think that consumers benefit whenever they 

have additional information that enables them to exercise their 

choices in the marketplace. And based on the record that we developed as part of this workshop, although our understanding is that 

many consumers have a very close and trusting relationship with 

their veterinarians and they are already having these discussions 

about prescription portability, we think there is room for improvement. 

Mr. SCHRADER. Well, there is probably always room for improvement in anything. I think it is a point of diminishing returns. And 

also, to be honest with you, the tone a little bit is impugning my 

profession. I have been a veterinarian for 35 years, and I could 

have made a lot more money in a lot of other professions. I went 

to school for an exhaustive period of time, in my opinion, and I 

chose veterinary medicine because I love working with animals. 

The prescription piece is a small part of what we do. And I think 

some of the testimony, with all due respect, that you have is outdated. You know, 20 percent of the business being prescriptions, I 

will wager you in this day and age, it is actually much less. My 

own practice over time back in the dark ages when I started, yes, 

medications were a big part, because there weren’t a lot of opportunities elsewhere. That has changed. I think it has changed for the 

better for, you know, frankly, a lot of the folks out there, whether 

the client or the actual pet itself. 

And the trend in veterinary medicine, just so you are aware and 

my colleagues, is to pay for services, not for items dispensed. It is 

much like what we are seeing in human medicine, it is a value 

added type of reimbursement system. Veterinarians have voluntarily in recent years, last, I would say, 6, 8, 10 years reduced the 

number of vaccines they give, because good research has shown 

they don’t need to be doing that. And I think that is a tribute to 

the profession. It is not about making money; it is about providing 

the best health care to the pet. 

And I appreciate the FTC comes at it from a different standpoint, 

you know, your background is in competition and getting the best 

price, best opportunity for the consumer, and that is fair, but that 

is not what veterinary medicine is all about. We are about protecting the health and safety of these animals. 

To be honest, as Ms. Brooks pointed out, these so-called complaints, you can’t verify where they have come from, who they have 

come from. My guess is they come from, frankly, the PetMed type 

of distributors out there, who their one single motivation is to 

make money. You know, I respect that, this is America, it is a market system, but they do not have the best interest of the pet at all 

in their sights. 

And the biggest thing that I would recommend the FTC also look 

at as they go on with this—if they are going to go on with this— 

is to look at, you know, what is the implication of allowing these 

big national distribution chains to issue prescription medications at 

34 

liberty? In other words, what we find in the veterinary field is you 

will have a prescription that says 30 days’ worth of, you know, thyroid medication for your animal, and PetMeds will come back and 

give them 120 days. How does that give the veterinarian the 

chance to make sure that that client does not go beyond what is 

safe for that pet, to make sure that pet is getting the needed check, 

and to make sure that medication is actually working correctly for 

them? 

There is a huge disconnect between where I think you are going 

with regard to how the veterinarians act, and the real culprit, the 

real worry is how these prescription distribution business companies are. It is purely to take advantage of the marketplace. And I 

am all in favor of, you know, free market enterprise. I always encourage, like I think most veterinarians, to get the best deal. 

They come to us initially, you give them initial prescription, if it 

is chronic medication—consumers are very sophisticated these 

days. There may be a few that don’t understand they can go online 

or, you know, get medications elsewhere, but I think in this day 

and age, most of them are very sophisticated. I have clients coming 

in saying, ‘‘Hey, Doc, can I get my Rimadyl or my Heartgard from 

somebody else?’’ I say, sure, because I am not making much money 

on it. I am probably losing money on it. You mark it up a tiny bit 

because of the competition that is out there, that is good. But it is 

there in case my clients need it in a crunch. They know I am going 

to be there for them. You know, PetMeds may take, you know, 24, 

36 hours to get them their needed medication. 

So I would just add the health and safety thing in there. I think 

that is something that is being totally missed in the discussion at 

this point in time. 

The other issue I would bring up real quick, and hopefully would 

be commented on in the second panel, is the idea that somehow the 

distribution system is limiting generics for veterinary patients or 

veterinary clients. Nothing could be further from the truth. I get 

calls all the time as a veterinarian, member of the United States 

Congress, on, you know, gosh, you know, we are having trouble getting generic medications. And it is not because of the distribution 

network, it is because, frankly, the consolidation that has gone on 

in the generic industry, some of the health and safety standards, 

some of the people that are doing these things. And that is a whole 

different subject. 

The idea that this is a big problem for generic distributions is absolutely completely wrong. And most veterinarians, they don’t deal 

with one distributor, they deal with multiple distributors. As a 

matter of fact, if you can’t get it through a distributor, most of the 

Prednisone prescriptions, we go through a pharmacy, for goodness 

sakes. But that is getting to be difficult to afford compared to the 

old days. Prednisone used be a very inexpensive medication, wide, 

broad-spread effectiveness, one that you need to check on, because 

chronic administration can cause serious problems. So even if it is 

a generic medication doesn’t mean that it doesn’t need veterinary 

supervision. 

I think it is real important for the panel to understand, you 

know, what is going on here. The basic issue we have here is, who 

do you trust? Is this about trusting PetMeds, that is in this purely 

35 

from a business standpoint to make money off of your pet, or is this 

about trusting your veterinarian, which has the best interests of 

you and your pet in mind? And I would urge the FTC to put a little 

bit of that heart into that business background that you are using 

as you go forward. 

And with that, I yield back, Mr. Chair. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

The Chair recognizes the gentleman from Oklahoma, Mr. Mullin. 

Five minutes for your questions, please. 

Mr. MULLIN. I am not sure how you follow that up. I think you 

summed it up pretty well. 

I have also got a letter here I want to present for the record from 

Oklahoma State University, from the dean, that also opposes this. 

Mr. BURGESS. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. MULLIN. I also would like to follow up on a couple of questions. Was there an epidemic of people reaching out to you on asking for this to happen? I mean, was there an overswell of the public 

that was saying, we are being cheated, we are being taken advantage of, we want it to be required that all vets write a prescription 

before they can give the drug to us so we have an option? Was that 

taking place? 

Ms. KOSLOV. So our study was prompted by legislation that was 

originally introduced in, I believe, 2011. And the reason that we 

did the study was that the—— 

Mr. MULLIN. Prompted by what? 

Ms. KOSLOV. We don’t know what it was prompted by, but the 

legislation, if enacted, would have given us rulemaking authority. 

Mr. MULLIN. So what did your—— 

Ms. KOSLOV. And given that we would have had—— 

Mr. MULLIN. What did the study do? What did the study come 

up with? I mean, did you find out that there was a large outcry 

from the public that was wanting this? 

Ms. KOSLOV. Well, one of the things we needed to study was, 

given that the legislation would require prescription portability—— 

Mr. MULLIN. No. That—— 

Ms. KOSLOV [continuing]. We needed to understand—— 

Mr. MULLIN. But that—I know. But when—— 

Ms. KOSLOV [continuing]. How that would fit in. 

Mr. MULLIN [continuing]. You did the study, did the study come 

out and say, ‘‘Wow, there is a huge problem here’’? 

Ms. KOSLOV. We found that there were a number of consumers 

who were either unaware of their right to take—— 

Mr. MULLIN. What is the number? What is the percentage that 

you use? Because, look, I have lived on a farm my whole life, and 

this whole comparison that you are using the same legislation for 

contact lenses, huge difference, big difference. Contact lenses, people didn’t even know they needed a prescription. They didn’t understand the difference between glasses and contacts. They didn’t understand the reverse effect that would happen. My kids wear contacts, and so does my wife, until she had Lasix, but they didn’t understand that the different material you put in your eye could 

36 

cause problems. They didn’t understand that there is a difference 

between one contact brand and the next contact brand. 

This is vets that are there with their patient, that are prescribing the medication right then. There is already over 30 States 

that already have legislation in place that says that if a patient 

asks for it, that the vet will provide it. And I would say the other 

States, the vet would do it anyway. So why? Tell me the percentage 

to make you say that this has to be the legislation that you guys 

are proposing, because all it sounds like to me is just more regulation on an industry that is struggling the way that it is now. There 

is a shortage of vets, especially in rural America. We cannot find 

enough of them. And this is just another reason to keep people out 

of it. 

Ms. KOSLOV. So the Commission hasn’t actually taken a position 

on the pending legislation. So the report focused more qualitatively 

on what is going on in the marketplace—— 

Mr. MULLIN. But you already support it, so you have taken a position. 

Ms. KOSLOV. The Commission has not come out in support of any 

specific legislation. We are supportive generally of measures to increase prescription portability. 

Mr. MULLIN. Which is essentially saying that you support the 

legislation without saying you support the legislation. That is the 

way we do it all the time up here. 

So my point is, why? What was the percentage that prompted 

you to think that this is a good idea? 

Ms. KOSLOV. I don’t have a specific percentage for you. The report focused much more on the policy of—— 

Mr. MULLIN. So this is just another piece of regulation that is 

being pushed out by a Federal agency without a need for it. 

Ms. KOSLOV. Well, we are not pushing the legislation. 

Mr. MULLIN. I know that. 

Ms. KOSLOV. We are responding to the legislation. 

Mr. MULLIN. But it doesn’t matter. 

Ms. KOSLOV. We identified a need from consumers. Consumers 

need more information in this huge marketplace to be able to exercise their options. 

Mr. MULLIN. Was there a lack of information being provided? 

Ms. KOSLOV. Our understanding was that a number of consumers did not have the—— 

Mr. MULLIN. Understanding. What was the study that showed 

that you are—you are speaking that there was a lack of information. So speak in specifics by saying what draw that. I don’t want 

assumptions. What is the percentage that said that there was a 

lack of information being out there to the consumer? 

Ms. KOSLOV. I don’t have a percentage for you. I would point you 

to the record of our workshop—— 

Mr. MULLIN. Then you can’t say that there was—— 

Ms. KOSLOV [continuing]. And our 700 public comments. 

Mr. MULLIN [continuing]. There was a lack of information to the 

public. You are making that general analysis, and you are making 

it off of your belief, but there is no analogy to back that up. 

37 

Ms. KOSLOV. We are making it based on the record of the testimony at our workshop, the 700 public comments, and the additional research that we conducted. 

Mr. MULLIN. Then what was the percentage of the 700 that you 

got that information from? 

Ms. KOSLOV. We did not quantify what percentage of consumers—— 

Mr. MULLIN. Well, I think that would be pretty—— 

Ms. KOSLOV [continuing]. Had asked for this information. 

Mr. MULLIN [continuing]. Important. I mean, don’t you? If we are 

going to come out in favor of legislation—which I know you haven’t, 

but you have—wouldn’t that be important for this committee to 

know? 

Ms. KOSLOV. I don’t think that we need to be able to quantify 

a specific percentage of consumers who are—— 

Mr. MULLIN. Well, yes, it would, because if there are a few bad 

apples, let’s go after the bad apples, let’s not go after the entire industry and use a one-size-fits-all approach that we do so often up 

here. 

Ma’am, I appreciate the position that you are at, and I appreciate 

you coming here and talking to us, but even though you are not 

supportive, you are speaking in favor of it, yet you are not able to 

tell us why you are speaking in favor, other than you are saying 

that the consumers need it, but you can’t tell us why the consumers need it. 

So I yield back, Mr. Chairman. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. 

Seeing no other members wishing to ask questions, I do want to 

thank our witness for being here today. Mrs. Brooks had to leave. 

And we will try to get a question for the record in writing to you. 

I think this is an important point of the number of complaints that 

were received, the type of complaints that were received. So if we 

can get some quantification of that, I think that would be helpful 

to the subcommittee. 

And I do also want to stress this is not a legislative hearing. This 

is a hearing that was called on the basis of the report. And as you 

commented, you did the report because you saw legislation that 

would require you to enter into rulemaking. So it is proactive. And 

I appreciate having preventive medicine. I am a believer in having 

preventive medicine, but I do want to stress this is not a legislative 

hearing on a particular piece of legislation. 

Does the gentlelady from Illinois seek to—— 

Ms. SCHAKOWSKY. I just wanted to make a comment. This hearing was requested by the majority based on a report that came 

from legislation that had been suggested. And I just felt the tone 

of the questioning was a bit of badgering of the witness, who, you 

know, is fulfilling her job, and I appreciate it, at the Federal Trade 

Commission. 

And given the number of pet owners, I think the issue is certainly important to many, many people, regardless of whether or 

not there is a percentage known of how many people; and that, you 

know, the idea, the possibility of more competition was raised in 

a piece of legislation that would have affected the Federal Trade 

38 

Commission. So I want to thank you for the study that was produced. And then, of course, it is always up to us on whether or not 

we proceed forward with any kind of legislation. 

And I yield back. 

Mr. BURGESS. The gentlelady yields back. The Chair thanks the 

gentlelady. 

Seeing no other members wishing to ask questions from our witness, I do want to thank our witness for being here today. I appreciate your forbearance through the voting recess that we took. 

This will conclude our first panel. We will take a brief, underscore brief, recess to set up for the second panel, and the committee 

will resume at that time. The committee stands in recess. 

[Recess.] 

Mr. BURGESS. I will call the subcommittee back to order. I want 

to thank everyone for their patience, taking the time to be here 

today. We are going to move into the second panel for today’s hearing. We will follow the same format as the first panel. Each witness will be given 5 minutes for an opening statement and then we 

will have questions from members. 

For our second panel, we have the following witnesses: Mr. Nathan Smith, the Vice President of True Science; and Dr. John de 

Jong, Chair of the Board of Directors at the American Veterinary 

Medical Association. 

We appreciate both of you being here with us this morning. 

We will begin the panel with you, Mr. Smith. You are recognized 

for 5 minutes for an opening statement, please. 

STATEMENTS OF NATHAN SMITH, VICE PRESIDENT OF STRATEGY AND INTERNATIONAL, TRUE SCIENCE, LLC, AND JOHN 

DE JONG, DVM, CHAIR, BOARD OF DIRECTORS, AMERICAN 

VETERINARY MEDICAL ASSOCIATION 

STATEMENT OF NATHAN SMITH 

Mr. SMITH. Mr. Chairman, Ranking Member Schakowsky, and 

members of the subcommittee, my name is Nate Smith and I am 

the Vice President of Strategy and International for True Science. 

I appreciate you allowing me to testify today. 

True Science is a pet medication and wellness company founded 

in 2010. We deliver premium prescription and over-the-counter pet 

medications and veterinarian-recommended products. We are dedicated to pet owners, the two of three American households who 

have at least one dog or cat. Americans love their pets. They provide us companionship and comfort. 

Pets are part of our families, which begs the question: Shouldn’t 

we have the same access to affordable medications for our pets as 

we do for medications for our children, the same access to generics, 

and the same right to choose our pharmacy? We believe we should. 

That is why we support the Fairness to Pet Owners Act, a bipartisan bill to give pet owners the right to copies of their pets’ prescriptions so they can shop around for the price, service, and convenience which suits them best. 

This bill will help pet owners and their pets. First, the 80 million 

American households who own pets will save money, have more 

choices, and better access. Second, the marketplace will be more 

39 

competitive and grow. We know competition and free markets 

work. Third, our pets will be better off. With medications more affordable and easier to obtain, pet owners will be better able to care 

for their dogs and keep them longer. 

At the outset, let me make clear that we cherish our vets, as do 

pet owners. We entrust them with the care of the pets we love. 

This is not an us-verse-them type issue. We just see the marketplace and its potential differently. We believe that if the market for 

pet medication is open to competition, everyone will benefit: manufacturers, veterinarians, pet owners, and pets alike. 

Today, the market for pet medication is bifurcated between those 

who can afford to buy pet medication and have reasonable access 

to vet clinics, and those with lower incomes or who do not have 

ready access. 

For pet owners who get their prescriptions, the savings can be 

significant. If we can pull up the chart, and this is the page that 

was referred to earlier. Heartgard is the leading heartworm preventative. Pet owners can save around 20 percent if they buy from 

a big box or club store, 25 percent buying online, and 35 percent 

if they purchase the generic. Rimadyl is a painkiller used for treating arthritis in pets. Pet owners can save 22 percent at big box 

clubs or stores, 28 percent online, and 50 percent if they purchase 

the generic. 

Mr. Chairman, in announcing this hearing, you asked whether 

Federal involvement is needed in the veterinary prescription medication space. That is an important question, since American households spend $7 billion every year on pet medications, $5.2 billion 

of which requires a prescription. 

The fact is the Federal Government is already involved in the pet 

medication space, and in a major way. The Government prevents 

pet owners from purchasing most pet medications without the approval of a prescriber, including medications pet owners in other 

industrialized countries can be purchased over the counter. If the 

Federal Government is going to tell pet owners, you can’t buy this 

without a prescription, shouldn’t it give those pet owners the right 

to copies of their prescriptions so they can shop around for the 

price, service, and convenience they prefer? 

The problem is, anytime the Government restricts access to a 

product by making it available only by prescription but permits the 

prescriber to sell what they prescribe, it sets up a conflict of interest in which the consumer is put squarely in the middle. Pet owners must ask the veterinarian, on whom they rely for their pet’s 

healthcare, for permission to take their business elsewhere, and 

that is only if pet owners know they have a choice. 

Policies and laws requiring pet owners to ask for a copy of their 

prescription simply do not work. We know they don’t work, otherwise, far more pet owners would be buying generics and saving 50 

percent, just like they do with human medications. These policies 

don’t solve the conflict of interest. They don’t let consumers know 

they have a choice. They lead to discriminatory prices, they deter 

interstate commerce, and they are unenforceable. 

Rather, the solution to this is simple, it is easy, and it is proven. 

Simply give pet owners a right to a copy of their prescription without having to pay a fee, sign a waiver. This is no easier, more effiVerDate Mar 15 2010 10:05 Sep 01, 2016 Jkt 037690 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X142PETMEDSASKOK081716\114X142PETMEDSPDFMADE W
40 

cient or more effective way to let pet owners know they have a 

choice. It has worked with human medications, with eyeglasses, 

contact lenses; it will work with pet medications. 

Thank you for considering our views. I look forward to answering 

your questions. 

[The statement of Mr. Smith follows:] 

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Mr. BURGESS. The Chair thanks the gentleman. 

The Chair recognizes Dr. De Jong. Five minutes for your statement, please. 

STATEMENT OF JOHN DE JONG 

Dr. DE JONG. Thank you, Mr. Chairman. 

Good morning, Mr. Chairman, and members of the committee. 

My name is Dr. John de Jong. I am the chair of the board of directors of the American Veterinary Medical Association and I am a 

companion animal practitioner in Massachusetts. 

The American Veterinary Medical Association represents more 

than 88,000 member veterinarians worldwide engaged in a wide 

variety of professional activities and dedicated to the art and 

science of veterinary medicine. Every day, my staff and I strive to 

serve the best interests of both our animal patients and their 

human owners. Whether it is a routine visit to the veterinarian or 

an emergency, we all want our pets to receive the very best veterinary care. 

Veterinarians understand that their clients must make financial 

decisions when planning and paying for services and medications, 

which is exactly why we support policies that give our clients the 

flexibility to choose where they fill their prescriptions. However, 

the Fairness to Pet Owners Act will require veterinarians to provide a written copy of every prescription for a companion animal, 

whether or not the client needs or even wants it. This is unnecessary and will place undue regulatory and administrative burdens 

on veterinarians and small businesses. 

Though not required by Federal law, the AVMA’s Principle of 

Veterinary Medical Ethics and its policy on client requests for prescriptions call on veterinarians to write a prescription in lieu of dispensing a medication when desired by a client, and a majority of 

States have similar laws or policies. 

In some cases, veterinary medications are only available through 

a veterinarian, negating the need for a written prescription. In 

other situations, the client might choose to have the medication 

dispensed by their veterinarian for a variety of reasons, including 

convenience and timeliness. But if this bill were to pass, veterinarians would still be required to provide the written prescription to 

these clients, take the piece of paper back, and then dispense the 

medication. This creates an administrative burden for veterinarians, who should be spending their time and resources taking care 

of their animal patients. 

Although some of the bill’s advocates claim that veterinarians 

are only interested in profiting from filling prescriptions in house, 

that is not the case. A report issued by Federal Trade Commission 

staff in 2015 did not find evidence of veterinarians withholding 

written prescriptions from their clients. Until we have real evidence showing that a problem actually exists, it is premature to 

consider such a sweeping Federal mandate. 

Thirty-six States have laws, regulations, or policies that require 

veterinarians to provide their clients with a written prescription 

upon request. If clients feel these requirements are not met, they 

can file a complaint for unprofessional conduct with any State’s 

veterinary licensing board. And even in States that have not adoptVerDate Mar 15 2010 10:05 Sep 01, 2016 Jkt 037690 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X142PETMEDSASKOK081716\114X142PETMEDSPDFMADE W
49 

ed formal laws or regulations in this area, State boards of veterinary medicine could find that a failure to honor a client’s request 

for a prescription constitutes unconditional conduct, leading to discipline against a veterinarian. 

In addition to the threat of discipline, veterinarians have other 

incentives to honor client’s requests for prescriptions. A veterinarian who denies such a request risks alienating clients and 

harming his or her practice. In cases where the patient’s condition 

may worsen quickly without medication and the client wishes to fill 

the prescription at a pharmacy, denial of a written prescription 

may place the veterinarian at legal risk. 

The FTC report concluded that more study is needed on whether 

competition in the pet medication industry is affected by consumer 

knowledge of and access to portable prescriptions. There is no evidence that consumers in States without a requirement are adversely affected as to price or quality of pet medication services. In 

addition, the consumer outcry that would demand such a dramatic 

remedy simply does not exist. 

If pharmacies believe consumers are unaware of the option to obtain products from them, then they are free to market and advertise their services, much like they do for other products. 

We understand the financial burdens facing many of our clients, 

and we all want what is best for a pet’s well-being, but we do not 

believe that this legislation would advance those goals. We are honored by the ongoing confidence and trust of pet owners, and we 

look forward to maintaining that trust. Thank you. 

[The statement of Dr. De Jong follows:] 

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60 

61 

Mr. BURGESS. The Chair thanks the gentleman. 

The Chair would first recognize Mr. Mullin from Oklahoma. Five 

minutes for questions, please. 

Mr. MULLIN. Thank you, Mr. Chairman. 

And if I come across, you know, I guess badgering, it is not badgering, it is passion and frustration. Because badgering, to me, 

seems like someone that is trying to pick a fight. I am not someone 

to pick a fight, but I do have frustration when we have something 

that is claiming to be needed and it is not needed, but yet the vets 

themselves and the associations are saying they don’t like it, but 

yet the other side is saying there is a need for it. 

And then, Mr. Smith, as you and I spoke in my office yesterday, 

the day before yesterday, we had, you know, a cordial conversation, 

and we agree to disagree on the issues. But I have some concerns 

about one thing that you said a while ago. You said that the system doesn’t work, because if it did work, essentially there would be 

more prescriptions being bought online or from pharmacies? Am I 

summing up your opening statement and what you said there? 

Mr. SMITH. As a part of the consortium of organizations that support this bill, we work with a lot of the leading pharmacies in the 

country, and we also have online pet pharmacies that are part of 

it. And every day, they experience thousands of people who weren’t 

able—— 

Mr. MULLIN. But you said it wasn’t working because there wasn’t 

enough prescriptions being bought online and through pharmacies. 

Is that fair to sum up what your statement said? 

Mr. SMITH. As a result of people not being able to get their prescriptions and having the intent or the—— 

Mr. MULLIN. But you are basing that on what, on what data? 

You are basing that on the fact because there is not enough people 

buying it, or maybe that is because there is not a problem with it? 

Mr. SMITH. I am basing it on the experience of the members of 

our consortium, who—— 

Mr. MULLIN. Which are who? 

Mr. SMITH. Which are the National Community Pharmacists—— 

Mr. MULLIN. But these aren’t the vets and these aren’t the patients? 

Mr. SMITH. These are the licensed pharmacies that have the ability to dispense—— 

Mr. MULLIN. But they are not the vets and the patients. 

Mr. SMITH [continuing]. If someone shows up with a prescription, 

which—— 

Mr. MULLIN. But, Mr. Smith, I am saying that you are basing 

your opinion not on the vets or the patients, the consumers. Are 

they the one asking for it, or is it your clients? 

Mr. SMITH. Every day, thousands of pet owners show up to licensed pharmacists—— 

Mr. MULLIN. No. I am asking—— 

Mr. SMITH. And we are basing it on that, like, the actual experience. 

Mr. MULLIN. OK. But are they asking for it? 

Mr. SMITH. Yes, they are—— 

Mr. MULLIN. Who? 

Mr. SMITH [continuing]. Asking for it. 

62 

Mr. MULLIN. Who is asking for it? 

Mr. SMITH. Pet owners who come into every Walgreens, 

Walmart. Petcarerx.com. 

Mr. MULLIN. They are coming in there because they already have 

a prescription, don’t they? 

Mr. SMITH. No, no. Ten percent of people who show up to 

petcarerx.com, for instance, have a prescription, despite wanting to 

buy it because of lower prices. 

Mr. MULLIN. So did they ask—had they asked their vet for one? 

Mr. SMITH. Yes. And in many cases—— 

Mr. MULLIN. They had? Because the doctor that just testified 

said that there is already a system in place, and the letter I submitted earlier for the record specifically stated to two regulations 

that requires them to do that even outside the States that don’t 

have it. So I don’t think you are actually getting the correct information. 

Also, I want to get to it before I run out of time. You also mentioned that this doesn’t go to large animals, it specifically goes to 

companion pets. Is that what you told me in my office? 

Mr. SMITH. Yes. 

Mr. MULLIN. And yet we had this conversation that, what is considered a companion pet, because pigs are considered a companion 

pet now. So wouldn’t that open the door to large animals? I mean, 

Shetlands are considered a companion pet now, and lot of people 

consider those horses. Wouldn’t that open the door to large animals 

too? 

Mr. SMITH. As we discussed in your office, our intent—the $7 billion being spent on pet medications is largely for dogs and cats—— 

Mr. MULLIN. But what my point was, is that this intent opens 

the door to larger regulations, it goes into unintended consequences. Once you go down this road, how do you stop it? How 

do you put it back in a box? 

And I am really concerned that we are going after an issue that 

you are in favor of that isn’t needed. It is just undue regulation on 

an industry, as I stated earlier, that is already hurting. 

I mean, I haven’t had anybody to actually give me the numbers 

of what is causing this support for this to go through, other than 

assumptions, and that is simply what I am hearing from you too. 

While I support your position to be able to have an opinion, I do 

think you are on the wrong side on this. 

I yield back, Mr. Chairman. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

The Chair recognizes the gentlelady from Illinois, Ms. 

Schakowsky. Five minutes for questions, please. 

Ms. SCHAKOWSKY. Thank you. 

So as we have heard, exclusivity agreements between manufacturers and distributors force some retailers to acquire medications 

they sell through secondary distributors. As much as 25 percent of 

all pet medication being sold in the United States may have been 

acquired through secondary distributors. 

Mr. Smith, is this figure consistent with what you are seeing in 

your experience? 

63 

Mr. SMITH. Yes. We are a secondary distributor, so we supply all 

the leading human pharmacies the pet medications they have 

available, both Rx medications requiring a prescription and some 

of the leading over-the-counter medications. 

In terms of attempts to supply our generics, for instance, to veterinary clinics, the leading distributors for drugs going to veterinary clinics oftentimes have blocking agreements that won’t allow 

our generic medications to go to the veterinarian so long as the 

brand from the pharmaceutical company is being offered through 

that distributor. 

Ms. SCHAKOWSKY. So to obtain the medications they sell, secondary distributors have to buy products that are diverted from the 

traditional supply chain. In some cases, secondary distributors acquire medications by purchasing overstock from veterinarians. Is 

that correct? 

Mr. SMITH. Yes, that is correct. We source in a couple of different 

ways. Sometimes, just as you mentioned, we will buy excess inventory from veterinarians, sometimes we buy straight from distributors, and at other times we have been able to source direct from 

manufacturers. Different drugs travel in different ways. We carry 

a wide range of medications, but we have a broad array of ways 

that we get the product to then sell on to human pharmacies. 

Ms. SCHAKOWSKY. OK. So, Dr. De Jong, has the American Veterinary Medical Association surveyed veterinarians to find out how 

widespread the practice of reselling to secondary distributors is, 

and if so, what was the result? 

Dr. DE JONG. We have never surveyed our members as far as 

that specifically. We do find out from our veterinarians all over the 

country that they are strongly opposed to this legislation. But as 

far as what percentage of veterinarians are actually buying and 

selling to secondary distributors, I could not tell you that. 

Ms. SCHAKOWSKY. So let’s consider a branded flea and tick overthe-counter medication that is being sold at a big box store. The 

manufacturer has made the medication, sold it to a distributor, 

who sold it to a veterinarian, who sold it to a secondary distributor, 

who sold it to an alternative retailer, who then sells it to a consumer. 

So, Mr. Smith, it is not uncommon for pet medications to be sold 

three or four times within the distribution network before they are 

ever sold to an actual pet owner, correct? 

Mr. SMITH. That is correct. The supply chain is longer. There are 

more players in it, more expense of moving things, additional profits being taken by each player. But despite that, on the example 

you mentioned, Frontline, Frontline Plus, generally speaking, those 

clubs will still, despite the additional costs, have a 20 percent lower 

price than the price offered—— 

Ms. SCHAKOWSKY. But isn’t it fair to say that everybody in the 

supply chain is hoping to make a profit from these transactions, or 

at least to recoup their administrative costs? Isn’t that right? 

Mr. SMITH. For sure. 

Ms. SCHAKOWSKY. And most of them aren’t selling the product at 

a loss, right? 

Mr. SMITH. No. 

64 

Ms. SCHAKOWSKY. So, therefore, it is possible that the price of 

these pet medications has been marked up multiple times long before they are sold to consumers, right? 

Mr. SMITH. That is correct. 

Ms. SCHAKOWSKY. So in your experience, how much does this affect the prices that pet owners end up paying out of pocket for pet 

medications? I heard you say that there still, at the end of the day, 

can be a lower price for consumers, but this does not seem to be 

an efficient supply chain, to me, in terms of best buy for the consumer. 

Mr. SMITH. Prevailing prices, and we don’t know exactly, but you 

would imagine prices could fall an additional 15 to 30 percent, 

based on the elimination of those extra steps in the supply chain. 

Ms. SCHAKOWSKY. Thank you. And I yield back. 

Mr. BURGESS. The Chair thanks the gentlelady. The gentlelady 

yields back. 

And the Chair would like to exercise the chairman’s prerogative 

and ask Mr. Schrader if he would like to go next in the questioning. And I will yield to you. Five minutes, sir. 

Mr. SCHRADER. Thank you very much, Mr. Chairman. I appreciate it. 

Mr. Smith, where are you from? 

Mr. SMITH. Utah. 

Mr. SCHRADER. Utah. Do you know where the sponsor of the bill, 

pet fairness medication, is from? 

Mr. SMITH. Yes, I do. 

Mr. SCHRADER. And where is that? 

Mr. SMITH. Utah. 

Mr. SCHRADER. OK. OK. Could you tell me a little bit about how 

you distribute your two products that you manufacture? How do 

you distribute them? And what do you manufacture? 

Mr. SMITH. We manufacture generic versions of all patent medication. We also manufacture pet treats and pet wellness products, 

including a medicinal line for hip and joint, dental products. So we 

have a wide range of things that we manufacture and sell ourselves. 

Mr. SCHRADER. You also manufacture, as I understand it, 

Carprofen and—— 

Mr. SMITH. We do. 

Mr. SCHRADER [continuing]. Your version of ivermectin/pyrantel? 

Mr. SMITH. We do. It is called TruProfen. 

Mr. SCHRADER. Very good. Good commercial. That is fine. I am 

OK with that. Good businessman. 

So it is my understanding you sell only direct to pharmacies, is 

that correct, for at least those last two medications? 

Mr. SMITH. Yes, we sell to human pharmacies. 

Mr. SCHRADER. Just to pharmacies. Isn’t that correct? 

Mr. SMITH. We have attempted to sell through the leading distributors of all the medications to veterinary clinics, but because of 

the blocking agreements, we have been told that they are unable 

to carry substantially similar generics to the brands without losing 

their ability to distribute the brands. 

Mr. SCHRADER. That certainly hasn’t been my experience. 

Dr. De Jong, do you want to comment on that, please? 

65 

Dr. DE JONG. Not necessarily. 

Mr. SCHRADER. Yes. I mean, what we have seen here is that 

there are usually a lot of opportunities. Now, the fact that you are 

prescribing and distributing only to pharmacies as opposed to direct to the patients, direct to other distributors, the secondary market that Congresswoman Schakowsky talked about, why aren’t you 

distributing direct to them? 

Mr. SMITH. We are a 6-year-old business, so our initial start was 

dealing with the big pharmacies. Our whole infrastructure is set up 

to work in large quantities sufficient to meet the needs of the country’s biggest pharmacies in the country. 

Mr. SCHRADER. So what you have done is made a business choice 

to limit the distribution of your products to make money, and I get 

that. Doesn’t this fly in the face of your argument a moment ago 

about increased competition and making sure it is available 

through all different outlets? 

Mr. SMITH. As our company has grown, our intent actually is to 

expand to more direct to veterinary opportunities. We have started 

the process of trying to figure out a way to sufficiently distribute 

broadly. 

Mr. SCHRADER. But currently the bottom line is you restrict access to your medications. 

So to be honest with you, Mr. Chairman, I think that flies in the 

face of what we are talking about. I don’t know too many businesses that are advocating for more Federal involvement, particularly in an area that is not a problem, I think it has been clearly 

stated. 

Just a last comment if I may, Mr. Chair. I am very concerned 

about what we are trying to do with this type of approach to distribution of prescription medications and other things that, frankly, 

need some sort of doctor-patient, you know, relationship on an ongoing basis. It flies in the face of a lot of what we passed yesterday 

out of our full committee. 

We are very concerned about overprescription, overuse of opioids. 

And here we are going down a track of trying to make these medications, many of which are very dangerous to our pet populations, 

more widely distributed, more subject to potential abuse. I think 

that, you know, based on what this committee has been working 

on, this sort of flies in the exact opposite direction. 

I would also argue, respectfully, that the administration has 

made it a point to be very concerned about the overuse of 

antimicrobials and other medications in livestock operations. And, 

again, you know, we are trying to pull it back from some of the 

over-the-counter use, not because we don’t want the farmers or 

ranch communities to be successful; we are worried about, you 

know, inadvertent circumstances and problems without direct veterinary supervision. 

So, Mr. Chairman, with all due respect, I think that this whole 

approach to the distribution and, frankly, the impugning of the veterinary community is exactly the opposite of where this committee 

has been going. And I hope that this is the first and last hearing 

we have on this sort of bill, with all due respect. 

I appreciate everyone’s time. Thank you. 

66 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman for his forthright testimony. 

And Dr. Schrader touched on something, Dr. De Jong, that I was 

going to ask, and I will anyway because it is now my time. And 

I yield to myself 5 minutes for questions. 

You know, a lot of parallels to the contact lens legislation from 

2003 have been drawn. And one of the concerns that has come up 

now several years later is that a contact lens prescription is written and then it is refilled. Yes, the prescribing physician has an opportunity to interject some professional opinion when it is presented for a refill to the online contact lens dispenser, but there is 

also a fairly finite period of time in which the prescriber can reply, 

and if they don’t, by default, it was approved. 

So you get into these situations where the office was queried, but 

perhaps if it was the wrong time of day, the time frame was short, 

nobody responded, so I guess it is, ‘‘OK, here is your stuff, we will 

ship it this afternoon.’’ 

Dr. Schrader brought up the question, or an observation with a 

medication like Prednisone. And Prednisone is something that you 

want to be thinking about. You just would never want to write an 

indefinite prescription for Prednisone to take forever, even though 

we recognize there are some conditions where a patient, in this 

case a pet or an animal, is going to require the medication over a 

long period of time, still there needs to be some real physician or 

veterinarian interaction and some questions asked. 

So is that something which you are in general agreement about, 

that there would be a hazard just by these indefinite refillings of 

prescriptions if we followed the same pathway as the contact lens 

legislation? 

Dr. DE JONG. Absolutely. I think it is important that we have to 

monitor our patients on a regular basis if they are being given any 

medication that has side effects, and just about every medication 

out there potentially does have side effects. If you were to give an 

indefinite prescription without monitoring the patient, you could do 

real harm to the patient. 

Mr. BURGESS. You know, and everybody else has talked about 

their pet today. I didn’t as I started my opening statement. Now 

I am regretting that I didn’t, because if my dog is watching, I am 

sure he feels left out. 

Ms. SCHAKOWSKY. Go for it. 

Mr. BURGESS. But February a year ago, our little dog Sammy, 

who at that time was 15 years old, developed signs and symptoms 

of congestive heart failure. And my wife took him to the vet and 

said, ‘‘Please, what can you do? We would miss our little friend.’’ 

And he said, ‘‘Well, I can’t do much, but I will give you some stuff, 

and we might get 1, 2, or 3 months out of it.’’ Well, doggone it, that 

little dog is still going strong today. But every month, basically, my 

wife goes back to the vet to get the medications. 

Sure, we could get them from an on—if I had had any idea he 

was going to live this long, maybe I would have. But I always 

thought it was a short-term venture, but it is also helpful, because 

there is an interaction that takes place of how’s little Sammy 

doing, and is he looking good, you know, does he need to come in 

for a recheck? And several times, in fact, that recommendation has 

67 

been made and followed and a medication adjustment has been 

made, which you wouldn’t have had the opportunity to do, while I 

guess you could have taken a picture with your iPhone and sent 

it in to the 1–800 number and gotten some advice back, but let’s 

face it, we are not to that level of sophistication. 

So I realize that is anecdotal, and the plural of anecdote is not 

data, and I get that, but at the same time, I think there is some 

value in the pet owner-veterinarian interaction that takes place, 

and I think that brings value to the transaction. I think that is 

something that I would be uncomfortable about just saying that 

it—I would discount that and that is not important. Sure, people 

should be able to make their own decisions. 

Have you ever denied a patient or an animal owner a written 

prescription if they asked you for one? 

Dr. DE JONG. Never. And I can’t think of any veterinarians or 

colleagues that I know that have. 

I can tell you that in my almost 31 years in practice next month, 

I have had plenty of clients ask, can you give me a written prescription, or can I call online and have it sent in? We get them in 

our office every day. But I have never, ever experienced a client 

say, is that an option? 

I think the knowledge base of the consumer, of the general public 

is well aware. The amount of commercials for online pharmaceuticals are on every TV station in America, and the consumers 

today are educated. With the advent of the Internet and commercial advertising, they know it is out there. 

Mr. BURGESS. I am sure there are Facebook ads. And I agree 

with Dr. Schrader. I think that is a positive thing that consumers 

do know that they have more choices. 

I just have to make one other editorial comment. Many people 

have said today that, you know, we spend a lot of money on pet 

medications, true enough, we do, and should we not have the same 

options for our pets that we do for our families? 

I would just caution people to be careful what you wish for. I 

know my dog wouldn’t want to go to an HMO. And the fact that 

my dog is taken care of by a veterinarian where it is a cash transaction, I recognize they may get a little bit better attention than 

I get when I go to my HMO. And there is nothing like a cash business. People ought to be careful what they wish for, because, after 

all, our pets are pretty darn important. 

Is there anyone on the panel that wishes a followup or additional 

or redirected question? 

Seeing no additional members wishing to ask questions for this 

panel, I do want to thank our witnesses for being here today. 

Before we conclude, I would like to submit the following documents for the record by unanimous consent: a letter from the Animal Health Institute, a letter from Consumers Union, a letter from 

Oklahoma State University. 

[The information appears at the conclusion of the hearing.] 

Mr. BURGESS. Pursuant to committee rules, I remind members 

that they have 10 business days to submit additional questions for 

the record, and ask the witnesses that they submit their responses 

within 10 business days upon receipt of those questions. 

68 

So without objection, the subcommittee is adjourned. And thank 

you all for being here. 

Dr. DE JONG. Thank you. 

[Whereupon, at 11:56 a.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

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Mr. Smith’s replies to submitted questions for the record have 

been retained in committee files and also are available at http:// 

docs.house.gov/meetings/IF/IF17/20160429/104877/HHRG-114- 

IF17-Wstate-SmithN-20160429-SD054.pdf. 

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