Competition in the 

Pet Medications Industry

Prescription Portability and Distribution Practices

FTC Sta Report

MAY 2015
Federal Trade Commission Staff Report

May 2015

Edith Ramirez Chairwoman

Julie Brill Commissioner

Maureen K. Ohlhausen Commissioner

Joshua D. Wright Commissioner

Terrell P. McSweeny Commissioner

This policy paper represents the views of the FTC staff and does not necessarily

represent the views of the Commission or any individual Commissioner.

The Commission, however, has voted to authorize the staff to issue this policy paper.
Workshop Team and Report Contributors:

Andrew I. Gavil, Former Director, Office of Policy Planning*

Tara Isa Koslov, Deputy Director, Office of Policy Planning

Stephanie A. Wilkinson, Office of Policy Planning, Principal Author

Christopher Bryan, Office of Policy Planning

Christopher M. Grengs, Office of Policy Planning

Daniel J. Gilman, Office of Policy Planning

Elizabeth A. Jex, Office of Policy Planning

Joel L. Schrag, Bureau of Economics

Kelly Signs, Bureau of Competition

Please direct inquiries concerning this report to Stephanie A. Wilkinson at 

(202) 326-2084 or swilkinson@ftc.gov.

Cover design and layout by Carrie Gelula, Division of Consumer and Business Education,

Bureau of Consumer Protection.

*At the time of the October 2012 Pet Medications Workshop and subsequent report 

drafting, Andrew I. Gavil was the Director of the Office of Policy Planning. Mr. Gavil 

departed from the Federal Trade Commission in December 2014.

This report is available online at:

www.ftc.gov/policy/reports/policy-reports/commission-and-staff-reports

The online version of this report contains live hyperlinks.
Contents

I. Introduction and Executive Summary .........................................................................................1

II. Overview of the U.S. Pet Medications Industry.......................................................................7

A. General Facts and Trends Regarding Pet Medications .................................................7

B. Retail Options Available to Consumers of Pet Medications ........................................11

C. Regulations Concerning Pet Medications: Federal, State and Industry 

Self-Regulation........................................................................................................................14

D. Overview of Key Issues Analyzed in This Report.......................................................... 17

1. Prescription Portability: Overview..................................................................................18

2. Industry Distribution Practices: Overview...................................................................20

3. Interdependence of Prescription Portability and Distribution................................21

E. Competitive Dynamics of the Industry ............................................................................22

1. Current State of Competition for Pet Medications ...................................................22

2. Effects of Non-Veterinary Retail Competition on Pet Medication 

Prices....................................................................................................................................25

3. Comparison of Animal Drug Industry to Human Drug Industry ............................28

III. Prescription Portability............................................................................................................. 33

A. Current State of Prescription Portability.......................................................................... 34

1. State Laws and Veterinary Codes of Ethics............................................................... 34

2. Veterinarian Attitudes Towards Prescription Release ............................................35

3. Consumer Awareness of Prescription Portability and Effectiveness 

of “Upon Request” Regulations and Policies..............................................................41

B. Merits of Automatic Prescription Release ...................................................................... 43

1. Areas of Agreement Between Proponents and Opponents of 

Automatic Prescription Release .................................................................................... 44

2. Arguments in Favor of Automatic Prescription Release.........................................45

3. Arguments Opposing Automatic Prescription Release ..........................................49

C. Impact of Automatic Prescription Release on Veterinary Income and 

Service Fees...........................................................................................................................65

1. Importance of Pet Medication Revenues to Veterinary Practices .......................66

2. Veterinarian Claims Regarding Increased Service Fees to Offset Loss of 

Prescription Drug Revenues .......................................................................................... 67

3. Professional and Ethical Issues Associated with Pet Medication Revenues .... 72
D. Analytical Framework for Evaluating Possible Limitations on 

Prescription Portability and Proposals to Eliminate Such 

Restrictions ............................................................................................................................. 74

IV. Distribution Practices in the Pet Medications Industry.................................................... 76

A. Exclusive Distribution and the Secondary Market........................................................ 76

1. Manufacturer Justifications for Exclusive Distribution Practices .......................... 76

2. Non-Veterinary Retailer Concerns About Exclusive Distribution ..........................81

3. The Secondary Market for Pet Medications ..............................................................85

4. Competitive Impact of Secondary Distribution .........................................................90

5. Product Pedigree and Safety Issues Associated with Secondary 

Distribution..........................................................................................................................93

B. Distribution Practices and Other Factors Affecting the Development 

of Generic Animal Drugs ..................................................................................................... 97

1. Limited Consumer Access to Generic Animal Drugs .............................................. 97

2. Exclusive Dealing Agreements May Have an Effect on Generic 

Entry....................................................................................................................................100

3. Restricted Distribution Practices May Have an Effect on Consumer 

Access to and Innovation for Generic Animal Drugs.............................................. 101

4. Prescription Portability May Have an Effect on Consumer Access to 

Generic Animal Drugs.................................................................................................... 103

5. Automatic Substitution Might Increase Consumer Access to 

Generic Animal Drugs.................................................................................................... 104

V. Concluding Remarks and Topics That Might Benefit From Additional 

Study.............................................................................................................................................. 106

A. Summary of Conclusions Regarding Prescription Portability, Industry 

Distribution Practices, and Generic Animal Drug Development............................. 106

B. Topics That Might Benefit From Additional Study.......................................................107

1. Pet Medications Pricing..................................................................................................107

2. Pet Medications Dispensing Errors .............................................................................107

3. Automatic Prescription Release Requirements ...................................................... 108

4. Secondary Distribution System ................................................................................... 109

Appendix A: Public Comments Cited in the Report................................................................... 110
1

I. Introduction and Executive Summary1

The U.S. market for companion animal medications (“pet medications”) has grown significantly 

in the last decade. This growth is reflected in increased sales of both prescription and nonprescription (also referred to as “over-the-counter” or “OTC”) medications.2 Recognizing the 

economic importance of the pet medications industry for American consumers,3 and in response 

to legislative proposals regarding prescriptions for pet medications,4 the Federal Trade 

Commission’s (“FTC” or “Commission”) staff compiled information concerning historic and 

current business practices in the sale of pet medications.5 Staff primarily focused on two related 

issues that directly affect consumers’ access to competitively priced pet medications:

• the availability of “portable” pet medication prescriptions, obtained from 

veterinarians and used to purchase prescription pet medications somewhere other than 

the prescribing veterinarian’s office; and

• manufacturer distribution policies and practices for both prescription and OTC 

pet medications.

Drawing on the Commission’s significant competition and consumer protection expertise, FTC 

staff sought to collect information related to the following three questions:

• To what extent, if any, is competition in the pet medications industry adversely 

affected by limited consumer knowledge of and access to portable prescriptions?

 

1 This report represents the views of the staff of the Federal Trade Commission. It does not necessarily represent 

the views of the Commission or of any individual Commissioner. 

2 For purposes of this report, the terms “market” and “marketplace” refer generally to the manufacture and sale of, 

and consumer demand for, all companion animal pet medications. This report does not purport to identify any 

relevant product market for antitrust law enforcement purposes.

3 As discussed in greater detail below, 65 percent of U.S. households own pets, and American consumers spent 

approximately $7.6 billion on prescription and OTC pet medications in 2013. 

4 See infra notes 67 and 72 and accompanying text.

5 Under Sections 6(a) and (f) of the FTC Act, Congress authorized the FTC “[t]o gather and compile information 

concerning, and to investigate from time to time the organization, business, conduct, practices, and management of 

any person, partnership, or corporation engaged in or whose business affects commerce,” and “[t]o make public 

from time to time such portions of the information obtained by it hereunder as are in the public interest.” 15 U.S.C. § 

46(a), (f).
2

• To what extent, if any, is competition in the pet medications industry adversely 

affected by manufacturer distribution practices that restrict non-veterinary retailers’

access to pet medications?

• To the extent that competition in the pet medications industry may be adversely 

affected by current industry practices, are there less restrictive approaches that could 

be used to enhance competition without compromising animal health and safety?

Although this report may not answer all of these questions definitively, it does offer insight into 

each of these issues and identifies areas for further research and study.

On October 2, 2012, the FTC conducted a public workshop to advance its understanding of these 

issues.

6 A variety of industry stakeholders participated in the workshop, including pet medication 

manufacturers and distributors, veterinarians, retailers, pharmacists, and consumer advocates, 

representing a broad range of perspectives on these issues. In addition, the FTC received and 

reviewed over 700 written public comments submitted in response to the workshop.

7

This report summarizes the information reviewed by FTC staff regarding these issues, makes 

recommendations on potential policy choices concerning prescription portability, and identifies 

areas that could benefit from additional study. The report is based on the workshop transcript and 

public comments received in response to the workshop, discussions between staff and various 

industry stakeholders in preparation for the workshop, and other publicly available information 

compiled by staff before and after the workshop. FTC staff intends for this report to be useful to 

a range of stakeholders – including businesses and policymakers – who are interested in 

 

6 Information about the workshop is available on the workshop’s webpage. Pet Medications Workshop, FED.

TRADE COMM’N (Oct. 2, 2012), http://www.ftc.gov/news-events/events-calendar/2012/10/pet-medicationsworkshop. A transcript of the proceedings is also available. Transcript of Pet Medications Workshop, Fed. Trade 

Comm’n (Oct. 2, 2012), http://www.ftc.gov/sites/default/files/documents/public_events/pet-medicationsworkshop/petmedtranscript-1.pdf [hereinafter Workshop Tr.]. 

7 The FTC held a public comment period from June 29 to November 1, 2012. All comments received are posted 

on the FTC website. List of Public Comments Regarding Pet Medications, FED. TRADE COMM’N, 

http://www.ftc.gov/policy/public-comments/initiative-433. The FTC received over 580 comments from veterinarians 

and veterinary hospitals; approximately 70 comments from consumers and consumer advocate organizations;

approximately 35 comments from the American Veterinary Medical Association (“AVMA”) and state veterinary 

medical associations; approximately 14 comments from retailers and pharmacies that sell pet medications, as well as 

pharmacy trade organizations; 3 comments representing the interests of branded manufacturers of pet medications; 2 

comments representing the interests of generic manufacturers of pet medications; and 2 comments from optometry 

industry stakeholders. This report often relies upon statements made by the AVMA as a proxy for views commonly 

expressed by state veterinary medical associations and individual veterinarians. Hyperlinks to all public comments 

cited in this report are included in Appendix A.

FTC staff also received public comments and other information related to prescription pet food, as well as 

medications for equine and production animals. See, e.g., Boylan Comment (#256); Rodgers Comment; Hamilton 

Comment; Pieper Comment; Bach Comment. While FTC staff did not study these other products in depth, we note 

that they raise prescription portability and distribution issues similar to those for companion animal medications.
3

economic developments in the pet medications industry, and who may be considering new 

business practices, laws, or regulations that could affect competition and consumer protection in 

that industry. This report may also better inform pet owners in their pet medications purchasing 

decisions. FTC staff was particularly interested in exploring the role of competition in the market 

for pet medications to determine whether and to what extent additional competition might help to 

reduce pet ownership costs while ensuring the availability of safe and effective pet medications.

The U.S. market for pet medications is growing, and is in a state of transition. Although many 

pet owners continue to purchase their pet medications directly from veterinarians, this traditional 

distribution model has been challenged by the entry and expansion of retail businesses (both 

online and brick-and-mortar) that sell pet medications, as well as changes in the business 

practices of pet medication manufacturers, distributors, veterinarians, and retailers. These 

changes in distribution patterns and methods of sale have had varying effects on these market 

participants who tend to have different perspectives on how consumers should obtain pet 

medications. Some key observations regarding this industry include:

• Major manufacturers of pet medications have historically distributed their products 

exclusively through veterinary practices. One reason for adopting this type of 

distribution model may have been to promote sales by providing incentives for 

veterinarians to learn about, recommend, and prescribe their products. Manufacturers 

argue that this model is necessary to distribute their products efficiently and to ensure 

the safe use of their products. Others have suggested that these exclusive distribution 

policies restrict competition and have questioned whether the purported justifications 

offered by manufacturers are valid, particularly with respect to OTC medications 

approved for safe use without direct veterinary oversight.

• Most manufacturers use independent, authorized distributors who focus on sales to 

veterinarians and veterinary practices. These distributors also argue that pet 

medications should be distributed exclusively through veterinary practices. In 

addition, some manufacturers may have agreements with distributors preventing them

from selling competing branded or generic animal drugs.

• Veterinarians traditionally have been the principal source of pet medications for 

consumers, and many appear to believe that they are best suited to dispense these 

products safely to consumers. In addition, veterinary practices typically derive a 

significant portion of their income from the sale of pet medications, and many 

veterinarians have expressed concern about the financial impact to their practices of 

losing these sales. For these reasons, many veterinarians favor a distribution model in 
4

which they are the exclusive seller for most pet medications and oppose any changes 

that would make pet medications more readily available through other distribution 

channels. Some veterinarians stated, however, that they accept these changes as 

inevitable and have already adjusted their practice models to rely less on profits from 

pet medication sales. Furthermore, some veterinarians appear to have already 

responded to price competition from other retail distribution channels by lowering 

their prices for certain pet medications.

• Retailers8 believe that they, too, can dispense pet medications to consumers safely. 

They seek to compete with veterinarians not only on price, but also on non-price 

factors such as convenience (for example, supplying maintenance prescription drugs 

for chronic conditions via home delivery or supplying OTC pet medications at 

regularly visited retail stores). Some retailers believe they could more effectively 

compete with veterinarians if portable prescriptions were more widely available to 

consumers and if it were easier for them to obtain supplies of pet medications.

Manufacturers and veterinarians have expressed concerns, however, about the ability 

of retail pharmacists to dispense pet medications safely.

• Coinciding with the increased presence of non-veterinary retailers, as well as 

increased consumer demand for pet medications, some manufacturers have departed 

from the traditional distribution model and now supply both veterinarians and nonveterinary retailers. In addition to this seemingly authorized expansion of distribution, 

a secondary distribution system (or “gray market”) for pet medications also has 

emerged, supplied by products that are diverted from the traditional veterinary 

distribution channel. This system allows non-veterinary retailers to purchase pet 

medications despite stated manufacturer restrictions on sales other than through 

veterinary practices. Some view the secondary distribution system as procompetitive,

because it allows for increased competition between veterinarians and non-veterinary 

retailers, at least to some degree. Some retailers, however, view the current secondary 

distribution system as inefficient, and contend that it leads to higher prices for pet 

medications than would otherwise prevail if primary distribution were not restricted 

to veterinarians only.

 

8 The terms “retailers,” “alternative retailers,” and “retail outlets” are used throughout this report to refer to the 

non-veterinary retail distribution channels that have emerged in the pet medications industry, including online and 

brick-and-mortar pharmacies and stores.
5

• Consumers appear to have benefitted from increased competition between veterinary 

practices and alternative retail channels, particularly for OTC flea and tick control 

products and prescription heartworm products. Pet owners now have many more 

choices for purchasing pet medications than they did a decade ago, and several 

industry stakeholders believe this has led to lower prices, greater convenience, and 

improved service.9

• However, these benefits may have been reduced by the inconsistent availability of 

portable prescriptions. Some retailers claim that many consumers are unaware of the 

option to obtain portable prescriptions from their veterinarians, which would allow 

them to purchase prescription pet medications from other retail outlets. Furthermore, 

it appears that some veterinarians may be reluctant to inform their clients that 

portable prescriptions are available and to provide portable prescriptions to their 

clients, or may otherwise try to discourage their clients from requesting portable 

prescriptions. Some stakeholders argue that if limitations on prescription portability 

and restrictive distribution practices were eliminated, the market would continue to 

develop in ways that are more responsive to consumer preferences. They suggest that 

this might, in turn, enable pet owners to further reduce their pet care costs and

provide them with additional purchasing options. Other stakeholders contend, 

however, that such changes would not reduce prices or increase convenience, but 

would instead undermine pet health and the financial stability of veterinary practices.

• Compared to the human drug industry, there are relatively few animal drugs that have 

generic substitutes. Furthermore, the generic animal drugs that do exist have not 

achieved the same degree of market penetration as human generic drugs. There 

appear to be several factors that may have deterred the development and marketing of

generic animal drugs. Some stakeholders suggest that changes in restrictive 

distribution practices, as well as legislative and regulatory measures that would allow 

for the automatic substitution of generic animal drugs, could facilitate the 

development and use of these products. Greater availability of generic animal drugs 

would likely benefit consumers.

 

9 Price may not be the only factor that consumers consider when choosing where to purchase a particular pet 

medication. Relevant factors, which may vary significantly among online pharmacies, brick-and-mortar pharmacies,

and veterinarians include search costs, shipping costs, and wait times for prescription fulfillment and delivery. When 

choosing where to make purchases, consumers may face a tradeoff between price and other factors, and different 

preferences regarding this tradeoff will likely lead different consumers to make different choices.
6

As part of the workshop, FTC staff considered whether limitations on prescription portability and 

restrictive distribution practices reduce the availability of pet medications at non-veterinary retail 

outlets, and thereby inhibit competition for the sale of pet medications. Staff concluded that 

portability likely benefits consumers, and therefore generally supports policies that would 

increase consumer awareness of the availability of portable prescriptions and veterinarian release 

of prescriptions to consumers. Consumers could then choose whether to purchase pet 

medications from their veterinarian or an alternative retail outlet. More information is necessary, 

however, to determine the extent to which consumers are aware of their ability to receive 

portable prescriptions and the extent to which veterinarians refuse to provide portable 

prescriptions to their clients. Likewise, more information is needed to determine the full 

economic impact of greater prescription portability. 

With respect to manufacturer distribution practices, FTC staff concludes that it is difficult to 

evaluate the effect of current practices on competition. More information about the impact of 

these practices is necessary to make such a determination. As with any market in flux, it is likely 

that participants in the pet medications industry – including manufacturers, distributors,

veterinarians, and retailers – will continue to reevaluate and adjust their competitive strategies in 

light of consumer demand, supply conditions, and any legislative and regulatory developments. 

Finally, FTC staff has identified some issues that might benefit from further study. First, at 

present there is a lack of empirical analyses of how prices for pet medications vary across 

different channels of distribution and how changes in the competitive environment have affected 

prices for pet medications. Second, consideration of whether safety concerns regarding retail 

pharmacists are justified may be useful. Third, analysis of the effect of any future changes in 

state legislation regarding prescription release for pet medications may shed light on the 

economic impact of such requirements, including the potential effect on consumer awareness of 

retail options and veterinary services pricing. Lastly, more information regarding the secondary 

distribution system for pet medications could allow for deeper analysis of the economic and 

product safety concerns alleged by industry stakeholders.
7

II. Overview of the U.S. Pet Medications

Industry

This section of the report provides general factual background regarding the U.S. pet 

medications industry, including an explanation of important regulatory characteristics that 

influence how it operates. This section then frames the key issues explored by FTC staff, with an 

emphasis on current competitive dynamics.

A. General Facts and Trends Regarding Pet 

Medications

Companion animal products and services constitute a major consumer expenditure in the United 

States. Approximately 65 percent of U.S. households own pets, the most common being dogs 

and cats, which equates to 79.7 million homes.10 In 2014, Americans spent approximately $58

billion on their pets, including food, supplies, veterinary care, prescription and OTC medications, 

and other pet services and products. This figure is expected to reach $60.6 billion in 2015, 

representing tremendous growth since 2001, when comparable expenditures totaled $28.5 

billion.11 Many industry stakeholders agree that this rapid expansion has been driven, in large 

part, by a shift in Americans’ attitudes towards their pets. In recent years, an increasing number 

of Americans have come to think of their pets as members of the family. Coinciding with this 

shift in attitude, many pet owners are willing to spend a significant amount of money to feed and 

care for their pets.12 Pet health care products and services comprise a significant portion of these 

 

10 See Pet Industry Market Size & Ownership Statistics, AM. PET PRODUCTS ASS’N, 

http://www.americanpetproducts.org/press_industrytrends.asp [hereinafter APPA Statistics]. The APPA estimates 

that 54.4 million households own at least one dog (approximately 77.8 million dogs) and 42.9 million households 

own at least one cat (approximately 85.8 million cats).

11 Id.

12 See GEORGE PURO, PACKAGED FACTS, PET MEDICATIONS IN THE U.S. 20 (3d ed. 2014) [hereinafter PACKAGED 

FACTS REPORT 3D] (“Recent surveys have consistently found that a large majority of U.S. pet owners consider their 

pet to be a part of the family, and this human/animal bond is one of the most important factors behind pet owners’ 

willingness to spend generously on pet health products and services.”). The Packaged Facts report examines the 

consumer market for prescription and non-prescription medications for dogs and cats, with a primary focus on flea, 

tick, and heartworm medications, but also covering a wide range of therapeutic treatments. Medications for 

production animals and horses are excluded from this analysis, as are nutritional supplements for horses and 

companion animals. Id. at 1. See also Bill Ward, Fidocare Isn’t Catching On, STAR TRIBUNE (Aug. 13, 2013), 

http://www.startribune.com/printarticle/?id=219448061 (citing the humanization of pets as children as a contributing 

factor to increased veterinary expenditures); Press Release, Animal Health Inst., Spending on Animal Healthcare 

Products on the Rise in 2010 (Nov. 16, 2011), http://www.ahi.org/archives/2011/11/2010-annual-sales/ (“America’s 

love for their companion animals also fueled growth in the animal healthcare sector.”); Steve Henderson, Spending 

on Pets:“Tails” from the Consumer Expenditure Survey, Beyond the Numbers, vol. 2, no. 16, U.S. BUREAU OF 

LABOR STATISTICS (May 2013), http://www.bls.gov/opub/btn/volume-2/pdf/spending-on-pets.pdf; AM. VETERINARY 
8

expenditures,13 and may continue to increase as pet life spans lengthen and the pet population 

ages.

14

Another important factor contributing to the growth in pet medication sales has been the 

introduction of new therapeutic medications approved by the Food and Drug Administration 

(“FDA”).

15 Many large pharmaceutical companies have increasingly focused on the pet 

medications market in the last ten years, researching and developing new pet-specific drugs that 

are often adapted from human drugs (for example, treatments for arthritis, anxiety, and 

infections).

16 Moreover, significant improvements have been made to traditional pet 

 

MED. ASS’N, U.S. PET OWNERSHIP & DEMOGRAPHICS SOURCEBOOK at 1 (2012 ed. 2012) (stating that in 2011, 

63.2% of pet owners considered their pets to be family members). 

13 The APPA estimates that 2014 sales of pet-related products and services breaks down as follows: $22.26billion 

for food; $13.75 billion for supplies and OTC medicines; $15.04 billion for veterinary care (includes routine 

veterinary care, prescription medications, and pet insurance, but does not include surgical veterinary care); $2.15

billion for live animal purchases; and $4.84 billion for other pet services (grooming, boarding, training, pet sitting, 

and miscellaneous). APPA Statistics, supra note 10.

14 DAVID LUMERIS, PACKAGED FACTS, PET MEDICATIONS IN THE U.S. 26-27 (2d ed. 2011) [hereinafter PACKAGED 

FACTS REPORT 2D] (“Pets are living longer because their owners are taking better care of them, both medically and 

nutritionally, as well as keeping them inside more often, where they are at less risk of getting hit by cars, etc. Even 

more important perhaps, longer lives mean stronger emotional bonds and thus an increased willingness among pet 

owners to do whatever it takes to keep their pets healthy and happy.”); PACKAGED FACTS REPORT 3D, supra note 12

at 25 (“The growing population of older pets means more companion animals are suffering from age-related 

conditions, including joint, coronary, cognitive, and immune-system-related, as well as diabetes and cancer. Senior- targeted pet products cover all of these needs as well as routine daily concerns, and because of their more 

specialized health focus, senior products and services are typically priced well above the market average.”); AM.

VETERINARY MED. ASS’N, supra note 12, at 2 (noting that U.S. pets are living longer, perhaps because of better 

care). See also id. at 26-28 (citing obesity as a major threat to the health of pets, leading to higher rates of chronic 

diseases, as well as higher health care costs); Press Release, Ass’n for Pet Obesity Prevention, Big Pets Get Bigger: 

Latest Survey Shows Dog and Cat Obesity Epidemic Expanding (Feb. 6, 2012), 

http://www.petobesityprevention.com/wp-content/uploads/2012/02/APOP-Survey-2011.pdf (showing a 37 percent 

increase in overweight dogs and a 90 percent increase in overweight cats from 2007 to 2012, which would 

potentially lead to an increase in chronic diseases).

15 Novartis Comment at 1 (“Today’s therapeutic products provide treatments and solutions that pets did not enjoy 

decades ago, and reflect the increasingly important role that pets play in our lives.”). See also Workshop Tr. at 42-44 

(Clinton Vranian); PACKAGED FACTS REPORT 3D, supra note 12, at 49 (stating that investors recognize the growth 

potential in animal therapeutics, and “how the devotion of pet owners can drive demand for innovative pet 

medicines.”).

16 See PACKAGED FACTS REPORT 3D, supra note 12, at 28; PACKAGED FACTS REPORT 2D, supra note 14, at 60 

(“In keeping with the broader pet market trend of humanization, whereby human product companies, brands, and 

product and service styles are crossing over, major pharmaceutical companies are adapting human drugs for pets and 

developing new ones. The practice of prescribing human medications to pets has grown significantly in the past two 

decades, with more than 600 human drugs being used ‘off-label’ to treat pets, and pharmaceutical companies are 

taking it to the next level by developing pet-specific therapies. Modes of adaptation include reformulating existing 

drugs, adding new ingredients, altering treatment modes, and offering new delivery systems and packaging forms.”); 

A Guide to Prescription Drugs for Dogs, VETINFO, http://www.vetinfo.com/prescription-drugs-dogs.html (“Recent 

advances in the development of drugs for dogs have yielded many new and effective treatments for common dog 

ailments and conditions. These pet drugs reduce pain, prevent and treat disease and improve the quality of life for 

millions of dogs each day. Many veterinary drugs are based on successful human drugs including those for arthritis, 

anxiety and infections.”); ANIMAL HEALTH INST., 2013 MARKET RESEARCH REPORT: U.S. ANIMAL HEALTH 

PRODUCTS INDUSTRY 25, 30, 34 (2013) (research and development expenditures of AHI members steadily increased 

from $689.7 million in 2010, to $712.6 million in 2011, to $746.8 million in 2012).
9

medications, such as flea, tick, and heartworm preventatives. As veterinarians and pet owners

have become more aware of these treatment options, the products have gained widespread 

acceptance and, in turn, reports indicate that overall pet health care has improved.17 The 

availability of a larger variety of pet medications has, however, increased the cost of pet 

ownership, as pet owners with the means to do so are more likely to purchase medications that 

will keep their pets as healthy as possible.18

Prescription and non-prescription pet medications comprise a significant portion of pet health 

care costs. In 2013, retail sales of prescription and non-prescription medications for dogs and 

cats was estimated at $7.6 billion.19 U.S. retail sales of companion animal pet medications are

expected to grow to $10.2 billion by 2018, reflecting a compound annual growth rate of 5

percent.

20 U.S. manufacturer sales of companion animal pet medications have been estimated at 

$3.7 billion to $4 billion annually.

21

 

17 See generally A Guide to Prescription Drugs for Dogs, supra note 16 (noting that recent developments of drugs 

for dogs has improved the quality of life for millions of dogs); Industry Statistics, ANIMAL HEALTH INST., 

http://www.ahi.org/about-animal-medicines/industry-statistics/ (“Scientists have developed numerous medicines that 

have resulted in dramatic improvements in the prevention and treatment of animal health issues such as flea and tick 

infestation, Lyme disease, rabies, diabetes, feline leukemia, and other types of cancers.”); Press Release, Animal 

Health Inst., Animal Healthcare Products Continue Sales Recovery in 2012 (Nov. 22, 2013),

http://www.ahi.org/archives/2013/11/animal-healthcare-products-continue-sales-recovery-in-2012/ (quoting AHI 

President and CEO Alexander S. Mathews, “The availability of animal medicines . . . allows our pets to live longer 

healthier lives and improves our enjoyment of them.”); Linda J. I. Horspool, Animal Health Markets and 

Opportunities: Companion Animal Landscape, in LONG ACTING ANIMAL HEALTH DRUG PRODUCTS:

FUNDAMENTALS AND APPLICATIONS 15-16 (Michael J. Rathbone & Arlene McDowell eds., 2013) (“the bond 

between companion animals and people is continuing to strengthen and with it the market for products, including 

pharmaceuticals and vaccines, which contribute significantly to the health and wellbeing of these animals.”). But see

PACKAGED FACTS REPORT 3D, supra note 12, at 204 (indicating no general trend towards increased use of pet 

medications); PACKAGED FACTS REPORT 2D, supra note 14, at 44-46 (describing risks and criticisms of increased 

development and use of pet medications).

18 See Tess Vigeland, How to Set a Price on the Life of a Beloved Pet?, N.Y. TIMES (Mar. 25, 2013), 

http://www.nytimes.com/2013/03/26/your-money/costs-and-choices-mount-for-pets-end-of-life-care.html

(describing how pet owners have more ethical and financial decisions to make when caring for their pets in light of 

technological advances in animal medical treatments over the last 10-30 years).

19 PACKAGED FACTS REPORT 3D, supra note 12, at 17. Packaged Facts retail revenues are inclusive of sales 

through veterinarians, brick-and-mortar retailers, and online retailers. Id. In 2011, Packaged Facts estimated U.S. 

retail sales of pet medications to be $6.7 billion, and this figure was broken down as follows: $2.4 billion in flea/tick 

control products (36%); $1.3 billion in heartworm preventatives (19%); $603 million in anti-infectives (9%); $335 

million in pain relievers (5%); and $2.1 billion in other categories (31%). PACKAGED FACTS REPORT 2D, supra note 

14, at 3. In 2012, other industry stakeholders estimated the consumer retail market for pet medications at $6 billion 

to $10 billion annually. Workshop Tr. at 27 (Paul D. Pion); Advocacy for Pets and Affordable Wellness (“APAW”) 

Coalition Comment at 1.

20 PACKAGED FACTS REPORT 3D, supra note 12, at 43. In 2011, Packaged Facts predicted that growth of pet 

medications sales would “come from both the pharmaceutical side of the market, as new drugs are launched, and 

from the retail side of the market, as products and ingredients crossing over from the veterinary channel broaden 

their retail following.” PACKAGED FACTS REPORT 2D, supra note 14, at 5.

21 See Animal Health Institute (“AHI”) Comment at 2 (estimating 2011 ex-manufacturer sales of companion 

animal health products to be approximately $3.8 billion); Axxiom LLC, US Animal Health Market Overview for 

Veterinary and OTC Products 2-3 (2012) [hereinafter Axxiom Market Analysis], attached to Am. Veterinary 
10

Pet owners appear to be increasingly concerned about the costs associated with pet ownership, 

particularly pet health care.22 Most pet owners pay these costs directly, as health insurance 

coverage for pets tends to be rather limited and most pet owners have not purchased such 

coverage.23 The costs associated with pet ownership can be burdensome for many households

that currently own pets, and prohibitive for some pet-free households that otherwise might 

choose to own pets.

24 These costs may result in diminished pet health, fewer pet adoptions, and 

 

Distributors Ass’n (AVDA) Comment at 16-22 (estimating U.S. companion animal health revenues at $3.7 billion, 

as measured in ex-manufacturer dollar sales for 2010). “Ex-manufacturer” sales refer to the value of goods sold by 

manufacturers, with no wholesale or retail margins added, and thus do not reflect the actual retail prices paid by 

consumers. See also PetMed Express, Inc., Annual Report (Form 10-K) 5 (May 27, 2014), 

http://www.sec.gov/Archives/edgar/data/1040130/000157104914002091/t79402_10k.htm (“The pet medication 

market that we [PetMed Express] participate in is estimated to be approximately $4.0 billion, with veterinarians 

having the majority of the market share.”).

22 See infra note 185; K&L Gates Comment at 1 (“In recent years, the importance of companion animals in the 

American household has increased dramatically. As our nation’s population begins to age, many households have 

taken in pets to provide comfort and companionship. New advances in animal drugs and veterinary treatment 

practices have allowed these pets to live longer and healthier lives. But, these advances come at a cost to pet owners. 

The cost of responsible pet ownership has skyrocketed and as a result consumers are searching for new ways to 

reduce those costs.”); Indep. Pharmacy Alliance Comment at 1 (“[T]he need to ensure consumer choice and 

competition for owner’s access to pet medications is a significant issue and a growing need for U.S. pet owners.”).

According to the American Society for the Prevention of Cruelty to Animals (“ASPCA”), new dog owners can 

expect to pay over $1,500 in pet care costs during the first year alone, and new cat owners can expect to pay over 

$1,000. Included in these figures is the estimated average annual cost of medical expenses, which is over $230 for 

dogs and $160 for cats. ASPCA Comment at 1-2. According to the 2015-2016 APPA National Pet Owners Survey, 

dog owners spent approximately $786 on routine and surgical veterinary visits, while cat owners spend 

approximately $594. APPA Statistics, supra note 10. According to the AVMA, total veterinary expenditures for all 

household pets rose about 15 percent from 2006 to 2011, to approximately $28 billion in 2011. AM. VETERINARY 

MED. ASS’N, supra note 12, at 65, 78, 91, 103, 113 (includes total veterinary expenditures for dogs, cats, birds, 

horses, and specialty/exotic animals). According to the Bureau of Labor Statistics Consumer Expenditure Survey, 

each American household spends, on average, over $500 on pets, which amounts to about 1% of total annual 

spending per household. By way of comparison, this is more than the average household spends on alcohol ($456), 

residential landline phone bills ($381), men and boys clothing ($404), or reading materials ($115). Henderson, supra

note 12. However, medical costs could be substantially higher for pets that suffer unexpected illnesses or have 

chronic conditions that require long-term therapeutic treatments. Furthermore, households with multiple pets will 

pay proportionately more than households with single pets.

23 See APAW Coalition Comment at 1-2; Indep. Pharmacy Alliance Comment at 1 (“[M]ost individuals [pay] 

directly for the costs of these medications out of their own pockets as pet healthcare coverage insurance is fairly 

limited.”); Ward, supra note 12 (despite increased spending on veterinary care, fewer than 1 percent of dogs and 

cats in the United States are insured, as compared to 26 percent in Great Britain and 48 percent in the Netherlands). 

But see PACKAGED FACTS REPORT 3D, supra note 12, at 29-30 (describing how pet health insurance is expected to 

become more prevalent in the future, potentially making pet health care more affordable, and estimating North 

American pet insurance sales at $618 million in 2013, up almost 15 percent since 2012 and projected to reach $962 

million by 2018, with U.S. sales accounting for nearly 87 percent) (“[T]he sharply rising cost of veterinary care 

remains a potent driver behind increased acceptance of pet health insurance among consumers and veterinarians 

alike, and one that will continue to spur pet insurance recommendation and adoption in the years ahead”). Even if 

pet insurance were widespread, however, the price of pet medications would still be important because that would 

affect the cost of the insurance.

24 See AM. VETERINARY MED. ASS’N, supra note 12, at 72, 85 (stating 29.3 percent of households that did not 

take their dogs to the veterinarian in 2011 and 21.5 percent of households that did not take their cats to the 

veterinarian in 2011 indicated that the primary reason was because they could not afford it); NAT’L COMM’N ON 

VETERINARY ECON. ISSUES (“NCVEI”) & BAYER HEALTH CARE LLC, ANIMAL HEALTH DIVISION, NCVEI

UPDATE/BAYER VETERINARY CARE USAGE STUDY 38, 60 (2011), 

http://www.brakkeconsulting.com/files/download/BAYERBCI_VET_CARE_USAGE_STUDY.pdf [hereinafter 

referred to as NCVEI/BAYER USAGE STUDY] (NCVEI Update is on pages 2-28, Bayer Veterinary Care Usage Study 

is on pages 29-101) (indicating that 53 percent of pet owners view veterinary costs as higher than expected, and that 
11

increased pet abandonments. Therefore, both existing and prospective pet owners have an 

interest in finding ways to cut pet care costs without significantly undermining the welfare of 

pets.25

B. Retail Options Available to Consumers of Pet 

Medications

In order to understand marketplace dynamics in the pet medications industry, it is important to 

recognize the various paths by which pet medications reach consumers.

Historically, nearly all major manufacturers of pet medications distributed their products only to 

licensed veterinarians or to authorized distributors that sold only to veterinarians. Largely as a 

result of this exclusive distribution model, consumers purchased virtually all pet medications 

from their veterinarians, typically at the end of an office visit for the examination and diagnosis 

of their pet. This is still how most consumers purchase prescription pet medications today.26

Indeed, consumer surveys indicate that veterinarians remain the most trusted source for pet 

medications.27

Local pharmacists (who are authorized to dispense both human and animal drugs)28 have always 

been part of the veterinarian-focused distribution model, but generally only to a limited extent. 

As several commenters noted, veterinarians have long relied upon local pharmacies to fill 

prescriptions for drugs that the veterinarians do not ordinarily stock, particularly human generic 

drugs dispensed for use in animals.29 In addition, veterinarians typically have maintained 

 

this results in fewer veterinary visits); AM. HUMANE ASS’N, KEEPING PETS (DOGS AND CATS) IN HOMES: A THREEPHASE RETENTION STUDY, PHASE I: REASONS FOR NOT OWNING A DOG OR CAT 7 (2012), 

http://www.americanhumane.org/aha-petsmart-retention-study-phase-1.pdf.

25 See ASPCA Comment at 1-2.

26 See Packaged Facts Report 3d, supra note 12, at 197 (“Other than flea/tick and heartworm control products, the 

top pet medications are antibiotics, pain relief products, allergy relief products, joint/arthritis products, and eye or 

ear products.”); id. at 198 (stating that as a general rule, veterinarians are the main source for these types of pet 

medications with a few exceptions: retail stores are the primary source of insulin and other diabetes medications, 

and veterinarians and retail stores are equally likely to be the source for nonprescription pain relievers and 

joint/arthritis medications); infra note 31 (noting that consumers are more likely to purchase prescription animal 

medications from veterinarians). See generally Packaged Facts Report 3d, supra note 12, at 154 (“Veterinarians 

have an inherent advantage in that they are the most trusted source of pet health information, with a built-in base of 

potential pet medications customers. For certain types of prescription medications, moreover, they are at times the 

only source.”).

27 See PACKAGED FACTS REPORT 3D, supra note 12, at 207.

28 See infra note 45 and accompanying text.

29 See infra note 58 and accompanying text (discussing veterinarians’ extra-label use of human generic drugs for 

animals). Some human generic drugs commonly dispensed for use in animals include antibiotics, corticosteroids, 

insulin, epilepsy drugs, thyroid drugs, and pain relief drugs. In recent years, manufacturers have developed branded 
12

relationships with local compounding pharmacies to ensure their ability to meet the needs of pets 

requiring specialized concentrations, sizes, or flavors of medications.30

Over the last decade, coinciding with increased consumer demand for pet medications, there has 

been a significant increase in the number of retail pharmacies and other retail outlets that 

compete with veterinarians to sell pet medications.

31 In the late 1990s, online pharmacies began 

selling pet medications, often at discounted prices.32 Many of these online pharmacies are owned 

and operated by licensed veterinarians and focus solely on filling veterinary prescriptions. More 

recently, brick-and-mortar big-box retail stores, supermarkets, and chain retail pharmacies have 

begun selling some of the largest volume pet medications, and many of these retailers advertise 

even greater discounts than online pharmacies.

33 As is discussed in more detail below, however, 

 

versions of some of these drugs that are specific to animals. Some clients still prefer the human generic versions, 

however, because they are often less expensive than the branded animal versions. Generally, it is within the 

veterinarian’s discretion to prescribe human generic drugs or veterinary label drugs for use in companion animals.

30 Foster (Drs. Foster & Smith (F&S)) Comment at 8 (“For more than fifty years veterinary clinics have relied on 

local pharmacies to fill certain prescriptions. . . . The practice of pharmacists filling pet prescriptions is normal and 

widely accepted and has been so for decades.”); Nat’l Ass’n of Chain Drug Stores (“NACDS”) Comment at 1 (“. . . 

working in partnership with veterinarians, retail pharmacists have historically dispensed human medications for use 

in pets. Chain pharmacies also provide over the counter (OTC) pet medications and other pet-related items. These 

are established business practices.”); Workshop Tr. at 30 (Paul D. Pion); K&L Gates Comment at 4; Pfizer 

Comment (#329) at 2 (“. . . veterinarians routinely rely on prescribing human drugs that, to some extent, are 

dispensed at retail pharmacies. Recent [IMS] audit data show that over 6 million prescriptions are written by 

veterinarians each year and filled by retail pharmacies.”) [In January 2013, Pfizer spun off its animal health division 

into what is now called Zoetis. Pfizer retains about 80 percent of the company.].

31 See PACKAGED FACTS REPORT 3D, supra note 12, at 154 (“The range of channels carrying pet medications has 

broadened considerably, and the shift away from the dominant veterinary channel is ongoing.”); Id. at 45 (noting 

that the distinction between the pharmaceutical/veterinary channel and the pet product/retail channel is blurring). In 

the past, non-veterinary retailers primarily sold OTC products that were supposed to be distributed exclusively 

through the veterinary channel. In recent years, non-veterinary retailers have begun selling a broad range of 

prescription products, as well. See id. at 160 (noting that PetMed Express’s sales of prescription medications 

increased from 29 percent in 2007 to 40 percent in 2013, while sales of non-prescription medications have fallen 

from 70 percent to 59 percent). However, consumers still appear more likely to obtain prescription products from 

veterinarians, even if they are willing to obtain OTC products from non-veterinary retailers. See, e.g., id. at 182-83, 

195-96 (indicating that 46 percent of dog owners purchase OTC spot-on flea and tick medications from 

veterinarians, versus 53 percent of dog owners who purchase from retail outlets; whereas 76 percent of pet owners 

purchase prescription heartworm medications from veterinarians, versus 24 percent who purchase from retail 

outlets). See also id. at 199-201 (showing channel breakdown of other common pet medications).

32 See Workshop Tr. at 30 (Paul D. Pion); Edward Woo, Analyst Interview: Increased Competition in the Pet 

Medication Space, WALL ST. TRANSCRIPT (May 30, 2011), https://www.twst.com/interview/28302 (“Before, about 

10 years ago almost all pet medication was sold by the vets. You visited your vet, and you picked up the medication 

on your way out. Vets controlled the treatment and the maintenance of the animals. And because of that they often 

controlled the dispensing of the drugs. Pet owners have a very personal relationship with their vets, so they didn’t 

necessarily want to endanger it or offend the vet by not buying his products or not buying the medication from him.

The Internet started to change all that. You started to having companies like PetMed Express enter the market. They 

looked around and realized they could sell the same medications a lot cheaper than what customers were getting 

from the vets, and that started to get people to start to buy medication away from the vets. It was a popular 

alternative because these medications can get expensive, so owners started to seek out other places to buy the same 

product.”).

33 See Workshop Tr. at 32 (Paul D. Pion); NACDS Comment at 1 (“At the request of customers, many chain 

pharmacies have begun to dispense, or are in the process of exploring options to provide prescription pet 

medications to their customers. We see this as a natural expansion of our current role with customers that are pet 
13

it is not always clear how these drugs reach non-veterinarian retailers in light of historic 

manufacturer exclusive distribution policies that remain common today.34

As a result of the emergence of alternative retail outlets, many consumers no longer view 

veterinarians as the sole source for pet medications.

35 It also appears that veterinary practices 

have lost some portion of their pet medication revenues to these emerging competitors. As one 

veterinarian stated, “[i]n the past, we’ve seen little competition for our clients’ hearts and 

pocketbooks. Consumers didn’t shop competitively for most products, and the profession 

enjoyed a prescribing and dispensing monopoly. But that’s changing . . . [as] several retail outlet 

pharmacies are hoping to take that business away by actively seeking pet owner prescriptions” 

and offering low prices on pet medications.36 According to one estimate, in 2014 veterinarians 

accounted for 58 percent of sales of pet medications, with brick-and-mortar retailers accounting 

for 28 percent and Internet/mail order retailers accounting for 13 percent.37

 

owners.”); Jeff Siegel, The New Pet Med Market, PET AGE, Sept. 2012, at 28, 32 (quoting Daryl Szyska, 

pharmaceutical consultant: “The more mainstream these products become, the more retailers are going to find ways 

to sell them. . . . And more people are going to ask their retailers why they aren’t selling them.”); Woo, supra note 

32 (“The next wave of change was with the general retailers. Now we have started to see nonprescription products 

show up in places like Costco (COST), Wal-Mart (WMT), Target (TGT) or even the grocery stores and smaller 

stores. When they first started, PetMed Express had almost a little monopoly in terms of selling the products online 

and outside the vet. It may still be the largest exclusive retailer of pet medication online, but it now has plenty of 

competition both from brick-and-mortar retailers and from other Internet or e-commerce retailers.”).

34 See infra Section IV.A.3, The Secondary Market for Pet Medications, at 74.

35 See Workshop Tr. at 32-33 (Paul D. Pion); Dennis Arp, Pharmacy Options for Veterinary Practices,

VETERINARY PRACTICE NEWS (July 26, 2012), http://www.veterinarypracticenews.com/June-2012/PharmacyOptions-For-Veterinary-Practices/ (“From discount online pharmacies to neighborhood drug and grocery stores as 

well as big-box retailers such as Walmart, Costco and Sam’s Club, competitors for pet-medication business abound, 

chipping at sales that once were solid for veterinary practices.”); Workshop Tr. at 60, 62 (Brad Dayton) (noting that 

60-65% of Ahold USA’s customers shop for pet products at its grocery stores, which is consistent with the number 

of American households that own pets, and Ahold views pet medications as a “natural offering” for its customers);

PetCareRx Comment at 1 (“Most consumers obtain prescription pet medications directly from veterinarians . . . 

Increasingly, however, consumers have turned to third-party pharmacies like PetCareRx for their pets’ prescription 

medications.”).

36 Michael Paul, The Real Future of Pharmacy: New Competition and Proposed Prescription Legislation Are 

Tough Pills to Swallow, DVM360.COM/VETERINARY ECONOMICS (June 1, 2012), 

http://veterinarybusiness.dvm360.com/real-future-veterinary-pharmacy.

37 PACKAGED FACTS REPORT 3D, supra note 12, at 154 (noting that “the days of veterinarians having a virtual 

monopoly on sales of pet medications are a thing of the past, with the days of pet medication distribution 

increasingly paralleling that of human medications.”). By comparison, in 2011, veterinarians were estimated to 

account for 63 percent of sales, brick-and-mortar retailers 28 percent, and Internet/mail order retailers 7 percent. 

PACKAGED FACTS REPORT 2D, supra note 14, at 11. See also PACKAGED FACTS REPORT 3D, supra note 12, at 19 and 

PACKAGED FACTS REPORT 2D, supra note 14, at 22 (indicating that pet care service providers, such as groomers, and 

all other distribution channels accounted for 1 percent of pet medication sales in 2014, and 2 percent in 2011).
14

C. Regulations Concerning Pet Medications: 

Federal, State and Industry Self-Regulation

Participants in the pet medications industry are subject to federal and state regulations, as well as 

various forms of industry self-regulation. Regulations may govern veterinarians, manufacturers, 

distributors, pharmacists, pharmacies, or the drugs themselves.

The American Veterinary Medical Association (“AVMA”) describes the veterinarian-clientpatient relationship (“VCPR”) as the basis for interaction among veterinarians, their clients, and 

their patients.38 The importance of the VCPR is generally recognized throughout the pet health 

industry.39 Under prevailing ethical guidelines for the practice of veterinary medicine, a 

veterinarian must establish a VCPR before prescribing or dispensing a prescription pet 

medication. A VCPR typically exists when: (1) a veterinarian assumes responsibility for making 

clinical judgments regarding the health of the animal and the need for medical treatment, and the 

client agrees to follow the advice of the veterinarian; (2) the veterinarian has sufficient 

knowledge of the animal to diagnose the medical condition of the animal, which typically means 

that the veterinarian has examined the animal; and (3) the veterinarian is readily available, or has 

arranged for emergency coverage, for follow-up evaluation in the event of adverse reactions or 

 

38 Principles of Veterinary Medical Ethics of the AVMA, AM. VETERINARY MED. ASS’N, 

https://www.avma.org/KB/Policies/Pages/Principles-of-Veterinary-Medical-Ethics-of-the-AVMA.aspx (approved 

Jan. 2015) (Principle II).

39 See, e.g., AHI Comment at 3 (“The veterinarian plays a critical role in our industry, particularly related to 

product selection for companion animals. . . . [T]he veterinarian is the primary source of information about animal 

health products for pet owners. Veterinarians have typically counseled clients regarding the use of products and 

many manufacturers have invested tremendous resources to educate veterinarians about their products. Veterinarians 

also have ongoing close interaction with their clients and have been the primary monitors of patient use of 

medication including evaluation for interactions and adverse events. They often train clients to administer products 

that are dispensed. These roles for the veterinarian are understandable as veterinarians are uniquely trained in the 

physiology and pharmacology for the various species they treat.”). See also Novartis Comment at 3 (“Prescription 

medications, by definition, must be administered with regard to their efficacy and their safety for a particular patient.

It is therefore essential to ensure that these products are prescribed by trained professionals, educated on the risks 

and benefits of these innovative technologies. The unique circumstances of a particular pet can impact the 

administration, efficacy and safety of these medications. Only a veterinary-trained professional can assess these 

variables and ensure that the client is properly counseled.”) [In January 2015, Eli Lilly acquired Novartis Animal 

Health and merged the Novartis assets with Lilly’s existing animal health business, Elanco. As part of the 

transaction, certain animal health assets in the United States relating to Novartis’s Sentinel® canine parasiticide 

franchise were divested to Virbac.]; AVDA Comment at 5 (“While the traditional human pharmacy has an important 

role to play in fulfilling certain prescriptions, particularly in those instances where the veterinarian is prescribing a 

standard human pharmaceutical product or a specialty compounding application, it is equally evident the 

veterinarian is the only medical professional sufficiently trained to judge the pharmacological agent to be used, its 

dosage, the duration of treatment and any other special considerations which may be unique to that species or even a 

given breed of pet.”).
15

failure of the treatment regimen. A VCPR also typically requires that veterinarians maintain 

medical records of their patients.40

Veterinarians are licensed, regulated, and disciplined by state government agencies and stateauthorized independent boards, such as state veterinary boards. The AVMA and individual state 

veterinary medical associations not only provide professional and ethical guidance to 

veterinarians, but also influence state regulations and policies regarding veterinarians. For 

example, several states have formally incorporated the AVMA’s ethical codes regarding the 

VCPR into statutes or regulations.41 Similarly, pharmacists are licensed, regulated, and 

disciplined by individual state boards of pharmacy, with support from the National Association 

of Boards of Pharmacy (“NABP”).

42

The distribution, sale, and dispensing of pet medications is generally governed by state 

veterinary and pharmacy laws and regulations, which vary by state,

43 but also have some general 

similarities. For example, all states require that prescription pet medications be dispensed with 

prior authorization from a prescribing veterinarian. In all 50 states, veterinarians have the 

authority to dispense pet medications for patients with whom they have established a valid 

VCPR.44 All 50 states also permit pharmacists to dispense both human and animal prescription 

drugs pursuant to a valid prescription.45 However, there are also some divergent provisions in 

state regulations, for example, concerning the provision of portable pet medication prescriptions 

by veterinarians,46 as well as the dispensing and distribution of pet medications.47

In addition to state and federal regulations regarding pharmacy operations, third-party 

accreditation organizations have promulgated voluntary pharmacy standards that are widely 

viewed as “best practices” within the industry.48 For example, the NABP established the 

Veterinary Verified Internet Pharmacy Practice Site (“Vet-VIPPS”) program in 2009 to accredit 

online pharmacies that dispense pet medications and are properly licensed under and compliant

 

40 Principles of Veterinary Medical Ethics of the AVMA, supra note 38 (Useful Terms – VCPR); Workshop Tr. at 

22 (Douglas G. Aspros).

41 Workshop Tr. at 139 (Adrian Hochstadt).

42 See generally About the NABP, NAT’L ASS’N OF BDS. OF PHARMACY, http://www.nabp.net/about.

43 See Workshop Tr. at 139 (Adrian Hochstadt); PetMed Express, Inc., supra note 21, at 6.

44 See Workshop Tr. at 24 (Douglas G. Aspros).

45 See K&L Gates Comment at 4.

46 See infra Section III.A.1, State Laws and Veterinary Codes of Ethics, at 29.

47 See infra notes 352, 354.

48 See Workshop Tr. at 199-200 (Race Foster).
16

with state and federal laws and regulations.49 Vet-VIPPS accreditation requirements incorporate 

criteria specific to veterinary pharmacies, and are designed to protect the health and well-being 

of pets.50 At present, 23 online veterinary pharmacies have received Vet-VIPPS certification.51

Both the AVMA and the FDA recognize Vet-VIPPS accreditation as a helpful factor in 

evaluating the quality of an online pharmacy selling pet medications.52 In addition, the Pharmacy 

Compounding Accreditation Board (“PCAB”) has also adopted a set of requirements specifically 

for compounding pharmacies.53 PCAB accreditation requires a pharmacy to comply with 

additional accreditation requirements, beyond the standard licensure requirements in individual 

states.54 The AVMA recognizes PCAB accreditation as a helpful tool for evaluating 

compounding pharmacies.55 Several online and brick-and-mortar retailers also claim to have 

internal processes to ensure product pedigree for medications purchased through secondary 

distribution.56

 

49 NAT’L ASS’N OF BDS. OF PHARMACY, FACT SHEET: VET-VIPPS ACCREDITATION PROGRAM (July 2013), 

http://www.nabp.net/system/redactor_assets/documents/605/Vet-VIPPS.pdf.

50 Vet-VIPPS, NAT’L ASS’N OF BDS. OF PHARMACY, http://www.nabp.net/programs/accreditation/vet-vipps/ (“The 

Vet-VIPPS program is an expansion of the Verified Internet Pharmacy Practice Sites program, which NABP 

established in 1999 after a coalition of state and federal regulatory associations, professional associations, and 

consumer advocacy groups provided their expertise to develop criteria for accredited Internet pharmacies to follow 

as part of their commitment to public health protection.”).

51 Find a Vet-VIPPS Online Pharmacy, NAT’L ASS’N OF BDS. OF PHARMACY, 

http://www.nabp.net/programs/accreditation/vet-vipps/find-a-vet-vipps-online-pharmacy.

52 See AM. VETERINARY MED. ASS’N, FREQUENTLY ASKED QUESTIONS BY PET OWNERS ABOUT PRESCRIPTIONS 

AND PHARMACIES 5 (n.d.), https://www.avma.org/KB/Resources/FAQs/Documents/Prescriptions-and-Pharmacies- Pet-Owner-FAQs.pdf [hereinafter AVMA FAQS]; Client Requests for Prescriptions, AM. VETERINARY MED. ASS’N, 

https://www.avma.org/KB/Policies/Pages/Internet-Pharmacies.aspx [hereinafter AVMA Client Requests for 

Prescriptions] (Recommendation 3); Online Pet Pharmacies: Protect Yourself and Your Pet: Be Online Pet 

Pharmacy A.W.A.R.E., U.S. FOOD & DRUG ADMIN., 

http://www.fda.gov/AnimalVeterinary/ResourcesforYou/AnimalHealthLiteracy/ucm203000.htm (last updated June 

6, 2014) (encouraging pet owners to look for Vet-VIPPS accreditation before purchasing pet medications from 

online pharmacies). See also PACKAGED FACTS REPORT 3D, supra note 12, at 157 (“With the implementation of Vet- VIPPS . . . the Internet has become a more trusted source of pet medications.”). 

53 A compounding pharmacy can often concoct drug formulas that are specially tailored to meet the unique needs 

of patients. For example, drug formulas may be compounded to create liquid versions of medications that are 

normally available only in solid pill form for patients who cannot swallow pills; to avoid a non-essential ingredient 

to which the patient is allergic; to obtain the exact doses needed of active pharmaceutical ingredients; or for optional 

reasons, such as adding flavors to a medication or otherwise altering taste or texture. For information on the PCAB 

accreditation program, see PCAB Pharmacy Compounding Accreditation, ACCREDIT’N COMM’N FOR HEALTH CARE, 

http://achc.org/go/achc-pharmacy-compounding-accreditation. 

54 See For Prescribers, PHARMACY COMPOUNDING ACCREDITATION BD., http://www.pcab.org/prescribers

(summarizing accreditation standards). See also Foster (F&S) Comment at 2. 

55 See AVMA FAQS, supra note 52, at 5.

56 Typically this is accomplished through the possession of original manufacturer invoices displaying product 

identification numbers and expiration dates that correspond with the pharmacy’s product inventory. See, e.g., Kroger 

Comment at 2; Giselle Smith, Kroger fills pet prescriptions, MSN MONEY (Jan. 26, 2012) (confirming that Kroger 

uses “very strict procedures” to ensure the pedigree of its products, even when purchased from a secondary 

wholesaler); Edie Lau, An Inside Look at Parasiticide Product Diversion, VIN NEWS SERV. (Apr. 7, 2009), 

http://news.vin.com/VINNews.aspx?articleId=12583 [hereinafter Lau, Parasiticide Diversion] (“Online retailers, for 
17

Most of the pet medications available to U.S. consumers can be classified into four areas: (1) 

parasiticides (e.g., flea/tick/heartworm); (2) vaccines; (3) anti-infectives (e.g., antibiotics); and 

(4) anti-inflammatory (e.g., non-steroidal anti-inflammatory drugs, “NSAIDs”).

57

Pharmaceutical products for companion animals are regulated by the FDA under the Federal 

Food, Drug and Cosmetic Act. These products may be labeled for OTC or prescription use. The 

FDA also allows veterinarians to prescribe extra-label use for animals of certain approved human 

drugs under the Animal Medicinal Drug Use Clarification Act of 1994.58 Extra-label drug use 

occurs when a veterinarian prescribes a medication for use in a way other than the label dictates, 

or when a veterinarian prescribes a human medication for treatment of a pet.59 Biological 

products for companion animals, including vaccines and diagnostics, are regulated by the U.S. 

Department of Agriculture under the Virus-Serum-Toxin Act. Pesticides for companion animals, 

including flea and tick topical products, are regulated by the Environmental Protection Agency

under the Federal Insecticide, Fungicide, and Rodenticide Act.60

In situations where controlled substances are prescribed for animals, veterinarians must comply 

with U.S. Drug Enforcement Administration (“DEA”) regulations and any applicable state laws.

Direct dispensing by veterinarians, as well as written, faxed, and oral prescriptions provided by 

the veterinarian, are allowed under all state regulations for Schedule III, IV, and V controlled 

substances. Schedule II controlled substances must either be dispensed directly by the 

veterinarian, or prescribed in writing and dispensed by a pharmacy.61

D. Overview of Key Issues Analyzed in This 

Report

As noted above, FTC staff’s study of the pet medications industry focused on three questions 

related to prescription portability and pet medication distribution practices. These issues are 

 

their part, bristle at the suggestion that their goods are any less authentic than those purchased in a veterinary

clinic.”).

57 See generally Pfizer Comment (#329) at 2 n.1.

58 See The Ins and Outs of Extra-Label Drug Use in Animals: A Resource for Veterinarians, U.S. FOOD AND 

DRUG ADMIN., http://www.fda.gov/animalveterinary/resourcesforyou/ucm380135.htm (last updated June 26, 2014).

59 See id. Much of modern veterinary education is focused on understanding the complexities of veterinary 

pharmacology, and how human drugs can be used to safely treat animal health problems. See Workshop Tr. at 29 

(Paul D. Pion).

60 See generally AHI Comment at 1-2.

61 See generally AVMA Comment at 2.
18

explored in detail in Sections III and IV below. However, because of the interdependence of 

prescription portability and distribution practices, an overview is provided here.

62

1. Prescription Portability: Overview

To purchase prescription pet medications from a retail pharmacy, a consumer must first obtain a 

“portable” prescription from her veterinarian. This may take the form of a written prescription

that is provided to the client, who can then present the prescription to a retail pharmacy of her 

choice. Alternatively, a veterinarian may transmit a prescription to a retail pharmacy on behalf of 

a client via telephone, facsimile, or other electronic means. A veterinarian may also verify a new 

prescription or refill request received directly from a retail pharmacy, provided a VCPR exists 

and use of the medication is deemed appropriate.

63 Consumers may purchase OTC pet 

medications, which are predominantly flea and tick control products, from veterinarians or retail 

outlets without a prescription.

Observers agree that many veterinarians provide portable prescriptions to clients upon request

and, in some instances, may affirmatively offer portable prescriptions to clients. Indeed, the 

AVMA Principles of Veterinary Medical Ethics state that its members should honor client 

requests for prescriptions whenever appropriate, although this guidance is neither binding nor 

does it require veterinarians to affirmatively offer prescriptions or inform clients of the option of 

requesting a portable prescription. Some states require that veterinarians provide prescriptions to 

clients upon request or provide notice to clients that they may request a portable prescription.

64

Yet, complaints persist that some veterinarians do not always comply with requests for 

prescriptions,

65 and the extent to which these requirements are enforced by state veterinary 

boards is unclear. Furthermore, anecdotal evidence indicates that some consumers either are not 

 

62 We are mindful of experiences in other jurisdictions that might inform policy decisions in the United States. 

Notably, in April 2003, the United Kingdom Competition Commission also published a report after investigating 

similar issues for the sale of prescription-only veterinary medicines. U.K. COMPETITION COMMISSION, VETERINARY

MEDICINES: A REPORT ON THE SUPPLY WITHIN THE UNITED KINGDOM OF PRESCRIPTION-ONLY VETERINARY

MEDICINES (2003), http://webarchive.nationalarchives.gov.uk/+/http:/www.competition- commission.org.uk/rep_pub/reports/2003/478vetmeds.htm#full. This report concluded that effective competition in 

the retail supply of prescription-only veterinary medicines depends on a number of factors, including the ability of 

alternative sources of supply to offer effective competition to veterinarians who diagnose animals and recommend 

prescriptions; the availability of prescriptions from veterinarians; the ability of pharmacies to supply medications on 

terms that do not prevent, restrict or distort competition with veterinarians; and the provision of transparent 

information to enable animal owners to understand and compare prices.

63 See infra note 246.

64 See infra Section III.A.1, State Laws and Veterinary Codes of Ethics, at 29.

65 See infra Section III.A.2, Veterinarian Attitudes Towards Prescription Release, at 30.
19

aware that they can receive a portable prescription upon request from their veterinarian, or may 

be uncomfortable asking for one.

66

As discussed at the FTC workshop, to address these concerns, federal legislation was introduced 

in 2011 to require veterinarians in all states to provide portable prescriptions for every 

medication they prescribe, regardless of whether the client requests it. H.R. 1406, titled the 

Fairness to Pet Owners Act,67 was modeled after the Fairness to Contact Lens Consumers Act,68

(“FCLCA”) and was intended to enable pet owners to shop for the best prices for pet 

medications.69 Comparisons have been drawn between the pet medications industry and the 

contact lens industry, despite some clear differences,70 as both involve medical professionals

who prescribe and dispense products, and both are affected by the issues of prescription 

portability and exclusive distribution.

71 Although H.R. 1406 was not enacted, it sparked a debate 

among industry stakeholders regarding the need for automatic prescription release and whether it 

should be mandated by the federal government. Similar bills were reintroduced in 2014 and 2015 

in both the House and Senate.72

 

66 See infra Section III.A.3, Consumer Awareness of Prescription Portability, at 35.

67 Fairness to Pet Owners Act of 2011, H.R. 1406, 112th Cong. (2011), available at

http://www.gpo.gov/fdsys/pkg/BILLS-112hr1406ih/pdf/BILLS-112hr1406ih.pdf. This bill would require 

veterinarians to provide prescriptions (in written, oral, or electronic form) to pet owners for all prescribed 

medications, regardless of whether requested. Veterinarians also would have to provide a written disclosure to pet 

owners that they may fill the prescription through the veterinary practice or through another pharmacy as determined 

by the pet owner. Veterinarians would not be allowed to charge a separate fee or require pet owners to sign a waiver 

of liability in exchange for providing a prescription. Furthermore, veterinarians would be required to verify 

prescriptions that are requested by any person designated to act on behalf of a pet owner, consistent with applicable 

state laws. As introduced, the bill would have made the Federal Trade Commission responsible for promulgating 

implementation rules.

68 Fairness to Contact Lens Consumers Act, H.R. 3140, 108th Cong. (2003), available at

http://www.gpo.gov/fdsys/pkg/BILLS-108hr3140enr/pdf/BILLS-108hr3140enr.pdf (enacted Dec. 6, 2003). This act 

requires contact lens prescribers to provide patients with a copy of their contact lens prescriptions, regardless of 

whether requested. Contact lens prescribers are not allowed to charge a separate fee or require patients to sign a 

waiver of liability in exchange for providing a prescription. Furthermore, contact lens prescribers are required to 

verify contact lens prescriptions in accordance with the Contact Lens Rule, issued by the Federal Trade Commission 

in 2004.

69 See Daniel R. Verdon, AVMA Works to Quash Legislation Targeting Veterinary Prescription Sales for Dogs 

and Cats, DVM360.COM/DVM360 MAG. (May 10, 2011), 

http://veterinarynews.dvm360.com/dvm/Breaking+News/AVMA-works-to-quash-Rxbill/ArticleStandard/Article/detail/721946 (citing Representative Matheson’s intent in drafting H.R. 1406).

70 See infra note 190 and accompanying text.

71 See generally Statement of Robert Hubbard, Assistant Attorney Gen., Antitrust Bureau, N.Y. Attorney 

General's Office, for FTC Workshop on Pet Medications at 6-7 (Oct 2, 2012), 

http://www.ftc.gov/sites/default/files/documents/public_events/pet-medications-workshop/rhubbardstmt.pdf

[hereinafter Hubbard Statement]; Zeidner (1-800 CONTACTS) Comment at 1-2; PACKAGED FACTS REPORT 3D, 

supra note 12, at 50-51 (quoting Chairman and CEO of Perrigo, Q3 2013 Perrigo Company Earnings Conference 

Call, May 7, 2013, expecting the pet medications industry to evolve in a similar manner as the contact lens industry).

72 Fairness to Pet Owners Act of 2014, H.R. 4023, 113th Cong. (2014), available at

http://www.gpo.gov/fdsys/pkg/BILLS-113hr4023ih/pdf/BILLS-113hr4023ih.pdf; Fairness to Pet Owners Act of 
20

2. Industry Distribution Practices: Overview

Nearly all major manufacturers of pet medications appear to maintain formal policies that restrict 

sales of pet medications to veterinarians or veterinary distributors.

73 Some stakeholders report 

that despite these stated policies, large retail pharmacies and stores have been able to purchase 

pet medications directly from the manufacturers, although no manufacturers have confirmed that 

they engage in this practice.74 While some distribution through non-veterinary retailers occurs, 

retail pharmacies and other retail stores expressed the view that it remains difficult to purchase 

pet medications directly from manufacturers or their authorized distributors. Often, these nonveterinarian retailers must rely on secondary suppliers of pet medications, who typically 

purchase excess product from veterinarians.75 The existence of this secondary distribution 

system likely results in lower prices than would otherwise prevail if exclusive distribution were 

being strictly enforced. As discussed in greater detail below, this secondary distribution system 

nevertheless has been described as inefficient, and may result in higher prices than would prevail 

absent any constraints on sales by manufacturers to non-veterinary retailers.

76 On the other hand, 

some commentators have suggested that secondary distribution may raise safety concerns

involving the pedigree of products distributed outside of the authorized veterinary channel,

77

although no recent evidence of counterfeit or otherwise unsafe products sold through secondary 

distribution has been presented to FTC staff.

In addition, it appears that some manufacturers and distributors enter into exclusive dealing 

agreements, whereby a distributor is contractually prohibited from selling either branded (also 

referred to as “pioneer”) or generic pet medication products that compete with the 

 

2014, S. 2756, 113th Cong. (2014), available at http://www.gpo.gov/fdsys/pkg/BILLS-113s2756is/pdf/BILLS113s2756is.pdf. These bills are similar to H.R. 1406, except that they would not have required veterinarians to 

provide pet owners with a written disclosure that pet owners may fill the prescription through the veterinary practice 

or through another pharmacy as determined by the pet owner. They also stated that veterinary prescriptions subject 

to automatic prescription release would not have included animal drugs administered by veterinarians while 

providing acute care. On May 6, 2015, legislation identical to S. 2756 was reintroduced in the Senate. Fairness to 

Pet Owners Act of 2015, S. 1200, 114th Cong. (2015).

73 See infra note 297. For further discussion of the potential benefits and harms of exclusive distribution practices, 

see infra Section IV.A.1, Manufacturer Justifications for Exclusive Distribution Practices, at 66, and Section IV.A.2, 

Non-Veterinary Retailer Concerns About Exclusive Distribution, at 70.

74 See infra notes 345, 348, and 338 and accompanying text.

75 These wholesale distribution practices may be limited by applicable state laws, which govern the distribution of 

pet medications. See infra note 354.

76 See infra Section IV.A.4, Competitive Impact of Secondary Distribution, at 78.

77 See infra Section IV.A.5, Product Pedigree and Safety Issues Associated with Secondary Distribution, at 81.
21

manufacturer’s products. Some industry stakeholders point to these types of agreements as a 

primary reason for the limited availability of generic pet medications.

78

3. Interdependence of Prescription Portability and Distribution

Prescription portability and product distribution are related. The availability of portable 

prescriptions to consumers from their veterinarians is unlikely to have any significant effect on 

competition for pet medication purchases if non-veterinary retailers lack adequate access to pet 

medications to fill the prescriptions. Likewise, increasing distribution of pet medications to nonveterinary retail outlets is unlikely to affect competition if consumers are unable or unlikely to 

obtain prescriptions from their veterinarians.

79 Any reduction of supply through restrictive

distribution may also affect consumer demand for those alternative sources of supply, especially 

if consumers perceive that non-veterinarian retail sources are unreliable or slow to fill orders. In 

addition, several stakeholders suggested that a financial conflict of interest arises when the

exclusive legal right to prescribe is combined with de facto exclusive authorization to dispense,

80

which could cause veterinarians to be reluctant to provide portable prescriptions to consumers.

Some stakeholders downplay the likely impact of limits on prescription portability and exclusive 

distribution. They claim that veterinarians already are legally and/or ethically bound to provide 

prescriptions whenever clients request them, and that pharmacies and retailers “can and do 

advertise their ability to provide products and fill prescriptions, and products are readily 

available” to non-veterinary retailers.81 Thus, they argue, “current distribution practices do not 

limit or impact prescription portability” and consumers already have many viable choices for 

purchasing pet medications.82

 

78 See infra Section IV.B.2, Exclusive Dealing Agreements May Have an Effect on Generic Entry, at 86.

79 See Workshop Tr. at 52 (John Powers) (“[T]rue prescription portability cannot exist within the context of 

restricted distribution”); Powers (F&S) Comment at 3 (“[I]t does no good to encourage prescription portability 

without ensuring product supply.”); Workshop Tr. at 146 (Race Foster) (“In my definition, portability ends with 

filling the prescription, not just obtaining it.”). See also Zeidner (1-800 CONTACTS) Comment at 1-2 (suggesting 

analogous interdependence of prescription portability and distribution practices within the contact lens industry).

80 See Workshop Tr. at 232 (Robert Hubbard) (stating that in markets where the prescriber is the only entity that 

is allowed to fill a prescription, power is conferred to the prescriber that does not usually exist in competitive 

markets, whereby they have the ability to restrict consumer access to competitive alternatives and protect their 

revenues); id. at 233 (stating that consumer access to competitive alternatives is restricted even further when 

manufacturers have the ability to limit access to products). See also id. at 114-15, 150 (Nate Smith); N. Smith 

Comment at 8.

81 AHI Comment at 4.

82 Id.
22

E. Competitive Dynamics of the Industry

1. Current State of Competition for Pet Medications

During the workshop, in written comments, and in other information gathered by FTC staff, 

industry stakeholders offered differing views of the current state of competition in the pet 

medications industry. Some believe the market has become increasingly competitive, and that 

market forces will continue to correct any remaining market inefficiencies. Others believe that 

competition has long been and remains constrained, leading to higher prices and a market that is 

less responsive to consumers.

At least to some extent, the current state of competition reflects historic distribution practices 

that developed before the emergence of new retail outlets for pet medications. According to one 

veterinarian, “current dispensing and pharmacy models were developed long before most of us 

even considered veterinary medicine as a career. We were a closed market dealing with a 

relatively captive audience, and our markups were pretty much what we thought the market 

would bear.”83 Another stakeholder asserted, “The veterinary profession has enjoyed nearly total 

isolation from competition on drug sales for decades. The pioneer drug manufacturers have 

facilitated that isolation to their pecuniary benefit. Competition is seldom welcomed into such an 

environment.”84

Retailers and consumer advocates argue that although the secondary distribution system for pet 

medications has provided some degree of competition, it remains constrained in ways that 

undermine the competitive process.85 First, non-veterinary retailers suggest that unreliable 

distribution and other inefficiencies of secondary distribution increase their costs, resulting in 

prices for consumers that are at least five to ten percent higher than they would be if pet 

medications were available to all sellers through the primary distribution system.86 Second, they 

 

83 Michael Paul, Leading Off: Find a Winning Strategy in the Big Box Battle, DVM360.COM/VETERINARY 

MEDICINE (Mar. 1, 2012), http://veterinarymedicine.dvm360.com/leading-find-winning-strategy-big-box-battle. 

84 K&L Gates Comment at 12. See also Hubbard Statement, supra note 71, at 6 (“Veterinarians have the power to 

withhold or otherwise limit access to the prescriptions necessary for consumers to consider and to use competitive 

alternatives for pet medications. Moreover, manufacturers of products sold in those markets appear to restrict 

distribution of their products to those who can prescribe their products, emphasizing profits for veterinarians, rather 

than value for consumers.”). 

85 Workshop Tr. at 88-89 (John Powers). See also id. at 192 (Nate Smith).

86 Id. at 190-91 (Race Foster); Foster (F&S) Comment at 9 (“Restricted distribution limits choices and causes 

consumers to pay more than necessary for prescription and OTC products. Pets may suffer if medications are not 

readily and economically available. Restricted distribution, in my view, affects both the availability and the cost of 

prescription and OTC medications to consumers and their pets.”); Valley Vet Supply Comment at 1 (“In our 

opinion, the current veterinary drug distribution system harms animal owners. It limits their choices and costs them 

more than necessary for veterinary drugs.”).
23

claim that lack of adequate and reliable inventory also harms the ability of non-veterinarian 

retailers to fill the orders they receive from customers. Third, retailers maintain that their 

inability to satisfy customer demand reliably discourages customers from seeking pet 

medications in the non-veterinary channel in the first place.87 They argue that, collectively, these 

factors inhibit the effectiveness and growth of competition from non-veterinary retailers, 

potentially resulting in higher prices and lower levels of service for customers than would 

otherwise exist.

Those who argue that the pet medications industry is less competitive than it could be also point 

to the limited availability of generic animal drugs. It is well-established in the human drug 

market that consumers can secure significant cost savings when they are able to substitute 

generic drugs for branded drugs.

88 For the most part, purchasers of pet medications have not 

reaped similar benefits from lower-priced generic animal drugs – either because there have been 

relatively few generic pet medication entrants,89 or because available generic alternatives are not 

typically distributed by veterinarians and are not easily accessible otherwise. Greater competition 

from generic pet medications would likely result in consumer savings90 and increased product

innovation, as is typically seen in human pharmaceutical markets when generic drugs are 

expected to take significant market share from pioneer drugs.

91

A number of manufacturers, distributors, and veterinarians counter that the pet medications 

market is highly competitive, pointing to consumers’ ability to purchase both prescription and 

OTC pet medications from online and brick-and-mortar retailers, veterinary clinics, and other 

 

87 PetCareRx Comment at 3; Kroger Comment at 2.

88 FED. TRADE COMM’N, GENERIC DRUG ENTRY PRIOR TO PATENT EXPIRATION 9 (2002), 

http://www.ftc.gov/sites/default/files/documents/reports/generic-drug-entry-prior-patent-expiration-ftc- study/genericdrugstudy_0.pdf; See David Reiffen & Michael R. Ward, Generic Drug Industry Dynamics, 87 REV.

ECON. & STAT. 37 (2005), http://www.mitpressjournals.org/doi/pdf/10.1162/0034653053327694.

89 See About Animal Generics: Facts & Figures, GENERIC ANIMAL DRUG ALLIANCE, 

http://www.gadaonline.org/animalgenerics/facts.cfm. According to statistics from the Generic Animal Drug Alliance 

(“GADA”), 86 percent of FDA-approved animal drugs do not have a generic version. Furthermore, of the top 20 

human drugs that lost patent protection between 2005 and 2007, 100 percent went generic, versus only 20 percent of 

the top 20 veterinary companion animal drugs during the same time frame. See also PACKAGED FACTS REPORT 3D, 

supra note 12, at 37 (“In large part because many companion animal specific medications are new, generics have 

played a relatively minor role in the market thus far compared with their ubiquitous position in human 

pharmaceuticals, but this is starting to change.”); id. at 58 (“Currently, with so few companies fielding pet generics, 

the cost savings are around 20 percent compared with the 80 percent discounts often seen on generic prescription 

drugs for humans.”). Perhaps the most notable generic entry in the pet medications industry occurred when Merial’s 

patent for fipronil (the active ingredient in Frontline) expired in 2010. Id. at 55. 

90 See infra Section IV.B.1, Limited Consumer Access to Generic Animal Drugs, at 84.

91 See infra note 412 and accompanying text.
24

sources.

92 Some of these industry participants suggest that large retailers would not offer these 

products if they did not have a reliable supply chain.93 Others also argue that current distribution 

practices do not impair innovation in the pet medications market and that manufacturers 

“continu[e] to invest in developing new and improved products.”94 Some of these stakeholders 

also frequently argue that market forces – including consumer demand for lower prices and 

greater convenience, and increased price competition between veterinarians and other retailers –

already have benefitted consumers and improved access to competitively priced pet medications, 

rendering legislation or other types of government intervention unnecessary.95

 

92 See Workshop Tr. at 75-76 (Mark Cushing) (“It’s simply not correct to say that that marketplace is constricted 

and somehow works against the consumer.”); Axxion Market Analysis, supra note 21, at 7 (“US Consumers in the 

United States have a broad array of options from which to legally purchase regulated pharmaceuticals, vaccines and 

non-regulated products typically used to insure the general health and welfare [sic] pets and food producing animals.

The number of options and competition for consumer spending has accelerated with the expansion of on-line 

retailing operations serving the animal health market over the past decade.”); Workshop Tr. at 188 (Douglas G. 

Aspros) (“[T]he market is functioning quite well today. It's diverse, there's new products coming on to the market all 

the time, consumers have choices like never before. The Internet and transparency and pricing has probably been a 

part of that . . . . [I]t's a very, very vigorous and well functioning marketplace.”); AHI Comment at 3 (“The very 

large number of sales outlets creates an environment of rigorous competition and choice.”); Maddigan (Willamette 

Valley Animal Hosp.) Comment (“[T]here are many more competitors in the marketplace the free market is working 

. . . .”).

93 See Workshop Tr. at 80-81 (Paul D. Pion).

94 AHI Comment at 3. See also Industry Statistics, supra note 17 (“Each year, AHI member companies spend 10-

12% of their sales investing in new innovations in animal health.”) and Regulation, ANIMAL HEALTH INST., 

http://www.ahi.org/about-animal-medicines/regulation/ (estimating that regulatory approval for new animal drugs 

takes an average of 5-7 years).

95 Lau, Parasiticide Diversion, supra note 56 (quoting Bruce Rosenbloom, CFO of PetMed Express, “At the end 

of the day, the consumers are going to call the shots. . . . The consumer demand is overwhelming. I don’t think the 

veterinarian or the manufacturer is going to get in the way.”); Oregon VMA Comment (#422) at 1-2 (“We also 

acknowledge that pet owners should have the ability to obtain a veterinary prescription from his or her veterinarian 

to be filled at a retail pharmacy of the client’s choosing. In fact, we believe this is already occurring across the 

country, with market forces ensuring that consumers have access to such medications fairly and without the need of 

federal legislation. . . . We also are confident that the current marketplace is a fair barometer that ensures the 

consumer reasonable choice and access to veterinary prescriptions and keeping their pets healthy and safe.”); 

Workshop Tr. at 244 (Link Welborn) (“The veterinary profession is currently experiencing numerous economic 

challenges. While these challenges intensify during the recession, they certainly predate the downturn in the U.S. 

economy and will persist even as the overall economy improves. Included among these are the progressive margin 

compression on veterinary medications that spans more than a decade. While this has reduced the profitability of 

veterinary practices, it has been beneficial to consumers in that it has reduced the cost of pet medications and it is an 

example of successful function of the free market. Today, the mark-up for the most commonly prescribed parasite 

control medication in my practice is about half of what it was ten years ago, even though there is no generic 

competition for that medication.”); id. at 245-46 (“Clients commonly request prescriptions for the parasite control 

medications with the expectation that the cost of these medications will be less from another source. Once again, 

free market forces have been very effective in the pricing of these medications within most veterinary practices as 

set based on the prices available through online outlets.”); Soc’y of Veterinary Hosp. Pharmacists (“SVHP”)

Comment at 2 (“SVHP also believes market forces currently in place or evolving will accomplish the inevitable and 

intended goals of the proposed legislation without the need for its enactment.”); Maine VMA Comment (#281)

(“The free market is already providing pet owners with competitive pricing of veterinary medicines. . . . Consumers 

can sort this out, just as the free market is sorting out consumer choices between online veterinary pharmacies and 

medications purchased through their family veterinarian.”). See also PACKAGED FACTS REPORT 3D, supra note 12, at 

32 (“[F]or pet owners as for U.S. consumers in general, economizing or spending optimizing often involves strategic 

retail behavior including buying across channels and brands, [and] shopping multiple channels for bargains . . .”); id.
25

2. Effects of Non-Veterinary Retail Competition on Pet 

Medication Prices

Despite an extensive record compiled by FTC staff, publicly available data do not permit an 

empirical analysis of the differences, if any, between prices offered by non-veterinary retailers 

and those offered by veterinarians.

96 Nevertheless, numerous retailer stakeholders claim that the 

availability of pet medications from non-veterinary retail outlets offers the potential for 

consumer cost savings, greater convenience, and improved service.97 Similarly, industry analysts 

attribute the growth of the retail channel to lower prices and greater convenience when 

purchasing products from non-veterinary retail outlets.

98 Several consumer comments indicated

that cost savings are possible when purchasing pet medications from retail outlets rather than 

veterinarians.99 Various pet industry and consumer publications specifically suggest that pet 

owners consider purchasing pet medications from retail outlets in order to save money.100

 

at 108-110 (suggesting that some of the pet medications manufacturers that typically marketed their products only to 

veterinarians have now begun marketing directly to consumers to help drive demand).

96 See, e.g., AVMA Comment at 6 (“We do not have data regarding prices charged to consumers by veterinary 

clinics for comparison to those charged by retailers and are not certain whether quantifying and comparing such data 

would be feasible. Veterinary business models range from small, single doctor practices to large, multidoctor, 

multifacility practices as well as from practices that treat only one species to practices that treat multiple species.”).

97 See, e.g., PetMed Express, Inc., supra note 21, at 3 (emphasizing the company’s ability to “rapidly deliver to 

customers the same medications offered by veterinarians, but at reduced prices.”); PetCareRx Comment at 1 (“While 

veterinarians and affiliated institutional pharmacies charge substantial mark-ups for prescription medications, thirdparty pharmacies generally offer more competitive pricing. In some cases, PetCareRx charges customers as much as 

50 percent less than a veterinarian may charge for the same medication.”); NACDS Comment at 2 (“Retail 

pharmacy is a highly competitive industry, operating on razor thin profit margins which average two percent.

Consumers benefit from this competition through convenient access, lower prices, and outstanding customer 

service.”); Kroger Comment at 2 (stating that retail drug stores are extremely competitive and customers frequently 

voice their preference to purchase pet medications from retail drug stores). See also Workshop Tr. at 183 (Nate 

Smith) (noting that prices online are generally lower than in a veterinary clinic); N. Smith Comment at 1 (“The 

bottom line is that American consumers stand to save hundreds of millions of dollars annually – if steps are taken to 

inject competition and choice into the marketplace for pet medications and specialty products.”).

98 See., e.g., LHK PARTNERS INC., PET MEDICATION PRICING: WHOLESALE, ONLINE, VETERINARIAN (2009)

(concluding that average online prices for pet medications for cats and dogs are less expensive than average 

veterinarian prices, based on pricing data collected in 2009 from 15 websites offering prescription pet medications 

and telephone surveys of 1,728 veterinarian offices); PACKAGED FACTS REPORT 2D, supra note 14, at 151 (“. . . 

veterinary clients opt to purchase pet medications online for two reasons: price and convenience . . . The lure of 

lower prices is not restricted to the Internet. Price-based value is one of the key factors behind the projected bright 

future of pet medications . . . in brick-and-mortar retailers.”); id. at 42-43 (suggesting that many pet medications are 

available at retail pharmacies as significant cost savings when compared to veterinary offices, especially if the 

pharmacy offers a generic discount drug plan); PACKAGED FACTS REPORT 3D, supra note 12, at 38 (“More broadly 

speaking, the retail turf of pet medications continues to expand into heavily price-focused channels. . . . Already, 

Internet sales of pet medications have cut deeply into veterinary channel sales, and it’s no coincidence that Internet 

sellers charge significantly less for pet medications than veterinarians do. Now, additional price-focused competition 

is under way, with the top two mass-merchandiser chains – Walmart and Target – tapping more heavily into pet 

medications.”); id. at 160, 165-68 (citing examples of retailers that offer pet medications at significantly lower prices 

than veterinarians).

99 See, e.g., Carrier Comment; Higgins Comment; Busansky Comment; Kaplan Comment.

100 See Siegel, supra note 33, at 30-32 (stating that Walmart, Target, Walgreens, and Kroger are all offering 

discount pet medications as a way to lure pet owners into their stores, and that regional grocers and pharmacies also 

see an opportunity in the pet medications market); Smith, supra note 56 (describing how Kroger offers hundreds of 
26

Volume-related purchasing efficiencies may permit large retail pharmacies to receive more 

advantageous pricing than small veterinary clinics.101 Such lower costs may, in turn, allow large 

non-veterinary retailers to offer lower prices to consumers.102 Administrative efficiencies also 

may contribute to the ability of large non-veterinary retailers to offer lower prices than small 

veterinary clinics.103

Consumer savings do not, however, appear to be limited to purchases through non-veterinary 

retail channels. As pet medications have become more widely available through alternative retail 

outlets, the veterinary profession has faced increased competition, which may have driven down 

prices even for consumers who continue to purchase their pet medications from veterinarians.

104

 

prescription pet medications at all of its pharmacy locations throughout 31 states, and that many of these products 

are included in Kroger’s generic drug program, through which typical dosages are available for $4 for a 30-day 

supply or $10 for a 90-day supply); Karla Bowsher, How to Get $4 Generic Pet Meds, MONEYTALKS NEWS, (Mar. 

1, 2012), http://www.moneytalksnews.com/2012/03/01/how-to-get-4-generic-pet-meds/ (stating that Target and 

Kroger offer $4 discount pet medications); Don't Automatically Get Pet Medicines From the Vet, CONSUMER 

REPORTS (Aug. 2011), http://www.consumerreports.org/cro/magazine-archive/2011/august/money/pet-costs/dont- automatically-get-pet-medicines-from-the-vet/index.htm (suggesting that consumers can save money on pet care 

costs by shopping for less expensive pet medications at chain drugstores, supermarket pharmacies, big-box retailers, 

or online veterinary pharmacies). “For one-time prescriptions, you might be willing to pay extra for the convenience 

of getting the drugs at your vet’s office. You might not have a choice in an emergency. But especially for 

medications that you’ll be buying repeatedly for a pet’s chronic conditions, you should consider going elsewhere.

Ask your vet to quote a price and give you a written prescription, then call around.” Id. at 33.

101 See PACKAGED FACTS REPORT 3D, supra note 12, at 155 (stating that individual veterinarians are forced to 

compete for sales of OTC and prescription pet medications with large online retailers that have substantial buying 

clout). Some veterinarians have complained that many retail outlets sell pet medications at prices that are lower than 

the price at which most small veterinary clinics could purchase these products. It has been suggested that veterinary 

clinics could purchase pet medications through veterinary group purchasing organizations (“GPOs”) or other buying 

cooperatives, in an effort to obtain more advantageous volume-based pricing. Indeed, it appears this is may already 

be happening. See Edie Lau, Group Purchasing Activity on Upswing in Veterinary Medicine, VIN NEWS SERV.

(Feb. 28, 2013), http://news.vin.com/VINNews.aspx?articleId=26218.

102 See AVMA FAQS, supra note 52, at 4.

103 See K&L Gates Comment at 7 (“The process of veterinarian dispensing, however, suffers from numerous 

inefficiencies. Pharmacies are set up to dispense drugs in an efficient, cost-effective and compliant manner. 

Pharmacies are generally able to stock more products than veterinarian offices and provide better pricing due to the 

larger volume of drugs that they dispense.”).

104 See Lowell Ackerman, Dir., Veterinary Bus. Solutions, Pfizer Animal Health, Remarks at the American 

Animal Hospital Association Annual Conference: Barbarians at the Gate: Managing the Veterinary Pharmacy in a 

Time of Extreme Outside Competition (Mar. 16, 2012) (stating that there is increased pressure on veterinary pricing 

strategies, and that veterinarians must respond accordingly if they want to remain competitively viable); Siegel, 

supra note 33, at 32 (stating that Ron Brakke, a leading pharmaceutical consultant, “maintains that price matching is 

veterinarians’ most effective method for dealing with big-box encroachment, and more of them ought to be doing 

it.”); WENDY S. MYERS, FIGHT FOR YOUR PHARMACY IN A COMPETITIVE MARKET (n.d.), 

http://mycomm.fatcow.com/library/fight_for_your_pharmacy_in_a_competitive_market.pdf (providing advice to 

veterinarians about how to better compete against retail pharmacies); AM. ANIMAL HOSP. ASS’N, THE VETERINARY 

FEE REFERENCE 245 (8th ed. 2013) (describing the market pressure that veterinarians face from online and retail 

pharmacies offering pet medications at reduced prices, and encouraging veterinarians to monitor competing 

retailers’ prices so that they can respond accordingly; “Many practices have lowered their prices to be reasonably 

competitive with other outlets; it is difficult to charge a great deal more for these products when clients are aware of 

the prices elsewhere.”); Edie Lau, Target Tests Market for Pet Medications, VIN NEWS SERV. (Dec. 22, 2010), 

http://news.vin.com/VINNews.aspx?articleId=17307 [hereinafter Lau, Target Tests Market] (“Certainly the 

expanding availability of pet medications beyond the clinic is putting pressure on veterinary hospital owners.”); 

Maddigan (Willamette Valley Animal Hosp.) Comment.
27

Some industry stakeholders argue that many veterinarians already have responded to the 

competitive pressure by monitoring competing retailers and, for example, offering comparable 

prices to online pharmacies.105 Indeed, during the course of FTC staff’s interviews with 

veterinarians, many represented that their pricing for pet medications is very competitive with

non-veterinary retailer pricing. Several stakeholders indicate that, despite the claims of some 

retailers, the prices of pet medications currently do not vary between veterinary clinics and 

alternative retail outlets.

106

Thus, it appears that competition from non-veterinary retail outlets may already have resulted in 

lower prices charged by veterinarians, at least for some consumers and some product categories.

The benefits of price competition could be especially significant for spot-on flea and tick control 

products and heartworm preventatives, the two largest categories of pet medications.107 These 

are the products for which consumers are most likely to comparison shop for the best price, and 

which consumers most often purchase from alternative retailers.

108 They tend to be the lowest 

margin products for veterinarians based on survey data collected by the AAHA, which indicates

that, in 2012, the average veterinary mark-up was 78.5 percent for flea/tick products and 82.9

 

105 Lau, Parasiticide Diversion, supra note 56 (providing examples of veterinarians who monitor the prices of 

online competition and set their prices to be comparable); Workshop Tr. at 245-46 (Link Welborn) (“The reality is 

that most [veterinary] practices set prices at, slightly above or slightly below the prices of online outlets with many 

practices matching the lowest price available online.”); id. at 193 (Douglas G. Aspros) (stressing that pricing offered 

by veterinarians is competitive with retail channel pricing, due largely to the pricing transparency available through 

the Internet); Arp, supra note 35 (quoting veterinary consultant who suggests that when possible, veterinarians 

should compete on price, which means knowing what online pharmacies and big-box outlets charge so that 

veterinarians can respond accordingly; “There’s no doubt that veterinarians are feeling the competitive pressure.”

The article goes on to state that, “Practitioners are selling more units at cheaper prices per unit to keep up with the 

competition.”).

106 See Workshop Tr. at 245-46 (Link Welborn) (“In our practice, clients are often surprised to find that the 

pricing in our hospital is slightly less than that available from online sources.”); id. at 38 (Paul D. Pion); Generic 

Animal Drug Alliance (GADA) Comment at 2 (“Informal surveys and anecdotal information from veterinarians 

suggest that online retailers do not offer much if any discount over veterinarians’ prices.”); Ackerman, supra note 

104 (pointing out that there is not a significant gap between Internet retail prices and vet prices, but noting that big 

box retailers offer lower prices than Internet retailers).

107 PetMed Express, Inc., supra note 21, at 7 (noting that a significant portion of sales is attributable to the most 

popular flea and tick and heartworm preventative brands); PACKAGED FACTS REPORT 3D, supra note 12, at 37 (“The 

most active area of consumer pet medications is the largest one, flea/tick care, especially in the spot-ons (topical) 

segment.”); PACKAGED FACTS REPORT 2D, supra note 14, at 50 (“the heartworm segment continues to see increased 

competition resulting in higher-level marketing support and heightened consumer awareness.”); id. at 67 (“From a 

consumer brand perspective, flea/tick care is the most important category in the U.S. market for pet medications, as 

well as the largest. During 2011, flea/tick care medications rang up over $2 billion at retail, Packaged Facts 

estimates, with spot-on treatments accounting for the large majority of this amount. Not surprisingly therefore, this 

has long been the most directly competitive area of the pet medications market, and now all the more so due to 

channel cross-over and the arrival on the scene of generic versions of fipronil (Frontline) ...”).

108 See infra notes 129-130 and accompanying text.
28

percent for heartworm preventatives, compared with 121.6 percent for other prescription 

drugs.109

These findings suggest that consumers may already benefit to at least some extent from price 

competition in the pet medications industry between veterinarians and alternative retailers. 

Nevertheless, continued growth of retail distribution could increase competition and lead to 

lower prices for pet medications in both veterinary and retail channels.

3. Comparison of Animal Drug Industry to Human Drug Industry

There are important differences between the human and animal drug industries with respect to 

prescription portability, distribution channels, and the availability of generics. Some comparisons 

between the two markets may help to illuminate the current state of competition in pet 

medications.

In the human medications marketplace, patients typically receive portable prescriptions from

their prescribing physicians without having to request them and with no conditions attached.110

Consumers almost always purchase their human medications from someone other than the 

prescribing physician.111 In contrast, unlike most human doctor’s offices, veterinary clinics 

typically function as one-stop providers of pet care, including not just examination and 

diagnosis, but also hospitalization and the dispensing of pet medications. Given this important 

distinction in the role veterinarians play, there does not appear to be any significant objection in 

the industry to continuing the practice of allowing veterinarians to maintain the right to dispense 

pet medications,112 as consumers may prefer in some cases to purchase medication directly from 

the care provider, especially for acute care and specialty medications.

113

 

109 AM. ANIMAL HOSP. ASS’N, supra note 104, at 245. Veterinary consultants frequently counsel veterinarians to 

use competitive pricing for these categories of products because they are being competitively shopped by clients.

See, e.g., Lowell Ackerman, Dir., Veterinary Bus. Solutions, Pfizer Animal Health, Remarks at American Animal 

Hospital Association Annual Conference: Keeping Your Eye on the Prize: Increasing Hospital Profitability (Mar. 

16, 2012).

110 By contrast, consumers usually must request portable prescriptions from veterinarians, at which time they may 

be asked to pay an additional fee or sign a waiver. See infra notes 249 and 253 and accompanying text.

111 See Workshop Tr. at 149-50 (Nate Smith). Physicians generally are discouraged from dispensing medications, 

to avoid any conflicts of interest. See infra notes 115 and 116.

112 See Foster (F&S) Comment at 8 (“To be clear, I also am firmly in favor of maintaining the ability of 

veterinarians to dispense medications, as opposed to the model in human medicine where physicians are generally 

discouraged from dispensing for profit.”); K&L Gates Comment at 7 (“Veterinarian dispensing is still a viable 

option that should be preserved for those consumers who are willing to pay a higher price for the convenience of 

receiving their pet’s drugs before they leave their veterinarian’s office.”).

113 See infra notes 131-133 and accompanying text.
29

Some stakeholders are very concerned, however, about the inherent conflict of interest that arises 

when the only authorized prescriber of medications is also the only authorized dispenser of 

medications. They claim this conflict of interest is exacerbated when manufacturers offer 

financial incentives to veterinarians for prescribing or recommending their products, and point 

out that these types of incentives are illegal in human medicine.114 Some stakeholders have 

suggested that the American Medical Association’s (“AMA”) Code of Ethics provides an 

appropriate basis for comparing the standard of care owed to patients when prescribing and 

dispensing human drugs versus animal drugs,

115 as well as potential guidance regarding 

resolution of conflicts between the physician’s financial interest and the physician’s 

responsibilities to the patient.116

With respect to human medications, once a portable prescription has been received, it can be 

filled at a patient’s pharmacy of choice, where the patient frequently has access to low-priced 

generic drugs. Both state law requirements and health insurance policies may compel generic 

substitution when feasible, which exerts further downward pressure on prices for human 

 

114 Magee (F&S) Comment at 12-13. See generally infra note 295 and accompanying text.

115 AMA Opinion 8.06 regarding the prescribing and dispensing of drugs states that:

(1) Physicians should prescribe drugs, devices, and other treatments based solely upon medical considerations and 

patient need and reasonable expectations of the effectiveness of the drug, device or other treatment for the particular 

patient. (2) Physicians may not accept any kind of payment or compensation from a drug company or device 

manufacturer for prescribing its products. . . . (3). . . Physicians may dispense drugs within their office practices 

provided such dispensing primarily benefits the patient. (4) In all instances, physicians should respect the patient’s 

freedom of choice in selecting who will fill their prescriptions as they are in the choice of a physician and, therefore, 

have the right to have the prescription filled wherever they wish. . . . Physicians should not urge patients to fill 

prescriptions from an establishment which has entered into a business or other preferential arrangement with the 

physician with respect to the filling of the physician’s prescriptions. . . . (6) Patients have an ethically and legally 

recognized right to prompt access to the information contained in their individual medical records. Since a 

prescription is part of the patient’s medical record, the patient is entitled to a copy of the physician’s prescription for 

drugs or devices, including eyeglassses and contact lenses. Therefore, physicians should not discourage patients 

from requesting a written copy of a prescription.

Opinion 8.06 - Prescribing and Dispensing Drugs and Devices, AM. MED. ASS’N (June 2002), http://www.amaassn.org/ama/pub/physician-resources/medical-ethics/code-medical-ethics/opinion806.page (AMA Code of Medical 

Ethics).

116 AMA Opinion 8.03 regarding conflicts of interest states that:

Under no circumstances may physicians place their own financial interests above the welfare of their patients. 

The primary objective of the medical profession is to render service to humanity; reward or financial gain is a 

subordinate consideration. For a physician to unnecessarily hospitalize a patient, prescribe a drug, or conduct 

diagnostic tests for the physician’s financial benefit is unethical. If a conflict develops between the physician’s 

financial interest and the physician’s responsibilities to the patient, the conflict must be resolved to the patient’s 

benefit.

Opinion 8.03 – Conflicts of Interest: Guidelines, AM. MED. ASS’N (June 1994), http://www.amaassn.org/ama/pub/physician-resources/medical-ethics/code-medical-ethics/opinion803.page (AMA Code of Medical 

Ethics).
30

medications. In contrast, there are very few generic options for pet medications, and limited 

regulatory or other mechanisms to encourage their use.

117

At the wholesale distribution level, there are other important differences between human and 

animal medications that may affect competition. Retail pharmacies have direct access to reliable 

supplies of human medications through established channels of distribution. In contrast, as 

explained above, most drug manufacturers have exclusive distribution policies that aim to restrict 

distribution of pet medications to veterinary channels – even when these same manufacturers do 

not impose similar distribution policies for human medications. Indeed, many consumers order 

their human prescription medications from online pharmacies, which have direct access to the 

medications and ship products to consumers’ homes.

With respect to filling pet prescriptions online, some non-veterinary retailers question why this

should be any more dangerous or inappropriate than filling human prescriptions in the same way, 

especially if the online pharmacy is staffed by veterinary experts.

118 More generally, with respect 

to the filling of pet prescriptions by pharmacists rather than veterinarians, proponents argue that 

manufacturers should be no more concerned about pharmacists dispensing pet medications than 

they are about pharmacists dispensing human medications because, in both instances, the 

pharmacist is merely dispensing medications as prescribed by a physician or veterinarian.119

They ask whether and, if so, why a higher standard of care is owed to animal patients than to 

human patients – especially when, in the human medications context, any purported health and 

safety concerns clearly have been resolved overwhelmingly in favor of prescription portability 

and pharmacist dispensing.

Opponents of automatic prescription release for pet medications argue that their positions are 

justified primarily by unique health and safety concerns that weaken any analogies between the 

human and pet medication markets. As discussed in greater detail below, pharmacists historically 

have received little or no education in animal physiology or pharmacology; therefore, some 

argue, pharmacists are inadequately trained to provide counseling to pet owners, detect dosing 

errors, or flag potentially harmful drug interactions.120 In addition, some stakeholders expressed 

 

117 See infra Section IV.B.1, Limited Consumer Access to Generic Animal Drugs, at 84; infra Section IV.B.5, 

Automatic Substitution Might Increase Consumer Access to Generic Animal Drugs, at 90. Some consumers have 

questioned why they pay more for human generic medications when prescribed for use in animals than when they 

are prescribed for humans. See, e.g., Colligan Comment. However, pet owners may be receiving different dosages 

and formulations for use in animals that are higher priced. In addition, drugs for human use are usually covered by 

health insurance, whereas drugs for animal use may not be covered. 

118 Foster (F&S) Comment at 7. Workshop Tr. at 146-48 (Race Foster).

119 Foster (F&S) Comment at 9.

120 See infra Section III.B.3.b, Safety Issues Regarding Retail Pharmacists, at 45.
31

concern that directing an increased volume of pet medication prescriptions to pharmacists could 

exacerbate the problem of pharmacist error, posing health risks for both humans and animals.121

Some of these concerns may be more pronounced with respect to traditional retail pharmacies 

that primarily dispense drugs prescribed for human use than for specialized online veterinary 

pharmacies that only dispense drugs prescribed for animal use.

It is unclear whether evidence supports veterinarians’ claims about dispensing errors by retail 

pharmacists. Although there has been some empirical research regarding human medication 

errors,122 there do not appear to be comparable studies regarding the incidence of pharmacist 

dispensing errors for pet medications. Likewise, FTC staff has found no information on the 

frequency of dispensing errors by veterinarians and their technicians, which might enable 

comparisons to the frequency of pharmacist errors.123 Even if dispensing errors occur, some 

stakeholders have suggested that veterinarians may be just as likely to make prescribing and 

dispensing errors as human doctors and pharmacists.124 In 2008, the FDA’s Center for 

Veterinary Medicine (“CVM”) began to more closely monitor medication error reports involving

animals. The CVM formally established its Veterinary Medication Error Program in 2010, and 

has learned that errors may occur at veterinary clinics, pharmacies, and in households when pet 

owners administer medications to their pets.125 The FDA stated that it has not received specific 

 

121 See AVDA Comment at 12-13; Greeley Comment.

122 See, generally INST. MED., COMM. ON QUALITY OF HEALTH CARE IN AM., TO ERR IS HUMAN: BUILDING A

SAFER HEALTH SYSTEM 2 (1999) (“Medication errors alone, occurring either in or out of the hospital, are estimated

to account for over 7,000 deaths annually.”); INST. MED., COMM. ON IDENTIFYING AND PREVENTING MEDICATION 

ERRORS, PREVENTING MEDICATION ERRORS (2007) 1-2 (“The committee estimates that on average, a hospital 

patient is subject to at least one medication error per day, with considerable variation in error rates across 

facilities.”).

123 See Workshop Tr. at 269 (Link Welborn) (stating that he is unaware of any data measuring adverse events or 

medication dispensing errors occurring at veterinary clinics); JoNel Aleccia, When Vets Make Mistakes, Pets Pay the 

Price, NBCNEWS.COM (Feb. 10, 2010), http://www.nbcnews.com/id/35286379/ns/health-pet_health/t/when-vets- make-mistakes-pets-pay-price/ (claiming that medical errors made by veterinarians, including those involving 

medications, are not routinely tracked and investigated the way they are in the human market). See also infra 

Section V.B.2, Pet Medications Dispensing Errors, at 93.

124 See James F. Wilson & John A. Rossi, Medical error and liability: How technology can be a safeguard, DVM360.COM/DVM360 MAG. (Apr. 1, 2008), http://veterinarynews.dvm360.com/medical-error-and-liability-howtechnology-can-be-safeguard (“The rate of error in human medicine is well documented and staggeringly high. The 

soaring costs of professional liability insurance for physicians and hospitals is forcing human medicine to take steps 

to reduce error rates. As veterinarians, it can be assumed that we commit just as many errors and for the same 

reasons. Reducing them in the interest of better patient care should be a priority.”); Aleccia, supra note 123 (stating 

that industry experts believe the occurrence of veterinary medical errors is likely comparable to medical errors in the 

human market).

125 See U.S. FOOD & DRUG ADMIN., MEDICATION ERRORS HAPPEN TO PETS, TOO (2012), 

http://www.fda.gov/downloads/ForConsumers/ConsumerUpdates/UCM327172.pdf; Product Safety Information: 

Veterinary Medication Errors, U.S. FOOD & DRUG ADMIN., 

http://www.fda.gov/AnimalVeterinary/SafetyHealth/ProductSafetyInformation/ucm380574.htm (last updated July 

28, 2014).
32

adverse event reports involving intentional alteration of prescriptions by pharmacists without 

verification from prescribing veterinarians.

126

Stakeholders who favor expanded retail distribution of pet medications also dispute the validity 

of concerns about counterfeit products and fraudulent online vendors, claiming that these

problems are no greater for pet medications than for human medications. If non-exclusive 

distribution and automatic prescription release are appropriate policies for human medications, 

they say, then these policies should be equally appropriate for animal medications.

127 FTC staff’s 

inquiry did not yield evidence suggesting that counterfeiting or consumer fraud are more 

significant problems for animal medications than for human medications.128

With this overview in place, the next two sections of this report provide a more thorough 

explanation of FTC staff’s findings regarding prescription portability and distribution practices.

 

126 Telephone Interview with Linda Kim-Jung, Martine Hartogensis, John Baker, Janice Steinschneider, and 

others from FDA CVM, Office of Surveillance and Compliance (Sept. 11, 2014). CVM’s post-market safety 

surveillance program utilizes pharmacovigilance database applications to monitor for adverse events, lack of 

effectiveness, product defects and medication errors. CVM can use this information to evaluate trends and relative 

frequencies of reported adverse drug experiences. However, the adverse event data do have limitations. For any 

given adverse event report, there is no certainty that the reported drug caused the adverse event or medication error. 

The adverse event may have been related to an underlying disease, using other drugs at the same time, or other nondrug related causes. The number of reports simply represents the numbers of adverse events received for a particular 

drug, by species, and route of administration. For additional information on adverse drug experience reports, please 

refer to: http://www.fda.gov/AnimalVeterinary/SafetyHealth/ProductSafetyInformation/ucm055369.htm. Id.

127 Workshop Tr. at 53 (John Powers). See also PACKAGED FACTS REPORT 3D, supra note 12, at 171 (“Packaged 

Facts views the [H.R. 1406] initiative as indicative of the way the pet health market is moving – toward greater 

parallelism with human healthcare – a natural progression as pets continue to gain status in American society.”).

128 See Telephone Interview with Kim-Jung et al., supra note 126 (indicating that counterfeit drug issues appear to 

be a bigger problem for human medications than for animal medications, and that a bigger problem exists for 

unapproved pet products, which include such products as compounded drugs, medicated shampoos, and vitamins).
33

III. Prescription Portability

To purchase prescription pet medications from retail pharmacies, consumers must first obtain 

portable prescriptions from their veterinarians. Consumers are more likely to request 

prescriptions when seeking refills of preventative medications or long-term therapeutic 

treatments for chronic conditions, as opposed to treatments for acute conditions.129 For example, 

anti-inflammatory drugs and heartworm preventative medications are more commonly 

“shopped” by consumers seeking to save money on the long-term use of such products.130 Some 

consumers may find it more convenient to purchase pet medications from alternative retailers, 

such as online pharmacies or the retail pharmacies where they normally shop for other items. On 

the other hand, some consumers may prefer the convenience of leaving the veterinary clinic with 

the necessary medications, especially if their veterinarian is matching prices available at retail 

outlets.

It should be noted that under some circumstances, it may not be appropriate for consumers to 

obtain portable prescriptions, particularly for acute care and specialty medications that can only 

be practically dispensed by veterinarians.131 For example, in emergency care situations, it could 

be medically inappropriate to delay treatment so that pet owners could comparison shop for the 

lowest priced medications if the animal requires immediate short-term treatment. Also, 

consumers may be less likely to realize a significant benefit from comparison shopping in these 

situations because of the sense of urgency and because there are unlikely to be recurring 

medication costs.

132 Indeed, H.R. 4023 and S. 2756 appear to have acknowledged this 

 

129 See id. at 174 (Race Foster); PetCareRx Comment at 1.

130 Workshop Tr. at 172-73 (Wendy Hauser).

131 See GADA Comment at 2 (“Some treatments take place in the veterinary practices (such as with an injectable 

medication), while the majority of drugs are dispensed to pet owners for a prescribed treatment regimen (for 

example, antibiotic tablets to be dosed at home).”); Workshop Tr. at 181 (Deborah Dubow Press) (“When we know 

that it will result in significant cost savings, we will affirmatively suggest that the prescription be filled elsewhere, 

and when it will benefit the client and the patient that’s what we do. Certain medicines, we can’t do this for. They’re 

not available at retail pharmacies.”). But see Gay (VetRxDirect) Comment (#576) (“There are hundreds of 

veterinary prescription medications for pets, each with their own indications, contraindications, and side-effects.

Some are proven safe (like canine heartworm preventatives) and could be dispensed by a non-knowledgeable 

pharmacist or pharmacy, but the dispensing of the majority of veterinary prescription medicines require the special 

knowledge of a veterinarian or the suitable, similar training in veterinary pharmacy and pharmacology of a 

pharmacist.”).

132 Workshop Tr. at 172-73 (Wendy Hauser); id. at 181-82 (Douglas G. Aspros). Other situations in which only 

veterinarians can practically dispense prescription pet medications may include euthanasia, anesthesia used during 

surgery, and certain injectables requiring veterinarian oversight.
34

distinction, and would have exempted acute care drugs from the automatic prescription release 

requirements.133

If prescription release were “automatic,” veterinarians would be required to provide portable 

prescriptions for all prescribed medications, regardless of whether clients request them. Industry 

stakeholders have expressed different views about the need for, and potential impact of, 

automatic prescription release mandated by federal or state law, or by industry self-regulation. 

This section of the report synthesizes FTC staff’s findings regarding the availability to 

consumers of portable prescriptions, as well as the arguments supporting and opposing automatic 

prescription release.

A. Current State of Prescription Portability

1. State Laws and Veterinary Codes of Ethics

Currently, 31 states have statutes, rules, or policy statements that require veterinarians to provide 

their clients with a portable prescription upon request in some circumstances.

134 In addition, 

California and Arizona mandate certain aspects of notice and prescription release, even if not 

initiated by the client. California law requires that veterinarians offer their clients a written 

prescription; clients may then elect to have the prescription filled by either the prescribing 

veterinarian or the pharmacy of their choice, and veterinarians must provide clients with written 

notice that this option exists.

135 Arizona law requires veterinarians to notify pet owners that some 

prescription-only drugs and controlled substances may be available at a retail pharmacy, but 

Arizona does not require veterinarians to provide a portable prescription to the client.136

The AVMA Principles of Veterinary Medical Ethics hold that veterinarians should honor a 

client’s request for a prescription in lieu of dispensing, but they do not mandate notice to the 

client of the right to request one.

137 Although the Principles on their own are not enforceable,

several states have expressly incorporated the Principles into their disciplinary standards; in other 

 

133 See supra note 72.

134 According to the AVMA, 21 states have adopted laws, regulations, or policy statements requiring veterinarians 

to provide their clients with portable prescriptions upon request, and another 10 states have incorporated the AVMA 

Principles of Veterinary Medical Ethics into their disciplinary rules, which state that veterinarians should honor a 

client’s request for a portable prescription. See State Summary Report: Client Request for Prescriptions, AM.

VETERINARY MED. ASS’N, https://www.avma.org/Advocacy/StateAndLocal/Pages/veterinary-prescription- orders.aspx (last updated May 2014).

135 CAL. BUS. & PROF. CODE § 4170(a)(6)-(7) (2014).

136 ARIZ. ADMIN. CODE R3-11-801 (2014).

137 Principles of Veterinary Medical Ethics of the AVMA, supra note 38 (Principle II.b.).
35

states, the Principles may be used by state veterinary boards to determine what constitutes 

unprofessional conduct.138 The AVMA argues that the threat of disciplinary action gives 

veterinarians an incentive to comply with client requests for portable prescriptions,

139 although it 

is unclear whether veterinarians perceive that threat as significant.140

Beyond the potential for disciplinary action, some veterinarians argue that market forces are 

enough to incentivize veterinarians to provide portable prescriptions: if a veterinarian refuses to 

provide clients with portable prescriptions upon request, any alienated clients will simply choose 

to take their pets to another veterinarian.141 Other stakeholders suggest, however, that switching 

costs may deter clients from choosing another veterinarian solely because they are discouraged 

from seeking or denied portable prescriptions.

142 The likelihood of switching may be even lower 

for consumers who are unaware of the availability of portable prescriptions or who have limited 

alternatives – for example, in rural areas with few veterinary practices.

2. Veterinarian Attitudes Towards Prescription Release

Anecdotal evidence and some survey data suggest that many veterinarians provide portable 

prescriptions to their clients, either at the clients’ request or on their own initiative, in at least 

some circumstances.

143 For example, in a study commissioned by the American Veterinary 

 

138 State Summary Report: Client Request for Prescriptions, supra note 134; Workshop Tr. at 139 (Adrian 

Hochstadt). But see Valley Vet Supply Comment at 4 (“In reality, the AVMA position does very little to effectuate 

written portable prescriptions, or to ensure consumer choice or price competition. That will only happen when 

mandated by law.”).

139 AVMA Comment at 5 (“Even in states that have not adopted formal laws or regulations in this area, state 

boards of veterinary medicine could find . . . that failure to honor a client’s request for a prescription constitutes 

unprofessional conduct, leading to discipline against a veterinarian.”). See also Pfizer Comment (#329) at 3 (noting 

that “state laws, regulations, policies and veterinary ethical codes of conduct ensure that if a consumer wants a 

prescription, he or she should receive it.”).

140 Although some veterinarians may refuse to provide portable prescriptions upon request, FTC staff found 

almost no evidence of disciplinary actions taken against veterinarians by state boards for failure to provide 

prescriptions (even in California, which has the most stringent prescription portability requirements). It is unclear 

whether the absence of disciplinary actions indicates substantial veterinary compliance, few consumer complaints, 

or a lack of active enforcement by state boards.

141 See, e.g., B. Taylor Comment; A. Anderson Comment.

142 See N. Smith Comment at 8 & Kroger Comment at 1 (describing a situation in which a consumer’s only 

practical choice is to purchase a pet medication from the prescribing veterinarian at an inflated price or switch to 

another veterinarian who will charge for a second examination before being able to provide a portable prescription).

143 See, e.g., AVMA Comment at 1 (stating that veterinarians already write prescriptions for clients); AHI 

Comment at 4 (“It is our view that under current law and practice veterinarians will provide written prescriptions to 

clients upon request.”); Bradley Comment; A. Anderson Comment; Brown Comment (#521). Veterinarian surveys 

conducted by state veterinary medical associations in Oregon, Washington, southern California, and Iowa suggest 

that many veterinarians provide prescriptions to their clients upon request. See OR. VETERINARY MED. ASS’N,

VETERINARY PRESCRIPTIONS & RETAIL PHARMACIES SUMMARY: MEMBERSHIP SURVEY 2 (2012) [hereinafter OR.

VET SURVEY], attached to Oregon VMA Comment (#175) (Oregon VMA sent a survey to approximately 525 

veterinary practices in the state of Oregon and received responses from 21%. The survey indicated that 95% of 

responding veterinarians honor client requests for prescriptions); WASH. STATE VETERINARY MED. ASS’N, WSVMA
36

Distributors Association (“AVDA”), veterinary prescription data for the 12-month period of July 

2010 through June 2011 showed that more than 45,000 veterinarians (over 70 percent of total 

veterinarians in the United States) provided in excess of four million prescriptions to pet owners 

to be filled outside of the veterinarian’s office.

144 One commenter stated that recent IMS audit 

data show that over 6 million prescriptions are written by veterinarians each year and filled by 

retail pharmacies.145 Although this data indicates that many veterinarians do provide portable 

prescriptions to their clients, more information is necessary to draw conclusions about the overall 

prevalence of veterinarian prescription release and the circumstances in which it occurs.146

The AVMA has expressed support for a pet owner’s ability to obtain a portable prescription 

upon request, and encourages its members to comply with such requests.147 Some industry 

stakeholders applaud the efforts of the AVMA to promote compliance with its Principles of 

Veterinary Medical Ethics and individual state rules regarding prescription portability,

148 and 

believe that many veterinarians who may have been reluctant to provide prescriptions in the past 

 

PRESCRIPTION MEDICATION SURVEY (2013) [hereinafter WASH. VET SURVEY] (on file with report authors) 

(Washington VMA sent a survey to 2387 veterinarians, and received 332 responses. The survey indicated that 96% 

of responding veterinarians honor client requests for prescriptions); S. CAL. VETERINARY MED. ASS’N, SCVMA

VETERINARY PRESCRIPTIONS AND MEDICATION SURVEY (2013) [hereinafter S. CAL. VET SURVEY] (on file with 

report authors) (Southern California VMA sent a survey to 1000 veterinary members and received 108 responses. 

The survey indicated that 96% of responding veterinarians honor client requests for prescriptions); IOWA 

VETERINARY MED. ASS’N, IVMA MEMBER SURVEY (2012) [hereinafter IOWA VET SURVEY] (on file with report 

authors) (Iowa VMA sent a survey to approximately 900-1000 active veterinarians and received 100 responses. The 

survey indicated that 77% of responding veterinarians honor client requests for prescriptions). 

144 Axxiom Market Analysis, supra note 21, at 6. Bureau of Labor Statistics data indicates that there were 61,400 

practicing veterinarians in the United States in 2010. Veterinarians: Occupational Outlook Handbook, BUREAU OF 

LABOR STATISTICS (Apr. 29, 2012), 

https://web.archive.org/web/20120429053206/http://www.bls.gov/ooh/Healthcare/Veterinarians.htm (site snapshot 

saved on Internet Archive WayBack Machine). Thus, according to the Axxiom Market Analysis, over 70% of 

veterinarians provided at least one written prescription. 

145 Pfizer Comment (#329) at 2.

146 The circumstances surrounding these prescription releases remain unclear, making it difficult to draw 

conclusions about the prevalence of veterinary prescription release. For example, if veterinarians typically offer 

prescriptions only for products they do not keep in inventory, this data may reveal little about the extent to which 

veterinarians routinely offer, or provide upon request, portable prescriptions for products that they do keep in 

inventory. Furthermore, without knowing the total number of prescription pet medications dispensed by 

veterinarians and retail pharmacists each year, it is difficult to determine the frequency with which veterinarians 

issue portable prescriptions based on this data alone.

147 Workshop Tr. at 179-80 (Douglas G. Aspros); AVMA Comment at 1-2.

148 See, e.g., Foster (F&S) Comment at 6-7; Workshop Tr. at 178 (Race Foster) (“There’s no question that the 

veterinary profession today is more likely to give out a prescription. I think the American Veterinary Medical 

Association has done an excellent job of talking to their constituents and educating them.”). See also PACKAGED 

FACTS REPORT 2D, supra note 14, at 12 (“Well aware of the Internet competition, some veterinarians have been 

reluctant to write prescriptions for online pharmacies, but the American Veterinary Medical Association (“AVMA”)

has advised its members that pet owners have a right to shop around, while noting that the Vet-VIPPS designation 

should help vets and pet owners identify legitimate online pharmacies.”).
37

have changed their behavior.

149 Some have argued that the long-term viability of a veterinarian’s 

practice can be impacted by the manner in which a veterinarian handles client requests for 

portable prescriptions.150 The AVMA has stated that it is unaware of any data suggesting that 

veterinarians do not currently provide prescriptions upon request.

151

In contrast, some commenters have suggested that veterinarian practices vary considerably in 

their willingness to provide portable prescriptions to clients upon request:

Certainly, there are veterinarians who adhere to very high ethical standards and 

provide prescriptions to their clients upon request. However, there are frequently 

barriers to consumers obtaining a prescription. For example, our client has 

identified: (1) a general reluctance from clients to “demand” a prescription in 

deference to the veterinarian as a professional; (2) veterinarians putting up 

barriers to receiving a prescription, e.g., front-office staff stating a policy of not 

issuing prescriptions and/or insisting that the animal be brought in for a check up 

even though sufficiently current laboratory results are in the animal’s file; 

(3) veterinarians calling and attempting to change a client’s mind about obtaining 

drugs from other sources; and (4) veterinarians indicating that they are not 

familiar with the products sold into the retail pharmacy and thereby instilling 

doubts about safety or efficacy of those products.

152

 

149 See, e.g., Gay (VetRxDirect) Comment (#576) (“In my experience, veterinarians are now over the initial shock 

of losing the exclusive dispensing business and are gradually, if not completely cooperative in providing a 

prescription to a pet-owning client if requested.”); Pedersen Comment (noting that vets have been writing more 

prescriptions in recent years, regardless of whether clients request them, in order to lower their inventory costs). See 

also Oregon VMA Comment (#175) at 1 (“According to the [veterinary] practices that responded to the survey, a 

significant majority of them will, at the client’s request, write a prescription to be filled outside of the practice. In 

addition, most veterinary practices DO NOT charge a prescription fee for this service.”).

150 See AM. ANIMAL HOSP. ASS’N, supra note 104, at 245 (“[Prescription] drugs are available online, and many 

human pharmacies are offering certain drugs for almost nothing. Clients are aware of this and are asking their 

veterinarians for cheaper alternatives. Veterinarians have reacted in various ways. Some have switched to drugs that 

are not available in human pharmacies or are not included in the list of those sold at very low cost. Others 

recommend to their clients that they buy those drugs at the human pharmacy for the significant cost savings; a great 

deal of client goodwill can be generated this way, and the long-term bonding of the client to the practice may 

outweigh the short-term loss of income.”); Lowell Ackerman, Dir., Veterinary Bus. Solutions, Pfizer Animal Health, 

Remarks at American Animal Hospital Association Annual Conference: Promoting Practice Protocols (Mar. 16, 

2012).

151 See infra note 191.

152 K&L Gates Comment at 8 (representing sentiments expressed in other comments and stakeholder interviews).

See also PetMed Express, Inc., supra note 21, at 7 (“Since we began our operations some veterinarians have resisted 

providing our customers with a copy of their pet’s prescription or authorizing the prescription to our pharmacy staff, 

thereby effectively preventing us from filling such prescriptions under state law. We have also been informed by 

customers and consumers that veterinarians have tried to discourage pet owners from purchasing from Internet and 

mail-order pharmacies.”); Valley Vet Supply Comment at 2-3 (“It is common for practicing veterinarians to make it 

difficult or impossible for the client to purchase their prescription products from a source other than the attending 
38

FTC staff did not identify any comprehensive data sources regarding the extent to which 

veterinarians provide portable prescriptions. Some state veterinary medical associations have 

surveyed veterinarians on this issue, however, and the survey responses revealed that some

veterinarians refuse to provide prescriptions to clients when requested, even in states having 

policies requiring them to do so.

153 Consistent with these findings, anecdotal evidence presented 

in written comments and other publicly available sources indicates that some veterinarians refuse 

to provide prescriptions to clients when requested.

154 Furthermore, some veterinarians may try to 

actively discourage clients from filling prescriptions elsewhere by providing misleading 

information about non-veterinary retailers, requiring waivers of liability that exaggerate the 

dangers of purchasing from non-veterinary retailers, or requiring extra fees for portable 

prescriptions.155

 

veterinarian. . . . Veterinarians use a variety of manipulative tactics to deny the clients the free-market option of 

filling their prescription at a licensed pharmacy.” These tactics include making unfounded claims about the quality 

of products provided by retail pharmacies, adopting practice policies of not providing portable prescriptions, 

charging a substantial fee for writing the prescription, suggesting that they will not provide follow-up care if 

medications are purchased elsewhere, or refusing to provide an open prescription and instead directing clients to an 

affiliate pharmacy that shares a portion of the revenues with the prescribing veterinarian.); Arp, supra note 35

(referencing veterinarians who charge prescription fees of up to $17 or institute policies of not writing prescriptions 

for any online pharmacy); MYERS, supra note 104, at 2-3 (instructing veterinarians how to discourage pet owners 

from having prescriptions filled elsewhere). 

153 See OR. VET SURVEY, supra note 143, at 2 (indicating that 5% of surveyed practices do not honor a client’s 

request to have a prescription filled outside of the veterinary practice and 7% charge a fee when the client fills the 

prescription outside of the veterinary practice); WASH. VET SURVEY, supra note 143 (indicating that 4% of 

responding veterinarians do not honor client requests for prescriptions and 4% charge a fee); S. CAL. VET SURVEY, 

supra note 143 (indicating that 4% of responding veterinarians do not honor client requests for prescriptions and 7% 

charge a fee); IOWA VET SURVEY, supra note 143 (indicating that 23% of responding veterinarians do not honor 

client requests for prescriptions and 29% charge a fee).

154 See, e.g., Foster (F&S) Comment at 7 (“By various methods a minority of veterinarians are putting pressure on 

their clients to purchase prescriptions only from them, the veterinarian. These methods include requiring consumers

to sign waivers and/or pay an ‘extra’ fee if they choose to fill prescriptions anywhere other than the veterinarian’s 

office.”); Magee (F&S) Comment at 8 (“Most veterinarians handle consumer choice well, and follow the AVMA 

guideline that says written prescriptions should be given when a client asks. Many even offer a written prescription 

without the client having to ask. . . . However, not all veterinarians handle prescription writing as the majority do.”); 

ASPCA Comment at 2 (“While many veterinarians are happy to provide written prescriptions for clients to fill 

anywhere they choose, not all veterinarians offer this option.”).

155 We received public comments from several individual consumers raising these types of concerns. See, e.g., S. 

Clark Comment; Baragiola Comment; Gonzalez Comment; Yoo Comment; West Comment; Ellis Comment; Brady 

Comment; Chesko Comment; Higgins Comment; Martin Comment; Sherman Comment; Hirsch Comment; Roth 

Comment; Holum Comment; Loehrer Comment; Hilton Comment. 

In addition, several veterinarian comments included in state veterinary medical association surveys indicate that 

at least some veterinarians are reluctant to provide prescriptions to clients upon request and try to discourage clients 

from seeking portable prescriptions. See, e.g., IOWA VET SURVEY, supra note 143 (Responses to survey question 

asking whether veterinarians provide prescriptions for clients to fill at an online outlet or retail pharmacy include: 

“Never been asked and I would charge for that service.”; “I do not provide prescriptions for on line pharmacies but I 

often will call prescriptions in to local pharmacies for medications I do not carry.”; “I try to fill all prescriptions in 

house. For those that go elsewhere I charge a fee.”; “We charge $8/script to do this, so we don’t get too many”; 

“Generally i [sic] try and price match, or ask the client why they wish to have their prescriptions filled elsewhere 

first.”; “very seldom”; “We aggressively price match online prices to attempt to keep the clients business, while 

educating the client of the concern of proper storage, counterfeit product, non US-label product, etc., and the 
39

During the FTC workshop and in the public comments, several veterinarians offered statements 

that suggested a tension between their willingness to provide portable prescriptions, on the one 

hand, and their views of the appropriate role of the retail pharmacist in dispensing pet 

medications, on the other. For example, some veterinarians stated that they always give a client a 

prescription when asked and, in fact, will affirmatively offer a client a prescription if they know 

it will save the client money. Also, some veterinarians indicated that they prefer for retail 

pharmacists to dispense certain medications that they choose not to carry because of low 

demand, compounding requirements, or human abuse potential. Yet, the same veterinarians also 

stated that they are uncomfortable providing prescriptions because they cannot be sure about the 

level of care the client receives after leaving their office, and because they have serious safety 

concerns about the products dispensed by retail pharmacists.156 Some commentators suggest that 

these positions are contradictory, because presumably veterinarians would not willingly provide 

any portable prescriptions to clients if they believed doing so would jeopardize the health and 

 

difficulty managing an issue if a problem develops from an unknown compound.”; “We do this on a limited basis 

only”; “Very seldom and very reluctantly”); S. CAL. VET SURVEY, supra note 143 (“Usually able to steer clients 

away from online pharmacies.”; “We require that the client picks up a written script to mail into the online retailer. . 

. . This way it takes almost 2 weeks for them to get the drug and by then they are frustrated and realize its not worth 

the savings.”; “I am concerned with the lack of response/action from the veterinary profession (stricter 

guidelines/regulations for these outside pharmacies esp online?). Pharmacy is a part of our bottom line and we 

should do what we can to keep these customers/clients.”).

156 Compare, e.g., Workshop Tr. at 154, 180 (Wendy Hauser) (stating that she routinely offers to write portable 

prescriptions for clients, especially when significant cost savings are possible), and id. at 171-72 (stating that there 

are many circumstances in which veterinarians will choose not to stock certain medications and will instead choose 

to write portable prescriptions for the clients to take to retail or compounding pharmacies), with id. at 155 (stating 

that she fails to see how clients and their pets benefit when they are given portable prescriptions, and that she 

believes “if H.R. 1406 is enacted, that drug-induced adverse events will occur and will cause harm.”), and id. at 186 

(“You bet I have my clients sign a waiver if they want to order online, and the reason that I do is because I can’t 

guarantee the safety of those drugs.”).

Compare AVMA Comment at 3 (“Given that not all veterinarians, particularly mobile practitioners, are able to 

stock every prescription product they might prescribe for their patients, there is an efficiency associated with 

pharmacies carrying certain prescription products.”), with id. (“[T]reatment with medications dispensed directly 

from a veterinary clinic can be started promptly and there are no anticipated concerns associated with the quality of 

the drug product. . . . [P]harmacists are not required to have training in animal pharmacology. . . . We have learned 

that this has resulted in incorrect counseling, wrong dosages, or unauthorized drug substitutions, which could harm 

animal patients and create the need for additional treatment that would have been unnecessary had the correct 

medications or information been dispensed initially.”). 

See also Pedersen Comment (stating that veterinarians are providing more prescriptions in recent years to reduce 

inventory costs, even when they are not requested, but opposing any requirements to provide prescriptions in all 

instances due to safety concerns regarding retail pharmacies and potential losses in pharmacy revenues); Neely 

Comment (claiming to already routinely provide prescriptions to clients to be filled by retail pharmacies, often when 

they are not even requested, yet also claiming that “[m]ost human pharmacists are not adequately trained to fill pet 

medications”); Malon Comment (“Veterinarians already provide prescriptions when asked and direct clients to 

appropriate sources. Human pharmacists are not trained in veterinary prescriptions and can make dangerous or even 

fatal mistakes . . .”); Hearing on L.D. 676 Before the J. Standing Comm. on Agriculture, Conservation, and Forestry, 

215th Leg., 1st Reg. Sess. (Me. 2011) [hereinafter Maine Hearing on L.D. 676] (separate statements from 15 

veterinarians opposing L.D. 676) (stating that veterinarians already provide prescriptions upon request and 

sometimes offer prescriptions to save clients’ money, despite their expressed concerns).
40

safety of animals.

157 Some of these veterinarians may only be providing portable prescriptions to 

clients because they are required to do so by state regulations or ethical guidelines.

Some veterinarians commented that although they are comfortable providing prescriptions to 

their clients when requested, they are uncomfortable when they receive prescription verification 

requests from online and local pharmacies rather than directly from their clients.158 This situation 

may arise when a client attempts to purchase pet medications from a pharmacy without first 

contacting the prescribing veterinarian, prompting the pharmacy to contact the veterinarian 

directly. In response, the veterinarian may need to review the pet’s medical records and 

determine whether the medication is appropriate or an examination is necessary in order to either 

verify or deny the prescription.

According to some veterinarians, differences in the regulation of physicians and veterinarians 

might cause confusion when pharmacists – who are more accustomed to dealing with doctors 

and human prescriptions – are presented with veterinary prescriptions. For example, doctors are 

required to include their National Provider Identifier (“NPI”) number on every prescription they 

write, but veterinarians are not eligible to have NPI numbers, which can lead to confusion when 

clients bring their pet medication prescriptions to retail pharmacies.159 In these situations, some 

pharmacies purportedly request veterinarians’ DEA numbers as an alternative way to track 

veterinarians in their electronic pharmacy systems. Some veterinarians stated they are 

 

157 See, e.g., N. Smith Comment at 3 (“[I]t is incongruous for veterinarians to claim both that they release 

prescriptions but that there is a negative health impact when they do release. If there was any quantifiable or realistic 

health concern with release, the AVMA would have never adopted provisions in its Principles of Veterinarian 

Medical Ethics stating in an unqualified manner that ‘veterinarians should honor a client’s request for a prescription 

in lieu of dispensing.’”). See also K&L Gates Comment at 6 (“While it is true that many state-level veterinary 

practice ethical rules call for veterinarians to provide a prescription upon customer request, these rules fail to take 

into account the natural trepidation that pet owners feel in requesting a prescription. In actual practice, if the 

prescribed drug is stocked by the veterinarians, the office staff typically provides the drug at check-out without any 

mention of the customer’s other options. Only when the veterinarian elects not to stock the prescribed drug is the 

customer typically provided with a prescription. Thus, the veterinarians’ reluctance to an obligation to provide 

notice of the availability of a prescription is not based on safety. If it were, veterinarians would presumably stock all 

necessary drugs and write no prescriptions. Rather, the stated reluctance is based in economics and the potential 

profits provided by veterinarian-dispensed drugs.”). Veterinarians employed by the ASPCA will affirmatively 

suggest that their clients fill prescriptions elsewhere if they know that doing so will be significantly less expensive. 

Workshop Tr. at 164 (Deborah Dubow Press). An ASPCA representative confirmed that the ASPCA would not have 

adopted this policy if the organization believed serious safety concerns existed with respect to retail pharmacies. 

Telephone Interview with ASPCA representative (Sept. 18, 2012). However, “[t]he ASPCA always counsels clients 

to avoid purchasing drugs from non-U.S. sources and to purchase drugs from reputable pharmacies, whether on or 

off-line.” ASPCA Comment at 3.

158 See, e.g., Greeley Comment.

159 See Are Veterinarians Eligible to Obtain NPIs?, CTRS. FOR MEDICARE & MEDICAID SERVS., 

https://questions.cms.gov/faq.php?id=5005&faqId=8240 (clarification issued by CMS); Email from Or. Veterinary 

Med. Ass’n & Or. Bd. of Pharmacy to Licensees (May 2014), 

http://www.oregon.gov/pharmacy/Pages/oboplistserve.aspx (noting that CMS has clarified that veterinarians are 

ineligible for NPI numbers and stressing that this should not be a barrier to prescription processing). 
41

uncomfortable providing their DEA numbers for non-controlled drugs, and therefore may be 

reluctant to verify prescriptions for these pharmacies.160 Indeed, the DEA advises veterinarians 

not to provide their DEA license numbers for non-controlled substances, but instead should 

provide their veterinary license numbers.161

3. Consumer Awareness of Prescription Portability and 

Effectiveness of “Upon Request” Regulations and Policies

In evaluating the effectiveness of existing “upon request” regulations and policies, it is important 

to consider whether they promote consumer awareness of prescription portability, such that 

consumers have accurate information upon which to exercise available choices in the 

marketplace.

Some industry stakeholders have suggested that many consumers may be unaware of their ability 

to obtain portable prescriptions for pet medications. In particular, they suggest that this lack of 

awareness may be perpetuated by the fact that, historically, veterinarians were the only viable

source for these products.

162 While state regulations or policies may require veterinarians to 

provide prescriptions upon request, these stakeholders argue that an “upon request” mechanism, 

by itself, provides no assurance that pet owners will know the option is available to them.163

These stakeholders argue that, for such unaware consumers, automatic prescription release 

 

160 See, e.g., Greeley Comment; Stevens Comment; Kordell Comment (#298). 

161 See Email from Or. Veterinary Med. Ass’n & Or. Bd. of Pharmacy, supra note 159 (instructing Oregon 

pharmacies that dispense veterinary prescriptions to request practitioners’ veterinary license numbers rather than 

their DEA numbers).

162 See, e.g., K&L Gates Comment at 10 (“Veterinarian dispensing has been the norm for so long that many pet 

owners may not be aware of the fact that their pet’s drugs may be available at a lower price from their local 

pharmacy.”). See also Workshop Tr. at 82-83 (Paul D. Pion) (stating that pet owners should be more informed about 

their ability to obtain a prescription from their veterinarian so that they may choose to purchase pet medications 

elsewhere, and suggesting that perhaps veterinarians should do more to inform pet owners in this regard, but that “it 

shouldn’t be at the expense of ensuring that the medications are dispensed appropriately with appropriate ability to 

counsel.”).

163 See, e.g., Indep. Pharmacy Alliance Comment at 2 (“In many states, the practice of obtaining pet medications 

is governed in veterinarian profession practices law. Not surprisingly, many states give veterinarians great control 

and/or influence over how pet owners access pet medications. While many states give these owners the right to a 

prescription, often it is a passive right to request a prescription rather than the automatic requirement that a 

prescription be generated. And in many states, there is virtually no assurance that a pet owner will know they have 

the right to obtain a pet medication from a retail pharmacy rather than a veterinarian’s office or a veterinary hospital. 

. . . With these laws allowing veterinarians to essentially control the market of dispensing pet medications, pet 

owners are not given all of the economic advantages of competition in filling these medications, nor the convenience 

and choice of when and where to fill these pet medications.”); K&L Gates Comment at 11 (“H.R. 1406 would 

ensure that veterinarians cannot preserve their monopoly by remaining silent and relying on their position of 

authority to prevent competition.”).
42

would provide “the most effective, most efficient means of creating a consciousness of 

choice.”164

Information available to FTC staff suggests that even when consumers are aware that they can 

request a portable prescription, some may be reluctant to do so for fear of offending their 

veterinarian.165 At the workshop and in written comments, stakeholders expressed the view that 

consumer comfort levels vary with respect to requesting prescriptions.166 They suggest that 

affirmatively asking for a prescription can be intimidating to consumers, and that this 

intimidation factor can be amplified when veterinarians require waivers of liability, make 

disparaging statements about non-veterinary retailers (e.g., suggesting that the product may be 

counterfeit), or require extra fees for prescriptions.167 They further suggest that pet owners do not 

want to feel that they have somehow degraded or compromised their relationship with their 

veterinarian, even when they know the veterinarian has a clear economic interest in selling pet 

medications.168 Some FTC workshop participants support automatic prescription release to help 

 

164 Workshop Tr. at 151, 183 (Nate Smith). Smith argues that this principle underlies both the FTC’s Eyeglass 

Rule and the FCLCA. N. Smith Comment at 5. Indeed, the cornerstone of the FTC’s Eyeglass Rule and Contact 

Rule (which implements the FCLCA) is that automatic prescription release helps to ensure the availability of 

eyeglass and contact lens prescriptions so that consumers can choose among sellers of these products. See infra note 

180. See also Zeidner (1-800-CONTACTS) Comment at 1-2 (stating that “by request” prescription release laws are 

unenforceable, discriminatory, and ineffective and that automatic prescription release was the best way to raise 

consumer awareness of their ability to purchase eyeglasses and contact lenses from a retailer other than their 

prescriber).

165 See Boylan Comment (#255) (describing the awkwardness of requesting a prescription from a veterinarian 

from the perspective of a pet owner); Maine Hearing on L.D. 676, supra note 156 (statement of Curtis Picard, Exec. 

Dir. of the Me. Merchants Ass’n and pet owner) (describing a recent experience purchasing pet medications from a 

veterinary clinic: “After the visit with the vet, the assistant came into the exam room, told us we were all set and the 

prescriptions would be ready for us out front. At no time was I told that I had the option of getting the prescription 

filled elsewhere nor was I told what the prescriptions would cost. . . . I don’t know if the two medications I was 

prescribed could have been filled elsewhere at a dramatically different price. However, I felt like an uneducated 

consumer and felt like I had no power in the transaction. The price could have been any amount. I understand only 

from researching this bill that I could have asked for a prescription and sought to have it filled somewhere else. I am 

sure that only a very small percentage of Mainers know that this is permitted and take advantage of it.”). 

See also PetMed Express, Inc., Annual Report (Form 10-K) 4 (May 29, 2012), http://www.sec.gov/Archives/edgar/data/1040130/000118811212001799/t73684_10k.htm (stating that many pet 

owners “may be hesitant to offend their veterinarian by not purchasing these products from the veterinarian.”); N. 

Smith Comment at 5-6 (“In any event, when it comes to prescription release, such “by request” provisions do not 

work. They do not provide pet owners with the same level of knowledge regarding their ability to choose 

alternatives which automatic release provides. They put the pet owner squarely in the crosshairs of the conflict of 

interest, placing him or her in the difficult, and often intimidating position of having to ask a health provider for 

permission to purchase products elsewhere.”).

166 See, e.g., Workshop Tr. at 175-76 (Deborah Dubow Press) (“. . . some people are savvier shoppers than others.

Some people are more assertive than others when it comes to speaking out and being advocates for themselves. So, 

some people just may be more comfortable asking questions of their veterinarians than others.”).

167 Id. at 176-78 (Race Foster). 

168 See id. at 182 (Nate Smith).
43

ensure that all consumers receive a portable prescription when they would like one, but are too 

afraid or uncomfortable to ask.

169

In response to these arguments, many veterinarians and manufacturers contend that most

consumers are aware that they can request and obtain portable prescriptions, in part because 

widespread advertising has educated consumers regarding the many online and other retail 

sources of pet medications.170

B. Merits of Automatic Prescription Release

Some stakeholders and policymakers have concluded that current “upon request” policies are 

inadequate to ensure that consumers are aware of their ability to obtain portable prescriptions for 

pet medications. This perspective has motivated efforts to reform the current state of prescription 

portability. Notably, proposed legislation at both federal and state levels would require automatic 

prescription release for pet medications.171 Several industry stakeholders support legislative 

 

169 See id. at 176, 201-02 (Deborah Dubow Press); N. Smith Comment at 5.

170 See Workshop Tr. at 209 (Wendy Hauser); id. at 209-10 (Douglas G. Aspros) (stating that 1-800-PetMeds 

spent more than $200 million on advertising over the past 10 years informing pet owners that they can request 

prescriptions and have them filled online); id. at 245 (Link Welborn) (“Consumer awareness of a large number of 

online and discount retail sources of pet medications has increased greatly since 2003, as a result of millions of 

dollars of advertising. As a result, virtually every pet owner that I see in my practice is aware of these options.”); 

Neely Comment; Pfizer Comment (#329) at 2; AHI Comment at 4. See also Maine Hearing on L.D. 676, supra note 

156 (separate statements from 15 veterinarians) (many stating that their clients are already aware that they can 

request prescriptions and purchase pet medications from retailers; e.g., testimony submitted by Lawrence Buggia, 

DVM, Annabessacook Veterinary Clinic, suggesting that retailers, not veterinarians, should be responsible for 

informing consumers about the option of purchasing pet medications from some place other than the veterinary 

clinic).

171 See supra description of H.R. 1406, at note 67; H.R. 4023 and S. 2756, at note 72. We are also aware of at 

least two states where similar legislation was proposed, prompting the question of whether automatic prescription 

release should be mandated by individual state governments. See An Act to Enact Requirements Concerning 

Veterinary Prescriptions, L.D. 676, 125th Leg., 1st Reg. Sess. (Me. 2011), available at

http://www.mainelegislature.org/legis/bills/getPDF.asp?paper=SP0207&item=1&snum=125; An Act Concerning 

Veterinarians and Supplementing Chapter 16 of Title 45 of the Revised Statutes, S. 2915, 215th Leg., Reg. Sess. 

(N.J. 2013), available at http://www.njleg.state.nj.us/2012/Bills/S3000/2915_I1.PDF. Both state bills require 

veterinarians to notify their clients, both orally and in writing, of the option to obtain prescription items from sources 

other than the veterinarian, and provide written prescriptions to their clients without imposing an additional fee, 

regardless of whether the client requests it. The Maine bill was introduced on February 17, 2011, and received a 

unanimous “Ought Not To Pass” committee vote on May 10, 2011. The New Jersey bill was introduced on July 29, 

2013, and was referred to the New Jersey Senate Commerce Committee.

See also Maine VMA Comment (#281) (stating that a hearing on the proposed Maine legislation identified the 

following issues: (1) errors arise when pet medications are dispensed by anyone other than the veterinarian who has 

the VCPR; (2) veterinary medications are generally not well-suited for substitution; (3) decisions to substitute 

generic human medications for veterinary medications should be made by the veterinarian; and (4) the free market is 

already sorting out consumer choices between online veterinary pharmacies, human retail pharmacies, and 

veterinary practices). A review of the written testimony submitted to the Maine legislature in connection with this 

hearing reveals that several veterinarians attended the hearing and voiced concerns with the bill. They provided 

anecdotal examples of pharmacist dispensing errors, although it is unclear whether any of these cases were 

submitted to the state pharmacy board for investigation and possible disciplinary action. Maine Hearing on L.D. 

676, supra note 156 (separate statements from 15 veterinarians).
44

efforts to mandate automatic prescription release.172 Many veterinarians and other stakeholders 

have raised concerns regarding automatic prescription release, however, particularly if mandated 

by federal law.

This section summarizes areas of agreement between proponents and opponents of automatic 

prescription release, as well as the main arguments for and against automatic prescription release

raised by the AVMA, individual veterinarians, retailers, consumer advocates, and other

stakeholders.

1. Areas of Agreement Between Proponents and Opponents of 

Automatic Prescription Release

FTC staff notes at the outset that there does not appear to be any dispute between proponents and 

opponents of automatic prescription release on some overarching principles. First, it seems 

widely accepted that veterinarians should only be required to provide portable prescriptions for 

medications that they deem medically appropriate and would have been willing to dispense to the 

client directly. No mandate is needed for medications that the veterinarian would be unwilling to 

dispense to the patient themselves. Moreover, there is broad consensus that veterinarians should 

retain the right to require all necessary examinations and diagnostic tests that would enable them 

to prescribe treatment regimens that are medically appropriate, within the context of the VCPR, 

regardless of where the medications are purchased. Furthermore, there is agreement that 

veterinarians should not be required to verify prescriptions with pharmacies that are not properly 

licensed or accredited.173

 

172 See N. Smith Comment at 5; APAW Coalition Comment at 3 (“By extending long-standing prescription 

release principles found in the distribution of human medications to the marketplace for pet medications . . . the 

price of pet medications will decrease. . . . Finally, by giving pet owners the right to receive a copy of their pet 

prescriptions and the ability to choose the place and location for filling these prescriptions, they will be empowered 

to make more informed choices . . .”); K&L Gates Comment at 9 (supporting automatic prescription release because 

it promotes consumer choice and would further enable retail pharmacies to compete in the market for pet 

medications); NACDS Comment at 2 (“NACDS believes the choice of where to obtain pet medications – both OTC 

and prescription – should be made by the pet owner. For this reason, we support H.R. 1406, the Fairness to Pet 

Owners Act . . .”); Hubbard Statement, supra note 71, at 6 (“Mandatory release of prescriptions for pets will allow 

owners to choose more easily where to buy those prescription products. The proposed legislation would reduce the 

costs to consumers of prescription products both by providing an opportunity for comparison shopping by pet 

owners and by fostering a more competitive market for those products.”).

173 See AVMA Comment at 8; AAHA Comment at 2; SVHP Comment at 1 (“[R]equiring verification of 

prescriptions, regardless of whether the pharmacy is accredited or licensed, places the veterinarian in both a legal 

and ethical dilemma. At the same time, it puts consumers at risk . . . .”). See also A. Anderson Comment (stating that 

she only verifies prescriptions to Vet-VIPPS certified pharmacies due to the large number of fraudulent Internet sites 

selling unsafe products and expressing concerns that H.R. 1406 may deny her the ability to protect her clients from 

fraudulent Internet sites); J. Forbes Comment (“Being forced to provide a written prescription which a consumer can 

utilize virtually anywhere is disturbing to me. Presently, I try to guide my clients to the most reputable sources I 

know when they choose to fill a prescription elsewhere.”).
45

2. Arguments in Favor of Automatic Prescription Release

Based on the workshop record and additional information compiled by FTC staff, it appears that 

entry and expansion by non-veterinary retailers already have increased competition and likely 

lowered pet medication prices for some consumers.

174 As discussed below, conventional 

economic theory suggests that greater prescription portability (including via automatic 

prescription release) would increase consumer awareness about their options for purchasing pet 

medications from non-veterinary sources, and thereby enhance consumers’ ability to evaluate 

and exercise choices in the pet medications marketplace. This, in turn, could foster additional 

competition for the sale of pet medications and further benefit consumers.

a. Potential Benefits of Automatic Prescription Release

Advocates of state or federal policies mandating automatic prescription release frequently argue 

that it would benefit consumers by expanding their access to pet medications prescriptions.175 In 

addition to the potential for greater competition and lower prices, they argue automatic 

prescription release will better enable consumers to choose the most convenient purchase 

location for their needs at any given time, which may be their veterinarian, the Internet, or their 

local retail pharmacy.176 They also contend that automatic prescription release would help to 

 

174 See supra Section II.E.2, Effects of Non-Veterinary Retail Competition, at 21.

175 Currently, laws, regulations, and polices governing prescription release for pet medications vary across states. 

See supra note 134 and accompanying text. Some proponents of automatic prescription release believe that a federal 

law would “harmonize state laws to provide one consistent guideline for veterinarians” and most importantly, 

“provide a uniform framework to guide consumer expectations.” ASPCA Comment at 4. They argue that a uniform 

federal measure would raise consumer awareness of the ability to purchase pet medications outside of the 

prescribing veterinary clinic based on the factors most important to them (e.g. price, convenience, service), thereby 

facilitating consumer choice and competition. See ASPCA Comment at 4; APAW Coalition Comment at 2. However, some proponents of automatic prescription release believe that this can be best accomplished at the state 

level. The Independent Pharmacy Alliance supports state-level prescription portability efforts and urges the FTC “to 

endorse policies that give pet owners greater choice over access to pet medications and the economic benefits from 

greater competition than currently exists in the marketplace.” Indep. Pharmacy Alliance Comment at 2.

176 See N. Smith Comment at 5 (“Customer value is a function of having choice across comparable products, 

convenient access, in combination with price. For many (and likely most) the vet clinic will continue to be the best 

value or place to shop based on immediate access, service and convenience – even if the price is higher. For others, 

their familiar pharmacy with lower prices will be the best value.”); Workshop Tr. at 174 (Deborah Dubow Press) 

(noting that access to a veterinary clinic may be limited in certain areas, whereas access to a pharmacy may be more 

convenient); PACKAGED FACTS REPORT 3d, supra note 12, at 154 (“Consumers are clamoring for choice. . . . 59% of 

pet owners believe they pay more for pet meds at the vet and 87% would like vets to give them all of their options 

rather than just dispensing the meds in the office.”). 

Some stakeholders contend that automatic prescription release would not alter consumer purchasing behavior 

much, because it is more convenient for pet owners to purchase pet medications from the veterinarian at the time of 

an office visit. See, e.g., id. at 175, 180-81 (Wendy Hauser) (about 50 percent of the cost-sensitive clients to whom 

she affirmatively offers prescriptions choose to purchase pet medications at the time of the veterinary office visit); 

PetMed Express, Inc., supra note 21, at 7 (“Veterinarians hold a competitive advantage over us because many pet 

owners may find it more convenient or preferable to purchase these products directly from their veterinarians at the 

time of an office visit.”); ASPCA Comment at 3 (“BMAH [Bergh Memorial Animal Hospital, an ASPCA-run 

facility] does not have data showing the frequency with which clients fill prescriptions outside of the hospital.
46

ensure that consumers can obtain competitively priced products, including generic animal drugs, 

and would spur new product innovation.177

Alternative approaches have been suggested to promote the awareness and ability of consumers 

to obtain pet medications prescriptions, and mitigate some of the alleged burdens of automatic 

prescription release on veterinary practices. One such approach would require veterinarians to 

provide clients with notice that they may obtain portable prescriptions in lieu of dispensed 

medications upon request. For example, veterinarians might be required to post a sign in the 

veterinary clinic lobby, hand a written disclosure statement to the client, or provide notice 

verbally. This approach might address the concern that some consumers are unaware of the 

option to obtain a prescription from their veterinarian and have it filled elsewhere. 

Some stakeholders have argued, however, that consumers would obtain even greater benefits if 

veterinarians were required to offer portable prescriptions to clients, regardless of whether a 

portable prescription has been requested. As already noted, this kind of mandatory release would 

address the concern expressed by some stakeholders that consumers may feel intimidated when 

requesting prescriptions from their veterinarians, regardless of whether veterinarians do anything 

to intentionally cause the discomfort.178 Therefore, automatic prescription release might be more 

effective than notice requirements in raising consumer awareness and mitigating the intimidation 

a consumer may feel when requesting a portable prescription. Furthermore, some stakeholders 

have suggested that automatic prescription release may help to resolve the apparent conflict of 

interest associated with a veterinarian having the power to both prescribe and sell pet 

medications.179

 

However, given the choice to fill their prescriptions elsewhere, most BMAH clients will fill their prescriptions at the 

hospital dispensary simply as a matter of convenience.”).

177 See K&L Gates Comment at 7 (“Because pioneer companies are able to use the current distribution/dispensing 

system to greatly limit competition from affordable substitutable products, there is less incentive to develop new 

animal drugs. A portable prescription system would ensure that competition, in the form of generic drugs dispensed 

at retail pharmacies, would enter the marketplace as soon as all patents on a pioneer drug expire and thus stimulating 

pioneer companies to develop new and better proprietary products.”).

178 See Foster (F&S) Comment at 7 (“However, putting the burden on the consumer creates pressure and 

intimidation which can be removed by having the veterinarian offer to provide a written prescription.”); Magee 

(F&S) Comment at 15 (“Veterinarians should consider offering written prescriptions rather than waiting until a 

consumer asks.”).

179 See, e.g., Lau, Parasiticide Diversion, supra note 56 (quoting a member of the Society for Veterinary Medical 

Ethics as stating, “It’s clearly a conflict of interest to be prescribing and selling the drug at the same time.” She 

suggested two ways for veterinarians to resolve the conflict: not selling medications at all or proactively offering 

clients a portable prescription that they can take to a pharmacy if they wish).
47

b. Consumer Benefits of Prescription Portability: Lessons from 

Eyewear Industry and Implications for Pet Medications

Although the FTC has not previously studied prescription portability with respect to pet 

medications, the FTC has expertise regarding prescription portability in other contexts. 

Consistent with the FTC’s opposition to laws and regulations that inhibit competition by 

impeding informed consumer choice, the FTC has a long history of supporting efforts to promote 

prescription portability for eyeglasses and contact lenses, other markets where prescribers also 

dispense the products.

180 The FTC’s experience with the eyeglasses and contact lens industries 

reinforces the basic principle that prescription portability is generally beneficial to consumers.181

At the FTC’s pet medications workshop, there was a general consensus that prescription 

portability, as mandated by the FCLCA, enabled consumer choice and thus fostered a more 

competitive market for the sale of contact lenses,182 although panelists disagreed as to whether 

increased competition following the passage of the FCLCA resulted in better prices for 

consumers.183 One workshop participant claimed that separating exclusive prescribing power 

from exclusive dispensing power “promotes healthy results, and it brings value to consumers.”184

 

180 See Ophthalmic Practice Rules, 69 Fed. Reg. 5451, 5453 (Feb. 4, 2004) (codified at 16 C.F.R. pt. 456)

(“Because release might not occur in the absence of a federal release requirement and because release of 

prescriptions enhances consumer choice at minimal compliance cost to eye care practitioners, the FTC has decided 

to retain the eyeglass prescription release rule. . . . In the absence of automatic prescription release, these consumers 

may not know to ask for their prescription, or their eye care practitioner may discourage them from requesting it. 

With automatic prescription release, these consumers will receive their prescription so that they can comparison 

shop among eyeglass sellers if they choose to do so.”); Contact Lens Rule, 69 Fed. Reg. 40,482 (July 2, 2004) 

(codified at 16 C.F.R. pts. 315, 456); FED. TRADE COMM’N, THE STRENGTH OF COMPETITION IN THE SALE OF RX 

CONTACT LENSES (2005), http://www.ftc.gov/sites/default/files/documents/advocacy_documents/strength- competition-sale-rx-contact-lenses-ftc-study/050214contactlensrpt.pdf.

181 See FED. TRADE COMM’N, supra note 180, at 50 (“The Eyeglass Rule has improved the ability of consumers to 

comparison shop for eyeglasses. Its prescription release requirement, in particular, continues to benefit consumers 

by spurring competition and providing consumers with more choices and lower prices.”).

182 See Workshop Tr. at 256 (Hubbard) (“So, I want to give as many alternatives as I can to consumers, and the 

portability of the prescription is one thing that does.”); Hubbard Statement, supra note 71, at 5 (“Mandating the 

release of prescriptions by ECPs has fostered a competitive market for the retail sale of eyeglasses and contact 

lenses. Consumers have enjoyed ever-expanding and value driven competitive alternatives for purchasing their 

eyeglasses and contact lenses.”); Workshop Tr. at 261-62 (James C. Cooper) (“[M]ore choice is unambiguously 

good, even if consumers don’t use it.”); id. at 276 (Robert D. Atkinson); id. at 226-27 (Clarke D. Newman) (“The 

Lens Act was a very good thing for the consumer by creating a framework for prescription acquisition that enabled 

the patient to shop for the best deal on lens prices.”).

183 See Workshop Tr. at 240-42 (James C. Cooper) (describing his empirical research, and stating that “I don't 

really find any evidence [that the prescription release requirement affected prices], but my takeaway from that isn't 

that it was a bad idea or that consumers didn't benefit.”). Dr. James Cooper, Director of Research and Policy at the 

George Mason University Law & Economics Center, argued that his research shows offline vendors have not 

lowered their prices for contact lenses in response to increased competition from online vendors. Id. Robert 

Atkinson, President of the Information Technology & Innovation Foundation, argued that contact lens providers 

have competed on the basis of price since the passage of the FCLCA, and believes there is evidence that offline 

vendors have responded to price competition from online vendors. Furthermore, he claimed that there are several 

price benefits enjoyed by consumers that would not have been captured in the study that Cooper conducted. Id. at 

238-39, 259 (Robert D. Atkinson). 
48

For similar reasons, the elimination of current constraints on prescription portability in the pet 

medications industry would likely enhance competition to the benefit of consumers. Those 

benefits might include lower prices, increased service, and greater convenience. The ASPCA, 

which offered an animal and consumer welfare perspective at the FTC workshop, argued 

strongly in favor of expanded prescription portability for pet medications. Veterinary and general 

health care costs are frequently cited as prohibitive factors to pet ownership. The ASPCA has a 

vested interest in lowering the costs of pet ownership so that fewer pets will be abandoned and 

more people will adopt animals from shelters.185 For these reasons, the ASPCA believes that 

“[v]eterinarians and policy-makers should take every available opportunity to make pet care as 

affordable as possible. Prescription release is a small but logical part of the solution.”186

Specifically, the ASPCA contends that “having unfettered access to their pets’ prescriptions 

gives consumers a choice about where they buy pet medications. As with many markets, more 

choice encourages competitive pricing. Lower prices for pet medications ease the financial 

burden on pet owners and ultimately benefit pets.”187 The ASPCA argues that this downward 

pressure on prices is particularly important for price-sensitive consumers who are looking for 

ways to reduce the costs of pet ownership, and for whom the affordability of preventative 

medicines is critical to protect against conditions that may be difficult and expensive to treat.188

Also, for consumers that own pets with chronic conditions requiring maintenance drugs, the 

ASPCA estimates that the potential cost savings would be substantial.189

Although the pet medications industry appears to function in a similar manner as the contact lens 

industry before the FCLCA passed and manufacturer restrictive distribution practices were 

eliminated, there are also some notable differences that may limit the comparison that can be 

 

Other panelists stated their understanding that price competition in the contact lens industry increased 

significantly since passage of the FCLCA, and that consumers have benefitted. Id. at 244-45 (Link Welborn); id. at 

264-65 (R. Joe Zeidner); Zeidner (1-800 CONTACTS) Comment at 4-10 (providing examples of consumer cost 

savings and product innovation that he claims have resulted from increased competition for contact lenses). See also

FED. TRADE COMM’N, supra note 180, at 41 tbl.9 (finding that on average, independent eye care professionals 

charged more than other retail vendors, including wholesale clubs, online vendors, and mass merchandisers). On 

balance, the evidence suggests that consumers have the potential to achieve significant cost savings by purchasing 

their contact lenses from alternative retailers.

184 Workshop Tr. at 233-34 (Robert L. Hubbard).

185 Workshop Tr. at 163-66 (Deborah Dubow Press). See also consumer comments stating that the high cost of pet 

medications is a real deterrent to pet ownership. Neville Comment; D. Sherman Comment; Black Comment; 

Rafalow Comment.

186 ASPCA Comment at 4.

187 Id. at 3.

188 See Workshop Tr. at 166 (Deborah Dubow Press); ASPCA Comment at 3.

189 ASPCA Comment at 3. See also Hubbard Statement, supra note 71, at 6.
49

drawn between market conditions of these two industries. Several stakeholders observe that the 

pet medications industry encompasses many different formulations and dosages of drugs 

administered to a wide variety of animal species, while the contact lens industry encompasses a 

single-use commodity product dispensed in pre-packaged boxes for human use. Furthermore, 

they claim that there are much greater health and safety concerns associated with the dispensing 

of pet medications versus contact lenses, and that for these reasons, it is inappropriate to compare 

these industries.190

3. Arguments Opposing Automatic Prescription Release

While expressing general support for the ability of pet owners to obtain a portable prescription, 

the AVMA and several other organizations in the veterinary industry have strongly opposed 

mandatory automatic prescription release.191 They have taken the position that federal legislation 

is unnecessary and redundant, arguing that veterinarians already are encouraged to provide 

prescriptions to clients upon request, and that pet owners already have the ability to fill 

prescriptions at the pharmacy of their choice. To the extent that prescription portability is not 

being fully realized, the AVMA argues that state boards of pharmacy and veterinary medicine 

are fully capable of resolving any outstanding issues.192 Indeed, several critics of the proposed

 

190 See Workshop Tr. at 243-44 (Link Welborn); id. at 247-49, 263 (Kent D. McClure); Gay (VetRxDirect) 

Comment (#576); AVDA Comment at 12; AHI Comment at 4-5. FTC staff has also learned that there may be 

material differences between the prescriber/vendor models in these industries. For example, it appears that at the 

time of the FCLCA, various state laws permitted a prescriber to be the only entity that could fill the contact lens 

prescription. See Workshop Tr. at 215 (Sydney Knight). By contrast, pharmacists are legally permitted to dispense 

pet medications under the laws of all 50 states. 

191 See AVMA Comment at 7 (“The AVMA is strongly opposed to HR 1406 and does not believe any 

amendments should be considered.” ); AVDA Comment; AAHA Comment; SVHP Comment. See also AVMA 

Comment at 1 (“The AVMA has concerns with mandatory prescription writing for veterinarians.”); id. at 5 (“We 

believe that state regulatory mechanisms pertaining to veterinary prescription writing are adequate and that there is 

no need for a federal mandate. Both veterinary medicine and pharmacy practices have traditionally been regulated 

by the states. A federal mandate would be a dramatic and unwarranted departure from state professional regulation 

and should be done only if there is a particular problem that needs to be addressed. We are not aware of consumers 

widely being denied their requests for prescriptions and see no need for a federal mandate that would undercut 

existing state regulation of veterinary medicine and pharmacy practices.”); Workshop Tr. at 144 (Adrian Hochstadt); 

id. at 201 (Douglas G. Aspros) (the AVMA is unaware of any data suggesting that there is a problem with 

veterinarians providing written prescriptions that requires a federal legislative solution, and to the extent that there 

are any issues, state boards of pharmacy and veterinary medicine are fully capable of resolving them); Am. 

Veterinary Med. Ass’n, Action Alert: Take a Stand Against H.R. 1406, THE PETWORK (May 3, 2011), 

http://thepetwork.wordpress.com/2011/05/03/action-alert-take-a-stand-against-h-r-1406/ [hereinafter AVMA Action 

Alert] (encouraging veterinarians to take a stand against H.R. 1406); Verdon, supra note 69; How the Maine VMA 

Rallied to Help Defeat Adverse Legislation - A Case Study, AM. VETERINARY MED. ASS’N (May 17, 2011), 

https://www.avma.org/KB/VMA/Pages/How-the-Maine-VMA-rallied-to-help-defeat-adverse-legislation---a-case- study.aspx (describing efforts that state VMAs can take to defeat proposed state legislation that would mandate 

automatic prescription release for pet medications).

192 See AVMA Action Alert, supra note 191; Verdon, supra note 69; Workshop Tr. at 201 (Douglas G. Aspros) 

(“If there is any issue, there's certainly no federal recourse required to resolve it. State boards of pharmacy and state 

boards of veterinary medicine certainly have the tools they need to identify and solve this problem if they decide that 

there is one.”).
50

federal legislation argue that it would encroach upon state jurisdiction,193 and some stakeholders 

who support efforts to promote prescription portability believe that implementing such policies

on a state level would be a better approach.

194 Based on public comments received in connection 

with the FTC workshop, individual veterinarians overwhelmingly appear to oppose any 

legislation that would mandate automatic prescription release, whether at the federal or state 

level.

195 Some of the primary reasons for this opposition are discussed below, along with 

responses offered by supporters of automatic prescription release.

a. Effect of Prescription Portability on the VCPR

Opponents of automatic prescription release argue that dispensing medications provides an 

important “touch point” between veterinarians, clients, and patients, such that mandating 

prescription portability would threaten the integrity of the VCPR.196 According to this view, all 

decisions regarding a pet’s health care should be collaborative in accordance with the VCPR, and 

voluntary.197 Furthermore, veterinarians argue that pet owners are more likely to comply with 

treatment regimens if the veterinarian dispenses the medications.

198

 

193 See AVMA Comment at 8; Am. Animal Hosp. Ass’n (“AAHA”) Comment at 2; Workshop Tr. at 74-75 (Mark 

Cushing); id. at 205 (Douglas G. Aspros) (“My license as a veterinarian is governed under state law. Pharmacy is 

governed under state law. And suddenly we have this overlay of Federal legislation over both of those licensed 

professions, and it's not clear how that's going to be managed.”).

194 See Indep. Pharmacy Alliance Comment at 2 (arguing that the economic benefits of greater prescription 

portability cannot be achieved at the federal level, and instead consumers would most benefit from automatic 

prescription release requirements being adopted at the state level).

195 See, e.g., Gay (VetRxDirect) Comment (#576); Pedersen Comment; Neely Comment. Hundreds of additional 

comments received from individual veterinarians echo the sentiments expressed in these three examples. See also

Maine Hearing on L.D. 676, supra note 156 (separate statements from 15 veterinarians opposing L.D. 676). 

196 See Workshop Tr. at 187 (Wendy Hauser) (“We have had so much fragmentation within our industry, that this 

is one more way that we’re going to lose touch with our patients.”); Greeley Comment (“The prescription and 

fulfillment of medications for animals and the delivery of veterinary services are interwoven in the practice of 

veterinary medicine and should remain firmly under the authorization of veterinarians.”).

See also Novartis Comment at 4-5 (“Veterinarians understand patient history and drug interactions and serve as a 

control point for dispensing medications, which is key to supporting proper drug usage. Contact points such as 

treatment, prescription, dispensing and follow up appointments with pets and pet owners create a base of experience 

and opportunities for feedback that are unmatched. These contacts, and the continuity of care fostered by a strong 

VCPR, are critical to the effective administration of animal health care. When this continuity is broken, then health 

and safety of companion animals are threatened. It is our position that nothing should interfere with this relationship 

or these contact points.”); S. Anderson (Ass’n for Veterinary Clinic Success) Comment (expressing the fear that 

excessive outsourcing of dispensing might break the link between veterinarians and their clients).

197 See AVMA Action Alert, supra note 191.

198 See, e.g., S. Anderson (Ass’n for Veterinary Clinic Success) Comment (“In regard to patient care, our 

experience indicates that a client is less diligent in following a medication protocol when a veterinarian and 

veterinary practice are not involved through each step in the process, including the dispensing of medications.”); 

Maine Hearing on L.D. 676, supra note 156 (separate statements from 15 veterinarians opposing L.D. 676) 

(expressing concerns that clients will be less likely to comply with recommended prescription drug treatment 

regimens if they do not leave the veterinary clinic with the product in hand).
51

The AVMA has expressed support for the ability of a pet owner to choose where to fill

prescriptions,

199 and provides this guidance to veterinarians on how to handle client requests for 

prescriptions:

(1) Drug therapy, when medically indicated, should be initiated by the attending 

veterinarian in the context of veterinarian-client-patient relationship. Clients that 

wish to purchase their prescription drugs from a pharmacy rather than the 

veterinarian should be advised to first obtain a prescription from their veterinarian 

before contacting a pharmacy. The veterinarian may choose to either issue the 

prescription in writing for the client, or contact the pharmacy electronically or by 

phone. 

(2) Veterinarians should honor client requests to prescribe rather than dispense a 

drug (AVMA Principles of Veterinary Medical Ethics). The client has the option 

of filling a prescription at any pharmacy.

. . . .

(4) Veterinarians asked by pharmacies to approve prescriptions they have not 

initiated should do so only if the prescription is appropriate and a veterinarianclient-patient relationship exists.

200

Based on this guidance, it seems that while veterinarians may dispense pet medications within 

the context of a VCPR, a valid VCPR need not always include the dispensing of medications. At 

the same time, the AVMA has taken the position that a federal law mandating veterinary 

prescription writing in all cases “would negatively affect the strong bond of trust that 

veterinarians have earned with their clients.”201

In response, supporters of automatic prescription release argue that the VCPR is not undermined 

when a veterinarian does not actually dispense the pet medication because the veterinarian 

remains the only individual with the legal authority to prescribe the pet medication. They note 

that pharmacists are already legally allowed to dispense pet medications in every state and argue 

 

199 See supra notes 137 and 147 and accompanying text.

200 AVMA, Client Requests for Prescriptions, supra note 52. But see AVMA Comment at 8 (“The AVMA 

believes that veterinarians are uniquely educated to provide the best professional guidance and education to pet 

owners when dispensing prescription products.”).

201 Workshop Tr. at 157-58 (Douglas G. Aspros). See also Pfizer Comment (#329) at 3 (“PAH [Pfizer Animal 

Health] sees no need for legislation, regulation or other government action which might, inadvertently, diminish 

critical interaction between the veterinarians, patients and clients while putting more pressure on the retail 

pharmacies that are not properly equipped to meet the challenges.”).
52

that this does not undermine the VCPR. In particular, they note that pharmacists are legally 

required to dispense medications exactly as prescribed. Some pharmacy stakeholders claim that 

the VCPR is important at the point at which the pet medication is prescribed, but is unlikely to be 

jeopardized if the prescription is dispensed outside the veterinary channel.202 They argue that

even with automatic release, veterinarians would still maintain most of the major touch points 

associated with the VCPR, including examining and diagnosing the animals; determining

treatment regimens and prescribing medications; and providing follow-up care to pets203 – all 

services that may only be provided by veterinarians.

b. Safety Issues Regarding Retail Pharmacists

Although state laws permit pharmacists to dispense both human and animal drugs,204 many 

veterinarians have expressed concerns regarding the ability of retail pharmacists to dispense pet 

medications safely.205 Many of these concerns relate to pharmacists’ training and knowledge, 

while others relate to the quality of products available to pharmacies through the secondary 

distribution system.

A principal argument voiced by opponents of automatic prescription release is that pharmacists 

typically lack training in veterinary pharmacology, rendering it impossible for pharmacists to 

validate the dosing information included on a prescription for pet medications.206 Some 

pharmacists themselves acknowledge discomfort in dispensing pet medications when they do not 

have a strong working knowledge of veterinary pharmacology.207 It is unclear to what extent 

 

202 Workshop Tr. at 178-79 (Race Foster) (“Remember, you’ve already had the client-patient relationship, that’s 

at the point where the drug is prescribed. Now we just have to count the pills and fill it.”); Magee (F&S) Comment 

at 15 (claiming that the VCPR relates to the writing of prescriptions, not necessarily the dispensing of medications, 

and is fulfilled when the patient has been examined and the prescription has been written); Jorgensen (Animal 

Pharm) Comment.

203 See Valley Vet Supply Comment at 4 (“Certain segments of organized veterinary medicine and veterinary 

practitioners will oppose a mandate for written, portable prescriptions. These interest groups and individuals argue 

that veterinary product sales should be limited to the veterinarian’s clinic to ensure proper medical care, and client 

information. But these needs are met in a valid VCPR. . . . And if the customer requires additional guidance in 

administering the prescription drug, he/she can consult with the prescribing veterinarian.”). 

204 See supra note 45.

205 See infra notes 216 and 229 and accompanying text.

206 See AVDA Comment at 4-5 (questioning the ability of pharmacists to perform appropriate drug utilization 

reviews before dispensing pet medications). See also AVDA Comment at 3, 11; AAHA Comment at 1-2.

207 See Stangl Comment (pharmacy technician has observed a lack of knowledge about animal products in human 

pharmacies, and questions whether pharmacists are as equipped to identify mistakes on veterinary prescriptions as 

they are with human prescriptions). Dr. Elaine Blythe acknowledges that the vast majority of pharmacists do not 

have any training in veterinary pharmacology and are not comfortable filling pet medication prescriptions. She 

points out, however, that there are subsets of pharmacists who have sought additional training and education in 

veterinary pharmacology, some with highly specialized post-graduate veterinary pharmacology training and clinical 

experience, that have developed positive working relationships with veterinarians within their communities and 
53

continuing education programs could mitigate these purported safety risks. There do appear to be 

opportunities for pharmacists to augment their knowledge of veterinary pharmacology,

208 which 

may enable more pharmacists to confidently and safely dispense pet medications.209 If demand 

for pharmacist-dispensed pet medications were to increase, pharmacists may be more inclined to 

secure additional training.210 Indeed, this may already be happening to a certain degree.211 Some 

 

should be able to safely and confidently dispense pet medications and field common questions related to chronic and 

preventative medications used in companion animals. Workshop Tr. at 194-96 (Elaine Blythe).

208 See Workshop Tr. at 160-62 (Elaine Blythe) (describing the educational opportunities available to pharmacists 

who want to learn veterinary pharmacology); id. at 196-98 (explaining that roughly 20-25 percent of the 127 

accredited pharmacy schools in the U.S. offer courses in veterinary pharmacology; and when this is not an option, 

pharmacy students and practicing pharmacists may enroll in online courses in veterinary pharmacology; “I think the 

increase in educational offerings is reflective of the increase in prescriptions that are being outsourced to community 

pharmacies”); Int’l Bd. of Veterinary Pharmacy Comment (“Veterinary pharmacy continuing education programs 

taught by ICVP diplomats are available and can fill the knowledge gap for the practicing pharmacist.”); SVHP 

Comment at 1 (“SVHP represents pharmacists actively working in veterinary pharmacy, and our membership is 

uniquely positioned to educate veterinarians and pharmacists in the safe distribution of prescription products to pet 

owners through compliance with existing state regulation and the education of all the stakeholders in the drug 

distribution chain.”); Telephone Interview with Kim-Jung et al., supra note 126 (stating that they are aware of some 

pharmacy schools now offering elective veterinary medicine courses and/or veterinary clinical pharmacy residence 

programs, and some pharmacies now offering continuing education courses in veterinary pharmacology).

209 See Lau, Target Tests Market, supra note 104 (quoting Donald Plumb, author of Plumb’s Veterinary Drug 

Handbook, as stating that continuing education courses and access to decent reference materials should provide 

pharmacists with enough knowledge to dispense pet medications and interact with veterinarians in a professional 

manner); Workshop Tr. at 82-83 (Paul D. Pion) (stating that these safety issues “can all be overcome by education” 

and that he has “no doubt that pharmacists can learn this,” although he questions whether “big box stores and 

pharmacies who largely see selling pet medications as a way to increase traffic are going to pay adequate attention to 

these issues?”); Stevens Comment (arguing that pharmacists should receive proper training in veterinary medicine 

before automatic prescription release is implemented, and that this might be accomplished by requiring a continuing 

education course or primary coursework in pharmacy schools); Workshop Tr. at 61 (Brad Dayton) (agreeing that 

pharmacists are not fully trained in veterinary pharmacology, but that a pharmacist’s experience, knowledge, and 

education can be used to develop working relationships with veterinarians so that retail pharmacists can properly 

dispense pet medications); NACDS Comment at 1-2 (noting that pharmacists are highly trained healthcare 

professionals that “have developed additional policies and programs to ensure pet medications are dispensed in a 

safe manner. Initiatives by chain pharmacies include accredited continuing education lessons on common pet 

medications, common conditions, counseling, dosing in pets and triage – the recognition of symptoms that require 

immediate intervention by a veterinarian.”); Workshop Tr. at 125 (David G. Miller) (arguing that training should be 

the responsibility of the pharmacy profession and should be included within the pharmacy curriculum, continuing 

professional education, and board certification processes).

210 See, e.g., Terry Chowder, No. 511: Comment Re: August 2012 Newsletter Article No. 509: Veterinary 

Prescriptions, OR. ST. BOARD OF PHARMACY NEWSL. (Or. State Bd. Of Pharmacy, Portland, Or.) Nov. 2012, at 1, 

http://www.nabp.net/publications/assets/OR112012.pdf (“As community pharmacists increasingly dispense both 

human and traditional veterinary prescription products for animals it is important that we have the education 

necessary to best serve our animal patients. . . . Many of us did not receive veterinary pharmacy education when in 

school, so it is important that we discover this education on our own or encourage our employers to provide access 

to continuing education. As a suggestion, the education should not only cover the medications used in veterinary 

pharmacy, but should also consider the perspectives of veterinary practice, legal implications for dispensing to 

animals, and information regarding how we as pharmacists can best provide support to animal owners and 

veterinarians.”).

211 See PACKAGED FACTS REPORT 3D, supra note 12, at 168 (describing how, in response to increased consumer 

demand for prescription pet medications, Costco implemented a new pet medications initiative that includes a 

continuing education program for its pharmacists, a veterinary drug handbook, and access to assisting veterinarians).
54

commentators believe that basic continuing education for pharmacists should be sufficient,

212

while others believe that more is necessary.

213 Some stakeholders also suggest that informational 

product inserts can be provided by the manufacturers of pet medications to assist pharmacists,

214

and pharmacists can contact the prescribing veterinarian if they have any questions.215

Opponents also argue that retail pharmacists routinely alter pet prescriptions without

authorization from the prescribing veterinarian or otherwise make dispensing errors, and may 

provide inaccurate information to pet owners regarding administration techniques, dosing, side 

effects, and potential drug interactions.216 Some state veterinary medical associations have 

recently attempted to collect information regarding alleged instances of pharmacist errors when 

dispensing pet medications.

217 It does not appear, however, that this information has resulted in 

any substantiated claims or formal actions taken by state pharmacy boards.218

 

212 See Workshop Tr. at 199 (Race Foster) (stating that continuing education for pharmacists is “absolutely 

essential” and should be mandatory for any pharmacist that wants to participate in the field of veterinary medicine, 

but arguing that the training a pharmacist receives probably does not need to be as extensive as veterinarian training, 

because they are only dispensing the medications, not prescribing them); Foster (F&S) Comment at 9; supra note 

209.

213 See AVDA Comment at 5-6 (“A mandated expansion of the role of human pharmacies designed to increase 

participation in the veterinary prescriptions market would necessitate clinical pharmacists demonstrate the same 

level of competency for veterinary medicine as currently required for human health.”); SVHP Comment at 2 (“Most 

importantly, SVHP believes that although pharmacy education is rapidly coming up to speed with regard to 

veterinary pharmacotherapy that the average pharmacist is not yet ready to dispense and counsel for veterinary 

prescription drugs with the same level of expertise and accuracy as he/she possesses for human prescriptions. . . .

SVHP believes that the average retail pharmacist is currently incompletely prepared to participate in the VeterinaryClient-Patient-Relationship. This training will evolve through continuing education, self-training, and formal 

education in pharmacy schools and will obviously take years to fully accomplish.”); Brown Comment (#521). 

214 See Workshop Tr. at 125 (Brad Dayton) (“So, if we have the package insert coming from a manufacturer, we 

have a better chance to answer questions and dispense medication properly.”); id. at 95-96 (Michael H. Hinckle) 

(mentioning the usefulness of FDA-approved informational package insert that a pharmacist can reference).

215 See, e.g., id. at 61-62 (Brad Dayton); id. at 95-96 (Michael H. Hinckle).

216 See id. at 78 (Mark Cushing) (stating that there is a “whole series of examples of adverse consequences for 

pets when there was a decision made by a pharmacist . . . to change dosage, or to swap out the particular prescription 

for a different drug reflecting a lack of concern or understanding about how the medication would work with a pet 

when a simple phone call might have made the difference.”); AVMA Comment at 5 (“Potential risks associated with 

prescription filling at pharmacies include those pertaining to lack of formalized veterinary medical pharmacology 

educational requirements for pharmacists. Untrained pharmacists can unknowingly provide incorrect counseling or 

substitute inappropriate medications to the detriment of the patient.”). See also Workshop Tr. at 83 (Paul D. Pion) 

(claiming knowledge of hundreds of examples where this has been issue, and pointing out that pharmacists should

seek proper training and respect veterinary prescription directions to avoid these problems); Maine Hearing on L.D. 

676, supra note 156 (separate statements from 15 veterinarians opposing L.D. 676) (expressing concerns that retail 

pharmacists are untrained in veterinary pharmacology and often substitute other products for prescribed products or 

question the veterinarian’s expertise). 

217 See Oregon VMA Comment (#422) at 1 (“While we recognize that retail pharmacies are filling prescriptions 

issued by veterinarians upon the request of their clients, we expect this to be conducted in accordance with state 

laws and administrative rules of boards of pharmacies. Regrettably, this has not always happened in Oregon – and it 

has caused serious concerns among our member veterinarians. . . . Since late February [2012] we have monitored 

this issue and documented specific examples where retail pharmacists have changed dosages of drugs prescribed by 

veterinarians and even dispensed an entirely different drug to the veterinary client. This has been done without 
55

Proponents of automatic prescription release have responded that pharmacists are highly 

regulated, trained professionals who understand that they are legally required to dispense 

medications exactly as written.

219 Pharmacists know that they must obtain authorization from a 

veterinarian before making changes to a pet prescription, just as they would obtain authorization 

from a doctor before making changes to a human prescription.

220 Some stakeholders pointed out 

that existing regulatory mechanisms (namely, oversight by the state pharmacy boards and 

NABP) already address unauthorized alterations of prescriptions and other dispensing errors.221

 

consulting the veterinarian and receiving his or her authorization.”); id. at 5 (indicating that 35% of responding 

veterinarians claim to be aware of instances in which a retail pharmacy changed a veterinary prescription without 

contacting and receiving authorization from the veterinarian; 17% of responding veterinarians claim that this 

resulted in an adverse health event for the pet);WASH. VET SURVEY, supra note 143 (indicating that 38% of 

responding veterinarians claim to be aware of instances in which a retail pharmacy changed a veterinary prescription 

without contacting and receiving authorization from the veterinarian; 10% of responding veterinarians claim that 

this resulted in an adverse health event for the pet); S. CAL. VET SURVEY, supra note 143 (indicating that 33% of 

responding veterinarians claim to be aware of instances in which a retail pharmacy changed a veterinary prescription 

without contacting and receiving authorization from the veterinarian; 9% of responding veterinarians claim that this 

resulted in an adverse health event for the pet); IOWA VET SURVEY, supra note 143 (indicating that 20% of 

responding veterinarians claim to be aware of instances in which a retail pharmacy changed a veterinary prescription 

without contacting and receiving authorization from the veterinarian; 10% of responding veterinarians claim that 

this resulted in an adverse health event for the pet).

218 Greg Cima, Substitution Errors, J. AM. VETERINARY MED. ASS’N (Sept. 4, 2014), 

https://www.avma.org/News/JAVMANews/Pages/140901a.aspx (For example, the Oregon VMA forwarded its 

survey results to the Oregon Board of Pharmacy, although this information did not result in any substantiated claims 

or formal disciplinary actions. Gary Miner, Compliance Director of the Oregon Board of Pharmacy, stated that the 

survey did not provide sufficient details to allow the Board to investigate the alleged incidents of pharmacist error. 

Since the time of the survey, the Board has received additional reports of pharmacist error that have been 

investigated, and some have resulted in disciplinary fines being imposed. Miner stated, however, that most of these 

reported incidents are related to accidental changes rather than deliberate substitutions, and that such mistakes are 

unfortunate but normal occurrences in pharmacies.).

219 See K&L Gates Comment at 7-8 (“Pharmacists are trained professionals who operate within very stringent 

state law requirements concerning the dispensing of drugs. Pharmacists routinely communicate with medical doctors 

about the human drugs they prescribe. There is no reason to believe that pharmacists could not, or would not, 

similarly communicate with veterinarians when it is necessary to do so. In fact, pharmacists already safely dispense 

significant numbers of animal drug products and human drugs for animal patients. The assertion that animal drugs 

can only be safely dispensed by a veterinarian is simply unsupportable and runs counter to reality.”). See also

Workshop Tr. at 95-96 (Michael H. Hinckle) (stating that the large volume of pet prescriptions filled by retail 

pharmacies suggests that for the most part, they already properly and safely dispense pet medications, exactly as 

prescribed by veterinarians).

220 Indep. Pharmacy Alliance Comment at 2 (“Since both the practice of veterinarian medicine and pharmacy are 

licensed professions in all states, ensuring policies that mandate prescriptions for pet medications and an affirmative 

freedom of choice for the owner in when and where to fill this prescription does not jeopardize pet health treatment 

or the need for veterinarian medical diagnoses decisions. As with human medication therapy, no pharmacy can fill a 

pet medication that is contrary to the medical decision of the prescribing professional. Indeed, state pharmacy 

practices laws require compliance with treatment directions of any prescriber for a living being, either human or 

animal.”). 

221 See Valley Vet Supply Comment at 2 (the inspection, certification, and licensing by the state boards of 

pharmacy and the NABP ensure high levels of competency in the retail pharmacies that wish to dispense pet 

medications); PetCareRx Comment at 3 (“PetCareRx is not aware of any safety issues posed by licensed, Vet- VIPPS-accredited pharmacies’ dispensing pet medications pursuant to verified prescriptions. States heavily regulate 

the practice of pharmacy, and the NABP actively monitors for compliance with accreditation criteria and standards 

as well as legal requirements. More than sufficient oversight exists to address any safety concerns.”); Workshop Tr.

at 126 (David G. Miller).
56

They suggest that when veterinarians believe a pharmacist has incorrectly dispensed medications 

to their clients, the veterinarians should file a complaint with the appropriate state board and 

avail themselves of this regulatory process.222 Opponents of automatic prescription release have 

argued, however, that veterinarians rarely file complaints with state pharmacy boards223 because 

the process is difficult and veterinarians may be confused about whether pharmacy boards or 

veterinary boards have jurisdiction.224

Some commenters also suggest that alleged safety concerns regarding the capabilities of retail 

pharmacists have been exaggerated, and that pharmacists are qualified to safely and effectively 

dispense pet medications.

225 Some workshop participants argued that the health risk arguments 

 

222 See Workshop Tr. at 126 (David Miller); id. at 256 (Robert L. Hubbard) (“If there is an adverse health 

consequence, that’s something that the regulatory system should address, and that should be discussed with 

evidence, and we should go forward from there.”).

223 AVDA Comment at 7-8 (“It is important to note that changes for script medications by the pharmacist absent 

consultation with the issuing practitioner is illegal and subject to disciplinary action or even prosecution by state 

authorities and the boards of pharmacy. Yet, these types of incidents generally go unaddressed, leaving unsuspecting 

pet owners subject to further abuse at the hands of perhaps well intended but grossly ill-informed pharmacists.”); 

Brown Comment (#521) (claiming to have had pharmacists substitute inappropriate medications on written 

prescriptions on three separate occasions, but not reporting these instances to state pharmacy boards, and therefore 

believing that this is likely a more widespread problem than what is reflected in complaints to state pharmacy 

boards). See also AVMA Comment at 4 (arguing that state authorities need to better enforce rules relating to 

prescription drug sales to ensure that the decision for use of prescription drug in an animal is made by a veterinarian 

within the confines of a VCPR, not a pharmacist).

224 See Workshop Tr. at 127-28 (Mark Cushing); id. at 129 (Paul D. Pion).

225 See, e.g., K&L Gates Comment at 10 (“These [safety] allegations are without merit. Human drugs have been 

safely and effectively dispensed by pharmacists based on physician prescriptions for decades. The pharmacy 

environment is efficient and safe. The veterinarian is not abdicating the veterinary-patient relationship to the 

pharmacist any more than a physician would abdicate the physician-patient relationship to the pharmacist in the 

human context. If the pharmacist has a question about a prescription or a dose, they would call the veterinarian, just 

as they would call a physician about a human prescription. Responsible pet drug manufacturers provide pharmacists 

with educational material and programs to ensure than pharmacists are equipped to counsel consumers about their 

product. The FDA-approved product insert that accompanies each animal drug also provides information about 

species, weight and potential metabolic issues as well as concerns about dosing. There is simply no supportable

argument for the position that pharmacies cannot safely dispense animal drugs. In fact, pharmacies are generally 

better suited to dispensing drugs than veterinarians. Pharmacies are routinely inspected by the state Boards of 

Pharmacy and have developed highly efficient inventory and dispensing systems to minimize errors. While errors by 

pharmacists are cited in the comments, it goes without saying that veterinarians also make mistakes. Obviously, 

veterinarians can also safely dispense drugs and there will always be a place for vet-dispensed drugs.”). 

Some retail pharmacies claim to have implemented internal processes to ensure that their pharmacists dispense 

pet medications safely. See Kroger Comment at 2 (stating that pharmacists are well-suited to accept prescriptions 

from veterinarians, and Kroger is “very satisfied with the tools that have been developed for our pharmacists, by 

vets and vet drug references, to help pharmacists practice the same drug utilization review (DUR) skills used in 

every day practice of human med dispensing, and apply them to pet prescriptions.”); PetMed Express, Inc., supra

note 21, at 3 (noting that pharmacists and pharmacy technicians are required to verify all prescriptions with the 

prescribing veterinarian before an order can be processed); PetCareRx Comment at 2 (“After a veterinarian has 

examined a customer’s pet and prescribed a particular medication, the customer calls PetCareRx or visits the 

company’s website to place an order for the prescribed product. . . . PetCareRx then contacts the prescribing 

veterinarian to confirm that a valid prescription exists. After the prescribing veterinarian provides the prescription to 

PetCareRx, one of the company’s licensed pharmacists dispenses the medication in accordance with applicable legal 

requirements . . . PetCareRx dispenses prescription pet medications only after confirming the existence of a valid 

prescription with the customer’s treating veterinarian. Our business model provides pet owners with a safe, 

convenient, and often less expensive alternative to purchasing the medications their pets need.”).
57

raised by veterinarians are very similar to arguments raised by eye care professionals during the 

contact lens antitrust litigation226 and in opposition to the FCLCA, and should be treated with 

skepticism. These commenters emphasized that, if health care concerns are valid, the regulatory 

system should address them directly, and that this is preferable to industry participants limiting 

access to portable prescriptions.227

Commenters on both sides acknowledged that communication between veterinarians, 

pharmacists, and clients can potentially address many of these concerns. When in doubt about 

dispensing pet medications, pharmacists can consult with the prescribing veterinarian, as is the 

standard practice when dispensing human pharmaceuticals.228 Although some commenters 

expressed concerns about retail pharmacists’ ability to provide adequate follow-up care to pet 

owners – particularly in the event of an adverse reaction229 – there do not appear to be significant 

 

226 See In re: Disposable Contact Lens Antitrust Litigation, No. MDL 1030 (complaints filed M.D. Fla. 1994). 

During this litigation, the attorneys general of 32 states and a certified class alleged that eye care professionals 

engaged in an organized effort to prevent or hinder consumers from obtaining their contact lens prescriptions. The 

complaints named Johnson & Johnson, Bausch & Lomb, CIBA Vision, the American Optometric Association, and 

individual optometrists as defendants. The complaints alleged two conspiracies: (1) that the practitioners and their 

trade associations conspired to prevent the release of contact lens prescriptions to consumers, and (2) that the 

manufacturers, practitioners, and trade associations, including the American Optometric Association, conspired to 

eliminate sales of contact lenses by pharmacies, mail order, and other alternative sellers. According to the 

complaints, the conspiracy severely restricted the supply of contact lenses available to alternative sellers, which 

hampered the growth of such sellers, decreased the supply of lenses to consumers, and increased the price of lenses. 

The parties reached settlements, the last of which the court approved in November 2001. As part of these

settlements, defendant manufacturers agreed to sell lenses via alternative distribution channels. Id.

227 See, e.g., Hubbard Statement, supra note 71, at 8-9. See also Workshop Tr. at 234-36 (Robert D. Atkinson) 

(“I’ve been writing and speaking about this issue of intermediary resistance to e-commerce since 2000, and it’s been 

amazing to watch the proliferation of industries and professions that fight back against consumer choice. They all 

use exactly the same logic and argumentation. This is car dealers, wine wholesalers, lawyers, realtors, undertakers, 

optometrists, and now veterinarians. They engage in this through three principal ways. ”). The three principal ways 

include: (1) collusion with producers, (2) limiting access to key resources, and (3) supporting passage of state laws 

that restrict access. Id.

228 Indeed, surveys conducted by some state veterinary medical associations suggest that this already occurs to a 

significant degree. See Oregon VMA Comment (#422) at 3; WASH. VET SURVEY, supra note 143; S. CAL. VET 

SURVEY, supra note 143.

229 See Workshop Tr. at 35-36, 82-83 (Paul D. Pion) (veterinarians have concerns about the ability of retail 

pharmacists to provide information regarding administration techniques, dosing, side effects, and potential 

interactions); id. at 157-58 (Douglas G. Aspros) (“Pet owners may encounter misinformation or inappropriate 

substitution from pharmacists who are not trained in veterinary pharmacology, who are prepared to discharge all of 

the responsibilities of a pharmacist when dispensing to a pet.”); Greeley Comment (providing examples of 

pharmacists who have offered inappropriate counseling to pet owners); Workshop Tr. at 56-57 (Andrew J. Bane) 

(“Specific training is required to properly evaluate, dispense, educate and counsel pet owners on the proper use and 

administration of medications to different species of pets. . . . [W]e feel that pharmacists trained only in human 

medicine is not interchangeable with a pharmacist specializing in veterinary medicine.”); id. at 87-88 (veterinarians 

are in the best position to dispense pet medications so that they have the opportunity to administer the first dose in 

the veterinary hospital, allowing pet owners to understand proper dosing and reactions to watch for); SVHP 

Comment at 2 (“The vast spectrum of doses, contraindications, side effects, and drug interactions that occur in 

animal species and breeds are not included in retail pharmacy prescription software and alert systems, and a safety 

net for animal patients is currently lacking in the average retail pharmacy practice. The average pharmacist, at the 

present time, is not likely to have sufficient knowledge to confidently and appropriately prepare, dispense, or 

counsel pet owners with regard to handling, administration, and monitoring of prescribed therapy.”); Gay 

(VetRxDirect) Comment (#576) (“There are hundreds of veterinary prescription medications as well as hundreds 
58

obstacles preventing veterinarians themselves from providing information and follow-up care to 

pet owners after a prescription is dispensed by an alternative retailer.

230

The AVMA is working with the NABP and other pharmacy stakeholders to help pharmacists 

better “understand their roles and responsibilities for counseling and educating clients when 

filling a veterinary prescription, including verification with the prescribing veterinarian should 

the pharmacist have any questions about the medication or dosage.”231 In addition, some state 

veterinary medical associations and boards of pharmacy are coordinating to resolve these issues

by, for example, instructing pharmacists to encourage pet owners to contact their veterinarians 

with any questions about medications or follow-up care.232 Information regarding administration 

techniques, dosing, side effects, and potential drug interactions could still be provided by 

veterinarians at the time of the examination or office visit, or through the use of printed 

instructions.

 

more human medications that are prescribed for companion animal use. The average pharmacist in the United States 

does not have adequate knowledge to dispense all of these medications safely, nor do they possess the ability to give 

advice about their use to pet owners. . . . And without basic knowledge of veterinary pharmacology by the average 

pharmacist in the United States, it would be unwise, dangerous and unethical to dispense medicines they are not 

familiar with.”); Pedersen Comment (claiming that human pharmacists are untrained in veterinary pharmacology, 

which potentially increases medication errors).

230 According to AVMA recommendations, “[p]rescribing veterinarians should ensure that information regarding 

the proper use of the prescribed drug and the risks associated with its use are communicated to the client, regardless 

of the drug source.” See AVMA Client Requests for Prescriptions, supra note 52 (Recommendation 7). Some 

veterinarians have argued that because pharmacists are more likely to make dispensing errors or provide incorrect 

information to pet owners, prescription release may result in a higher volume of adverse events for pets. The AVMA 

argues that these situations could require additional treatment for pets, at additional cost to pet owners, in 

comparison to the veterinarian dispensing the medication properly in the first instance. See AVMA Comment at 3.

However, no data have been presented to support these assertions. In addition, it is theoretically possible that postdispensing costs might be higher for veterinarians when a prescription is filled by an alternative retailer, even when 

it is filled correctly. For example, clients may require more follow-up counseling when they purchase pet 

medications from a retail pharmacist rather than the veterinarian, and the veterinarian may not always be able to

charge the client for this follow-up care. However, FTC staff is unaware of data to support this theory.

231 AVMA Comment at 1. See also id. at 4 (“The AVMA is currently reaching out to pharmacy stakeholders to 

help ensure optimal communications and interactions between individual prescribing veterinarians and pharmacists 

for the well-being of our patients.”); SVHP Comment at 1 (referencing “the emerging collaborative process that the 

professions of pharmacy and veterinary medicine have been undertaking over the last decade.”).

232 See Workshop Tr. at 127 (Mark Cushing) (stating his belief that most pharmacists already coordinate with 

veterinarians if they have questions); OR. VET SURVEY, supra note 143, at 1 (“When a retail pharmacist has a 

concern about a prescription issued by a veterinarian, a majority will contact the veterinarian to discuss the issue. In 

some instances, veterinarians have established a good business relationship with a local pharmacist, and together 

they work hand-in-hand to meet the needs of the client and the best interests of the patient.”). The Oregon Board of 

Pharmacy acknowledged that the information exchange with the Oregon VMA prompted continued dialogue 

between the Board and veterinarians, and has resulted in more educational outreach by the Board regarding 

pharmacist dispensation of pet medications, as well as recommendations that Oregon pharmacy schools offer more 

courses in veterinary pharmacology. Also, Oregon pharmacies that dispense pet medications are now required to 

keep veterinary drug reference materials on hand, “such as Plumb’s Veterinary Drug Handbook or the Merck 

Veterinary Manual.” Cima, supra note 218.
59

A second, distinct area of concern relates to the quality of the pet medications dispensed by retail 

pharmacists. Some veterinarians claim that the integrity of products dispensed outside the 

veterinary channel cannot be trusted because these medications often are procured through the 

secondary distribution system, thereby increasing the risk that the products could be counterfeit, 

adulterated, or otherwise compromised.233 The FDA has issued a warning to consumers about 

purchasing pet medications from unscrupulous online pharmacies that operate illegally. The 

FDA states that it “has found companies that sell unapproved pet drugs and counterfeit pet 

products, make fraudulent claims, dispense prescription drugs without requiring a prescription, 

and sell expired drugs.”234 Therefore, it recommends that consumers purchase pet medications

only from Vet-VIPPS accredited pharmacies to ensure product quality.

235

These types of concerns may cause some veterinarians to be reluctant to provide portable 

prescriptions to clients.236 However, the AVMA acknowledges that there should not be any 

serious product safety concerns if retail pharmacists procure and dispense pet medications in an 

appropriate and legal manner.237 Other industry stakeholders suggest that limiting prescription 

portability does not protect consumers from illegal counterfeit products. Rather, they suggest, 

this problem would be better addressed by making pet medications readily available in retail 

pharmacies that are equipped to identify and eliminate counterfeits.238

c. Administrative Burdens and Cost of Compliance

Many industry stakeholders have expressed concern that veterinary practices, some of which 

may already face economic pressures, will face substantial administrative burdens and additional 

 

233 See infra Section IV.A.5, Product Pedigree and Safety Issues Associated with Secondary Distribution, at 81. 

234 Purchasing Pet Drugs Online: Buyer Beware, U.S. FOOD & DRUG ADMIN., 

http://www.fda.gov/forconsumers/consumerupdates/ucm048164.htm (last updated Mar. 11, 2010).

235 Id.

236 See, e.g., B. Taylor Comment (arguing that veterinarians need the ability to monitor the sources from which 

their clients purchase pet medications; mandatory written prescriptions take away this ability, thereby compromising 

follow-up care for pets).

237 AVMA Comment at 2 (“Assuming that pharmacies acquire FDA-approved products through legal channels 

and store and ship them in the appropriate manner per manufacturer guidelines and state pharmacy rules, there 

should not be a concern with product safety or quality. We are unaware of any legal restrictions preventing pet 

prescription products from being dispensed by nonveterinary retail pharmacies. The key requirements are that the 

pharmacy is compliant with pharmacy laws and regulations and the prescriber must be authorized to provide the 

prescription.”).

238 See, e.g., K&L Gates Comment at 6 (“The market for these counterfeit and low quality products is only 

encouraged by the lack of availability of low price alternatives in readily available retail outlets (i.e., pharmacies).

There is no better way to protect against these low quality alternatives than by making affordable, high quality 

products readily available in retail pharmacies that are equipped to identify and eliminate counterfeits and evaluate 

substitutions within established guidelines.”). 
60

costs to comply with automatic prescription release legislation.239 The AVMA and many 

veterinarians claim that there is administrative burden associated with writing a prescription for 

each medication, regardless of whether the client opts to fill it elsewhere. In further describing 

this burden, the AVMA claims that writing, calling in, or faxing a prescription adds a few 

minutes to every appointment, or more when patients require more than one medication. The 

verification requirement for every prescription, including follow-up phone calls from 

pharmacies, may further increase the time, cost, and burden placed on a veterinary practice.240

For clients who decide to have their prescriptions filled by the veterinarian, the AVMA claims 

that extra measures would be needed to store or properly dispose of superfluous written 

prescriptions, in accordance with state laws, so as to prevent misuse of any prescription.241 The 

AVMA further argues that the cumulative time required for prescription writing and verification 

activities for all patients would substantially impact the scheduling of appointments in veterinary 

practices, as well as the allocation of support staff duties and other office resources. As a result, a 

veterinarian might need to extend office hours to ensure sufficient patient volume to keep a 

practice running, which would increase costs.242

In response, other stakeholders contend that the administrative burdens and additional costs of 

complying with automatic prescription release legislation would be minimal.243 Human health 

care practitioners are expected to write and verify prescriptions for their patients, and some use 

time-saving measures such as automated dispensing devices, personal digital assistant (“PDA”) 

devices, and tablet computers to more quickly generate prescriptions for patients and their 

medical files and reduce errors. It is possible that existing or evolving technologies, particularly 

those already used in the human medical field, could help reduce the administrative burdens and 

 

239 See, e.g., AVMA Comment at 7; Oregon VMA Comment (#422) at 2; AHI Comment at 5; Workshop Tr. at 

204-05 (Douglas G. Aspros); Arp, supra note 35; S. Anderson (Ass’n for Veterinary Clinic Success) Comment 

(“Some veterinary practices will have difficulty in conforming with proposed legislation, and I believe that it will 

force several of these small businesses out of business.”); A. Anderson Comment. See also Maine Hearing on L.D. 

676, supra note 156 (separate statements from 15 veterinarians) (expressing concerns that mandating automatic 

prescription release would be burdensome and time-consuming to veterinary practices, and that this would likely 

increase the costs of veterinary care).

240 AVMA Comment at 7. See also id. at 3 (“Faxed prescription requests from pharmacies also create 

inefficiencies. These requests are generated by the client or pharmacies, and veterinary clinics can receive numerous 

faxes a day. These faxes require the review of patient medical histories before authorization can be granted or 

denied. Additional inefficiencies associated with faxed requests include when the dispensing pharmacist has followup questions for the veterinarian.”).

241 Id. at 7.

242 Id.

243 See ASPCA Comment at 5; K&L Gates Comment at 12; N. Smith Comment at 5.
61

compliance costs for veterinarians, while helping them adapt to the changing pet medications 

marketplace.244

Furthermore, it appears that automatic prescription release requirements could be reasonably 

tailored to avoid imposing any unnecessary administrative burdens on veterinarians. For 

example, if the client opts to have the veterinarian dispense the medication, the veterinarian does 

not need to provide a written copy of the prescription.245 When clients do opt for a portable 

prescription, they could choose to receive it in writing, or have it transmitted by telephone or in 

an electronic format.246 Some clients may prefer the convenience of having a prescription 

directly transmitted to the retail pharmacy of their choice, rather than having to physically 

deliver a written copy. It may not be necessary, therefore, to require that written prescriptions be 

prepared and physically handed to a client in every instance.247 This would be consistent with 

emerging practices in the human medications industry, where written prescriptions are 

increasingly less common.248

Some veterinarians have argued that they need to assess fees for issuing portable prescriptions to 

cover their administrative costs.249 Concerns have been raised, however, regarding veterinarians’ 

 

244 See Wilson & Rossi, supra note 124 (arguing that information technology presents opportunities to reduce 

medication errors in both the human medical and veterinary professions: “Electronic prescribing has helped reduce 

prescription, dispensing and administrative errors.”); id. (“Computerized physician order entry (CPOE) is a system 

for physicians to prescribe pharmaceuticals online, and has probably had the biggest impact of any automated 

intervention in reducing medication errors.”). CPOE systems could also reduce the time normally associated with 

providing portable prescriptions.

245 See AMVA Comment at 8; SVHP Comment at 1 (“It is burdensome and unnecessary to require a written 

prescription as well as a written notification that the prescription may be filled elsewhere, regardless of whether the 

client is having the prescription filled by the veterinarian.”); Foster (F&S) Comment at 7 (“If the consumer decides 

to have the veterinarian dispense the medication, the veterinarian need not write a prescription.”). 

246 See AVMA Comment at 2 (portable prescriptions may be provided by handing “a written prescription to the 

client, by prescribing via telephone or electronically to a pharmacy, or by signing a faxed prescription from a 

pharmacy upon request, as allowable under individual state veterinary medical and pharmacy rules.”). See also

AVMA Client Requests for Prescriptions, supra note 52 (Recommendation 1) (“The veterinarian may choose to 

either issue the prescription in writing for the client, or contact the pharmacy electronically or by phone.”).

247 Proposed legislation has varied on this requirement. H.R. 1406, H.R. 4023 and S. 2756 would have required 

that a copy of each prescription, whether in written, oral or electronic format, be provided to consumers. Conversely, 

Maine Senate Bill S. 207 and New Jersey Senate Bill S. 2915 would have required that written copies of each 

prescription be provided to consumers.

248 See Neely Comment (the human medical community is moving away from written prescriptions in favor of 

other methods, such as fax or phone, to avoid errors that arise when written prescriptions are misread).

249 See AVMA Comment at 6 (“The AVMA contends that it is not appropriate for federal law to deny 

veterinarians the ability to charge a fee . . . for providing a written prescription to clients . . . . Writing prescriptions 

and subsequent follow-up work, including phone calls with pharmacists, takes time and it is not unreasonable to 

charge a fee for that time.”); Malon Comment (“At the very least, veterinarians should be able to be compensated for 

creating the appropriate prescription for an animal (this should not necessarily be a free service).”). See also AM.

ANIMAL HOSP. ASS’N, supra note 104, at 245 (“In 2012, the average prescription fee charged by a veterinary 

practice for medications dispensed from its own hospital was $10.04, and the fee charged for a prescription to be 

filled elsewhere was similar ($10.68).”).
62

imposition of fees as a precondition to providing clients with a portable prescription. In 

particular, some observers have expressed concern that veterinarians are requiring such fees as a 

way to discourage consumers from requesting and obtaining portable prescriptions, rather than 

for legitimate business reasons.250 Prescription fees may be economically justified if they 

represent reasonable compensation for the actual cost of providing portable prescriptions, which 

in some cases might include reviewing patients’ medical files, verifying prescriptions, and 

answering pharmacists’ questions.251 Some stakeholders have suggested, however, that the 

procompetitive goals of prescription portability would be better served, and clients would face 

fewer real or perceived barriers to receiving portable prescriptions, if veterinarians simply 

charged clients a single professional services fee that encompassed all administrative activities, 

including providing prescriptions.252 Of course, that would shift costs to those clients who are 

not obtaining a prescription drug or those who purchase directly from the veterinarian.

d. Veterinarian Liability Issues

Some veterinarians have expressed concerns about possible liability when pet medications are 

dispensed by retail pharmacists. In particular, they question whether a veterinarian will be held 

responsible if a pharmacist dispenses an incorrect, counterfeit, or otherwise adulterated pet 

medication; therefore, some veterinarians may require clients to sign a waiver of liability before 

providing them with a portable prescription.

253 Some veterinarians have expressed concern that 

proposals to prohibit the use of such waivers could potentially expose them to liability for the 

 

250 See K&L Gates Comment at 11 (“Restrictions on fees and waivers are necessary to prevent their use as means 

to indirectly prevent competition. Veterinarians are free to charge whatever they wish for their services, but charging 

a client an additional fee for writing a prescription serves only an anti-competitive purpose. Presumably, no such fee 

would be charged if the client opted to purchase its drugs directly from the veterinarian. Yet, the administrative costs 

associated with dispensing (e.g. labeling, recordkeeping, etc.) are surely as high, if not higher, than the costs 

resulting from writing and recording a prescription. The sole purpose for charging such a fee would be to discourage 

clients from requesting a prescription and thereby preserving the veterinarian’s monopoly.”). See also IOWA VET 

SURVEY, supra note 143 (“We charge $8/script to [provide prescriptions for clients to fill at an online outlet or retail 

pharmacy], so we don’t get too many [requests]”).

251 See, e.g., Principles of Veterinary Medical Ethics of the AVMA, supra note 38 (Principle VII.f.ii.) (“A 

veterinarian may charge a fee for the services the veterinarian provides in conjunction with the use of third-party 

providers such as laboratories, pharmacies, and consulting veterinarians.”).

252 See Foster (F&S) Comment at 7 (“Certainly veterinarians, just as physicians, have a right to be paid for their 

services, including the processing of faxes, record-keeping, correspondence and other tasks associated with 

prescriptions. I feel this is best accomplished with a simple office call or professional services fee, which are 

common practices in the human medicine. To do otherwise pressures clients and reduces prescription portability.”).

253 See, e.g., Workshop Tr. at 186 (Wendy Hauser) (“You bet I have my clients sign a waiver if they want to order 

online, and the reason that I do is because I can’t guarantee the safety of those drugs. . . . I look at that waiver as 

informed client consent, period. I do like the fact that I feel it releases me from some liability.”); A. Anderson 

Comment; Greeley Comment. Several examples of liability waivers used by veterinarians are on file with the 

authors.
63

mistakes of pharmacists, as well as the costs of litigating such claims.254 Some commentators 

have also suggested that veterinarians might face legal liability if they prescribe a human generic 

drug rather than a veterinary-label drug in an effort to save their clients money.

255

Based on the workshop record and additional research, these concerns do not appear to be 

founded. FTC staff received no information regarding any instances where a veterinarian has 

been held liable for a pharmacist’s dispensing error. Some pharmacy boards have expressly 

indicated that pharmacists are responsible for any prescription misfills, not veterinarians.256

Thus, it is unclear that such waivers are, in fact, necessary to protect veterinarians from legal 

liability. Available information suggests that as long as an animal is properly examined and 

diagnosed, and a prescription is written properly, it is unlikely that liability would attach to a 

veterinarian in the event a retail pharmacist incorrectly dispenses a medication.257 Likewise, FTC 

staff is unaware of any evidence that veterinarians have faced legal liability for prescribing 

human generic drugs for use in companion animals when a veterinary-label drug is available.

 

254 Legislation proposed at the federal and state level would prohibit veterinarians from requiring waivers of 

liability from clients who obtain portable prescriptions. See supra description of H.R. 1406, at note 67; H.R. 4023 

and S. 2756, at note 72; and Maine S. 207 and New Jersey S. 2915, at note 171.

255 See MYERS, supra note 104, at 2 (“Increased legal risk. If a pet experiences a complication from a human drug 

and the client files a complaint with the state board or court, how will you defend yourself when a FDA veterinary 

approved drug was available?”). In written testimony to the Maine Legislature, one veterinarian contended that 

veterinarians are required by the FDA to dispense and prescribe veterinary approved drugs when available, and are 

only allowed to prescribe a human drug if there is no animal drug that can successfully treat the condition when used 

in accordance with the approved label. Furthermore, this veterinarian stated that veterinarians who deviate from 

these guidelines face the risk of unfavorable actions by the FDA and are not protected by liability insurance. See 

Maine Hearing on L.D. 676, supra note 156 (statement of Derralyn Rennix, DVM, Poland Animal Hosp.). See also

id. (statement of Renee L. Bourgeois, DVM) (“The FDA recommends dispensing the veterinary version of a given 

medication even if a less expensive generic version exists.”). However, a thorough reading of the FDA’s guidance 

on extra-label drug use in veterinary medicine reveals that this restriction applies only to food animals, not 

household pets. See The Ins and Outs of Extra-Label Drug Use in Animals, supra note 58 (“In companion (nonfood-producing) animals, you can prescribe an approved human drug for an extra-label use even if an approved 

animal drug is available.”).

256 See, e.g., Letter from Hawaii Board of Pharmacy to Hawaii Pharmacists Concerning Veterinary Prescriptions 

(Jan. 2014), http://hawaii.gov/dcca/pvl/news-releases/pharmacy_announcements/veterinaryprescriptions/PharmacistVetPrescription.pdf (“If a pharmacy changes or alters the veterinary prescription, who is 

liable or responsible for any ill consequences to the veterinary patient that may result? Response: A pharmacist is 

not allowed to change or alter a prescription without first consulting with the prescriber.”). 

257 See K&L Gates Comment at 11 (“Pharmacies are liable for any medication errors that they make when 

dispensing a drug product. Veterinarians do not need any special liability protection.”); AVMA FAQS, supra note 

52, at 4 (“In general, veterinary liability is based on the standard of care in your jurisdiction. Standards may vary 

among jurisdictions, but in general, if you 1) prescribe an appropriate medication at the correct dose for the patient; 

2) talk with the client about the various alternatives to the medication (if any); and 3) share risks with the client and 

get client consent on the medication to be used, then it is less likely that you will be held responsible, even if your 

patient has an adverse reaction or the pharmacy filled the prescription incorrectly.”).

Some stakeholders argue, however, that even if veterinarians would not ultimately be found liable, without a 

liability waiver they may find it more difficult to get lawsuits filed against them dismissed. See Wilson (Priority 

Veterinary Mgmt. Consultants) Comment (#475).
64

Some proponents of automatic prescription release have questioned the motivations of 

veterinarians who require liability waivers as a precondition for issuing a portable prescription. 

In their view, it is likely that they do so for the purpose of discouraging consumers from 

requesting portable prescriptions and that this dampens competition.258 In any event, restrictions 

or prohibitions on waivers of liability need not prohibit veterinarians from providing medical 

advice to clients, which may include truthful information about non-veterinary sources of pet 

medications.259

e. Increased Potential for Prescription Fraud and Abuse 

Some veterinarians expressed concern about the potential for increased fraud and abuse if 

automatic prescription release were mandated by federal or state legislation, asserting that it may 

result in a surge of written prescriptions given to clients. Veterinarians speculate that this may 

increase the likelihood that individuals will fraudulently and illegally procure prescription drugs

for abuse by humans, and that veterinarians may need to employ enhanced anti-fraud measures 

to mitigate this risk.

260 It is unclear, however, why the potential for this type of abuse would be 

worse if prescription portability were enhanced and clients filled prescriptions using a nonveterinary drug source rather than the veterinarian. Either way, the client would obtain the 

prescribed drug and the veterinarian would have no way to control whether the client uses it 

appropriately.

 

258 See K&L Gates Comment at 11 (“[R]equiring a waiver of liability would only serve an anti-competitive 

purpose . . . [T]he true purpose of such a waiver would be to scare pet owners into believing that filling their 

prescription at a pharmacy is going to put their pet at risk. The waiver, like the fee, would simply be a tool to 

indirectly stifle competition from retail pharmacies.”). But see AVMA Comment at 6 (“The AVMA contends that it 

is not appropriate for federal law to deny veterinarians the ability . . . to require a waiver of liability for providing a 

written prescription to clients, although we have not seen evidence of widespread use of such waiver forms. . . . The 

decision to require a waiver should be left to the business judgment of the clinic owner, subject to state liability 

laws, rather than be dictated by federal law.”).

259 See AM. ANIMAL HOSP. ASS’N, supra note 104, at 246 (“Focus on educating clients about the realities of 

purchasing elsewhere, but don’t exaggerate those realities. For example, not all online pharmacies are buying 

product that can’t be legally sold in the United States, but do talk to your clients about the ramifications of their 

purchase choices. Make sure they understand product guarantees and the true price difference between your practice 

and other outlets; it’s often not as large as they think. Emphasize your availability if something goes wrong – for 

example, if the pet has an adverse reaction.”).

260 See AVMA Comment at 7-8 (“One unintended consequence we can foresee is the increased chance of 

prescription abuse and fraud. . . . [V]eterinarians will have to take measures to mitigate circumstances where clients 

use the requirement as an opportunity to acquire inappropriate numbers of prescriptions. Although prescriptions are 

written now for clients, the sheer number of prescriptions being written would be expected to increase because 

unlike the current situation . . . a prescription would be required in each and every instance the decision is made for a 

prescription drug. Increased numbers of prescriptions given to clients, recycled, or discarded if not needed by the 

client could yield increased opportunities for fraud by use of written prescriptions.”); A. Anderson Comment; Maine 

Hearing on L.D. 676, supra note 156 (statement of Sharon Waugh, DVM, Alfred-Waterboro Veterinary Hosp.) 

(“Finally Act LD 676 is ambiguous as it could be interrupted [sic] that it requires the veterinarian to provide clients 

with written prescriptions even if the medication is dispensed though [sic] the veterinary hospital. This would allow 

drug abusing and drug seeking pet owners to fill the same prescription multiple times. Thus, the act unintentionally 

encourages drug abuse.”).
65

Veterinarians also expressed concerns about an increase in inappropriate drug requests – for 

example, when clients request a drug even though necessary blood work has not been performed

on the animal.

261 It is unclear to what extent this problem would be affected by mandating 

automatic prescription release. With or without a mandate, presumably veterinarians will only 

prescribe medications when it is appropriate to do so.

C. Impact of Automatic Prescription Release on 

Veterinary Income and Service Fees

A common theme that emerged during the workshop and in related comments is that many 

veterinarians fear that automatic prescription release could lead to a significant erosion of their 

revenues. Commenters have made various assertions regarding the importance of revenue from 

pharmaceutical sales to current veterinary practice business models, as well as the potential 

effects of automatic prescription release on clients’ total out-of-pocket costs. They have also

suggested that veterinarians might seek to increase their service charges to compensate for lost 

prescription revenues.

Although FTC staff’s research allows for a qualitative description of the possible effects of and 

strategic responses to automatic prescription release, as is discussed in greater detail below, data 

currently available to staff do not permit a reliable quantification of the likely economic impact 

of automatic prescription release on veterinarians and consumers. We note at the outset, 

however, that the seemingly widespread concern among veterinarians that increased prescription 

portability would lead to a significant loss of revenue appears to be inconsistent with their 

arguments that prescription portability is not currently constrained and that their prices for pet 

medications have already been adjusted to account for retail competition. With respect to 

portability, if most consumers are already aware of and exercise their ability to obtain 

prescriptions, and veterinarians already provide these prescriptions without any limitations, then 

it would seem that proposed legislation mandating automatic prescription release should not 

result in any significant loss of revenues beyond what has already occurred. 

 

261 See Workshop Tr. at 187 (Wendy Hauser) (“I think inappropriate drug requests are another reason that we 

have concerns. If the blood work isn’t accurate, if the drug isn’t safe and appropriate for the patient.”).
66

1. Importance of Pet Medication Revenues to Veterinary 

Practices

Veterinarians have long relied upon pet medication sales as a source of revenue.262 Currently, pet

medication sales comprise approximately 20 percent of the total income for a typical primary 

care veterinary practice.

263 Some commenters speculate that if the prices currently being charged 

by veterinary practices for prescription drugs are higher than the prices charged by nonveterinary retailers, mandatory automatic prescription release may lead more clients to purchase 

pet medications from retail pharmacies, thereby reducing veterinary practice revenues.264

Veterinarians may respond to this additional retail competition by reducing their own 

pharmaceutical prices to retain sales, which would result in a loss of revenue, even if sales 

volumes remained constant. Several commenters have further alleged that some veterinarians

may actively resist providing written prescriptions to clients due to concerns over revenue 

loss.265

 

262 See Workshop Tr. at 36 (Paul D. Pion); Coffin Comment (“Rightly or wrongly, pharmacy sales have always 

been a significant portion of veterinary hospital revenue.”). See also Lee Comment (claiming that many U.S. 

veterinarians mark up pet medications three to ten times their cost in order to profit from these sales); K&L Gates 

Comment at 4 (“Historically, veterinarians have dispensed most of the drugs that they prescribe. This allows the 

veterinarian to make product margin (additional profit) when selling the drugs. The current distribution process also 

permits veterinarians and their office staff to benefit from various incentive programs sponsored by the 

manufacturers of the animal drugs that the office dispenses.”); S. Anderson (Ass’n for Veterinary Clinic Success) 

Comment (“[T]he sale of medications is an important element in the care of veterinary patients. The sale of these 

products cannot be isolated from other elements in patient care . . . .”).

263 See AM. ANIMAL HOSP. ASS’N, FINANCIAL & PRODUCTIVITY PULSEPOINTS 86, 94 (7th ed. 2013) (in 2011, 

prescription drugs comprised 18.8 percent of the total income for the average veterinary practice and OTC products, 

including non-prescription flea/tick products, comprised 5.5 percent); AM. VETERINARY MED. ASS’N, 2010 AVMA

BIENNIAL ECONOMIC SURVEY 15 fig.12, 51 tbl.21 (2010) (in 2009, prescription drug sales accounted for 16 percent 

of mixed animal practices, 17.1 percent of companion animal predominant practices, and 17.6 percent of companion 

animal exclusive practices, while nonprescription drug and product sales accounted for 9.1 percent, 7.9 percent and 

5.5 percent, respectively); Ackerman, supra note 104 (pet medication sales are a significant source of revenues and 

an important profit center in the current veterinary practice model). During the course of FTC staff’s research and 

interviews with industry participants, individual veterinarians claimed that pet medication sales comprised anywhere 

from 15-30% of their practice revenues, with the majority hovering around 20%. 

264 See Paul, supra note 36 (“Dispensing and prescribing is already a dwindling part of our practices. When 

clients ask for written prescriptions, most states now require us to provide them . . . . If passed, new congressional 

legislation will mandate that veterinarians provide a written prescription even if we fill the prescription in house. . . . 

The result of such legislation: Pet owners who didn’t know they could go to their neighborhood pharmacy for 

prescriptions will now know – and will go.”); Pets Feel the Bite of Recession, THE PERT GRP. (Feb. 22, 2012), 

http://www.thepertgroup.com/news-items/detail/92 (“Pending legislation could erode even more of what pet owners 

spend at the vet. Under the Fairness to Pet Owners Act, veterinarians would be required to write prescriptions 

whether or not they actually dispensed the medication. Traditional pharmacies would be able to fill scripts, creating 

additional competition. A majority of respondents [to a survey of 1,200 dog and cat owners] indicated that they 

would fill those prescriptions outside the veterinary channel, at least some of the time. The Internet and pet super 

stores continue to gain share in several product categories due to lower costs, variety and convenience.”). 

265 See K&L Gates Comment at 5 (“Some veterinarians have sought to protect the income stream derived from 

dispensing by refusing to issue prescriptions for drugs that are stocked by the veterinarian. . . . In some instances, 

veterinarians have refused to provide a prescription to a mail-order Internet pharmacy in order to protect the 

veterinarian’s dispensing income even at the risk of losing the client.”); Arp, supra note 35 (some veterinarians are 

not interested in working cooperatively with online or brick-and-mortar pharmacies because they do not want to 
67

Yet, it is unclear whether automatic prescription release would cause veterinarians to lose 

a significant amount of pharmacy revenue.266 Presumably, many clients would prefer to

continue filling prescriptions with their veterinarian rather than a retail pharmacy because 

they consider it more convenient, particularly for acute care products.267 It also may be 

the case that consumers who are interested in obtaining portable prescriptions and 

comparison shopping for pet medications are already doing so, and automatic 

prescription release would not result in veterinarians losing significant additional sales. In 

addition, veterinarians likely would continue to sell OTC medications that do not require 

prescriptions, thereby retaining at least some of this portion of pharmacy revenues.

2. Veterinarian Claims Regarding Increased Service Fees to 

Offset Loss of Prescription Drug Revenues

For several reasons, it is difficult to determine the likely economic impact of mandatory 

automatic prescription release on veterinary practices and consumers based on the workshop 

record and publicly available data.

268 Many veterinarians have stated that prescription drug 

revenues help to offset the significant costs associated with running a veterinary practice, thereby 

allowing veterinary practices to charge lower service and examination fees than they otherwise 

would.

269 They have suggested that if veterinary practices lose a significant portion of their 

 

give up the income from pet medication sales); Bowsher, supra note 100 (“Of course, getting your pet’s generics for 

$4 may not be as easy as that 1-2-3. Your vet may be reluctant to write the prescription that you’ll need – because 

PetRx programs save you money but take income away from vets. . . . If your vet hands you a prescription, they 

know you’re going to take it elsewhere, which means they won’t be able to sell it to you at a higher price.”). Patty

Khuly, On the ‘Fairness to Pet Owners Act’ And Other Prickly Access-to-Pet-Med Issues, VETERINARY PRACTICE 

NEWS (June 29, 2012), http://www.veterinarypracticenews.com/June-2012/On-The-Fairness-To-Pet-Owners-ActAnd-Other-Prickly-Access-to-Pet-Med-Issues/ (stating that although the AVMA considers it unethical for 

veterinarians to refuse to provide prescriptions to clients, it “has never come anywhere close to condemning it,” and 

“state and local VMAs have also been loath to cry foul when practitioners routinely engage in this brand of personal 

income stream protectionism . . . Given our obvious degree of reluctance to self-police on this issue, is it any wonder 

the federal government is now advancing legislation to drag us kicking and screaming into the modern drug retail 

industry?”).

266 Veterinarian prescription revenue has already been declining, so the relevant question becomes whether 

automatic prescription release would simply reinforce this pre-existing trend.

267 See supra notes 129-132 and accompanying text. See also AM. ANIMAL HOSP. ASS’N, supra note 263, at 86 

(“As clients find more sources of less expensive medication, pharmacy income as a percentage of the practice’s total 

income may decrease. We have not seen a statistically significant decrease in the past few years, however, which 

may mean that many clients are willing to pay for the convenience of not having to shop for the best deal or make a 

second stop to purchase medications for their pets.”).

268 See, e.g., AVMA Comment at 6 (“We are not certain how HR 1406 would affect veterinary sales of pet 

medications. Small animal veterinary practices have varied business models, ranging from large hospitals with 

substantial in-patient tertiary care to house-call businesses with minimal dispensing of drugs. To that end, 

veterinarians’ sale of pet medications differs just as broadly, making speculation difficult.”).

269 See, e.g., Workshop Tr. at 38-39 (Paul D. Pion) (“The veterinary profession has a need to supplement the

inability to charge adequately for services. . . . [T]hey have sustained the ability to charge affordable pricing for 

services by supplementing with product fees.”).
68

pharmacy revenues to other retailers, they would need to charge higher service fees to 

compensate for the lower revenues, and that this may deter consumers from seeking care for their 

pets.270 Furthermore, they fear that higher service fees could result in an erosion of trust in 

veterinarians,271 and that increased price competition for sales of pet medications could degrade 

beneficial collaboration that has developed over time between veterinarians and pharmacists.272

There is some evidence suggesting price sensitivity for veterinary care. For example, there 

appears to have been a decline in visits to companion animal veterinary clinics in recent years 

likely due, in part, to a decline in consumer income during the economic recession and the 

perception among pet owners that veterinary care is too expensive.

273 However, this trend 

appears to be reversing as the economy recovers.274 Nevertheless, given that many veterinarians 

lost some portion of pet medication revenues to alternative retail outlets, even in the absence of 

automatic prescription release requirements,

275 some have expressed concern that requiring 

automatic prescription release could accelerate the loss of pharmacy revenues and increase the 

likelihood that veterinarians would need to increase the prices of their services.276 In this respect, 

 

270 See, e.g., Workshop Tr. at 207 (Wendy Hauser) (stating that if small animal practices were to lose their 

pharmacy revenues, they would have to increase revenues somewhere else to make up for this loss and the most 

likely place for this to happen is with the fees charged for services); id. at 39 (Paul D. Pion) (“I think that there's a 

danger here if you stress the veterinary profession too much further here that with the increased competition you'll 

damage quality of service available to the public.”). 

271 Workshop Tr. at 38-39 (Paul D. Pion) (“For the veterinary profession, I see it as a big detriment, overall, this 

evolution, because I think it’s damaged the public’s trust in the veterinary profession. . . . I think when you have a 

situation where you’re advertising to the public that veterinarians are overcharging you for these products, the public 

is going to start to ask what else are they overcharging me for.”).

272 SVHP Comment at 1 (H.R. 1406 “would further increase resentment of pharmacists by veterinarians over 

perceived lost revenue and would derail the emerging collaborative process that the professions of pharmacy and 

veterinary medicine have been undertaking over the last decade.”).

273 See PACKAGED FACTS REPORT 3D, supra note 12, at 34; NCVEI/BAYER USAGE STUDY, supra note 24, at 18-

28, 59-60, 63, 78-83 (suggesting that veterinary visits declined in 2009-10 due to the recession and veterinary fee 

increases).

274 See PACKAGED FACTS REPORT 3D, supra note 12, at 33-37. See also Press Release, Animal Health Inst., supra

note 17 (indicating that sales of animal health products including biologics, pharmaceuticals, and feed additives for 

companion animals and food production animals, also have steadily increased from 2010 to 2013, despite recessiongenerated sales declines in 2008 and 2009).

275 For example, veterinarians have lost a significant portion of OTC product sales, which would not be impacted 

by prescription release requirements. See PACKAGED FACTS REPORT 3D, supra note 12, at 153 (“The potential loss of 

flea/tick product revenue is an important concern in the veterinary channel. However, the veterinary channel will 

have to adapt to a changing marketplace and determine new ways to add value to the process of protecting pets from 

parasites.”); AM. ANIMAL HOSP. ASS’N, supra note 104, at 245 (“Drugs and medical supply purchases constitute the 

second largest expense in veterinary hospitals and, historically, one of the more profitable centers of the practice.

The pricing of medications, heartworm preventative, and over-the-counter items such as flea and tick products has 

become more difficult, however, as the availability of these items elsewhere has increased. This is not a new 

problem; these products have been available over the counter for years, and continue to cause worries for veterinary 

practice owners.”).

276 See, e.g., Neely Comment; Pedersen Comment; Coffin Comment; Greeley Comment; IOWA VET SURVEY, 

supra note 143 (“I have tried to avoid the use of writing prescriptions. As prescription writing becomes mandated, I 

will adjust other charges to defray the loss of income from dispensed medications.”); Maine Hearing on L.D. 676, 
69

they argue that automatic prescription release would not lead to consumer cost savings, but 

would actually increase the cost of pet care.277

Consultants and experts often recommend that veterinarians adjust their practice models to 

decrease their reliance on pharmacy sales versus service revenues, regardless of any automatic 

prescription release requirement,278 and this adjustment may already be happening to some 

degree.279 The AVMA indicated that, over the past 25 years, drug sales have been a decreasing 

source of veterinary practice revenues, while physical exams, vaccines, laboratory tests and other 

 

supra note 156 (separate statements from 15 veterinarians) (e.g., testimony of James E. Hotham, DVM, Hotham’s 

Veterinary Services, Inc.: “The sales of prescription drugs helps us to keep our service fees down and provide 

affordable prescriptions to our clients. If this income is lost to my business, it will ultimately mean a decrease in jobs 

and an increase in fees to make up for the decreased revenue.”). See also Smith, supra note 56 (“The proposed 

Fairness to Pet Owners Act . . . would require vets to write out prescriptions when customers ask for them. This 

would make it easier for pet owners to shop around and find the best price, but could cut into veterinary office 

profits. Veterinarians, who depend on prescriptions for as much as one-fourth of their income, say that as drug sales 

decline, their fees will go up, which may make their services too expensive for some people.”).

Some veterinarians practicing in rural areas point out that consumer access to legitimate sources for pet 

medications may be limited in these areas, where veterinarians are currently the main source of these products. See, 

e.g., Washenfelder Comment. If these veterinarians are forced to increase the prices of their services due to losses in 

pharmacy revenues, they fear that veterinary care will become even less affordable for their clientele, which could 

have a negative impact on pet health and pet ownership, in general. See, e.g., Webb (Lindquist Veterinary Care Ctr.) 

Comment; Maine Hearing on L.D. 676, supra note 156 (statement of Derralyn Rennix, DVM, Poland Animal 

Hosp.) (“We are not the veterinary clinics of larger metropolitan areas. We must rely on income generated from our 

prescription medications in order to provide this type of affordable [rural] community care for our patients. Income 

generated from our prescription medications help us to be able to offset the actual costs of bringing a pet in for an 

exam or procedure. Without income from the prescription medications, the cost to bring a pet to the veterinarian for 

services would have to increase in order for Maine veterinary hospitals to continue to operate.”).

277 See, e.g., Workshop Tr. at 81 (Paul D. Pion) (“In the end, pet owners will end up paying more for their pet 

care, or fewer pets will be seen, which will deteriorate the health care of our pets and our population.”); Maine 

Hearing on L.D. 676, supra note 156 (separate statements from 15 veterinarians) (e.g., testimony of James E. 

Hotham, DVM, Hotham’s Veterinary Services, Inc.: “At the end of the day if this bill is passed, the client and 

patient will end up paying more for veterinary services and really see little or no savings on prescription drugs.”).

278 Ackerman, supra note 109; NCVEI/BAYER USAGE STUDY, supra note 24, at 66-67; Workshop Tr. at 38 (Paul 

D. Pion) (stating that veterinarians have become too dependent on product sales and should focus more on providing 

professional services); Lee Comment (“Veterinarians should not be pharmacies. We are medical professionals. We 

should be charging to write a script to an outside pharmacy. If as a profession we would just charge more 

appropriately for examinations and services, we would not need to rely on marking up medications to turn a 

profit.”); AM. ANIMAL HOSP. ASS’N, supra note 104, at 245-46 (stating that veterinary practices “need to focus on a 

combination of strategies: generating a greater percentage of their income from nonproduct sources, competitive 

pricing, and creating value to encourage clients to purchase products from the practice.”). See also Coffin Comment 

(stating that he believes most veterinary practices would become healthier fiscally if automatic prescription release 

were mandated, and veterinarians could no longer rely as heavily on pharmacy revenues).

279 Some veterinarians seem less concerned about a loss of revenue due to a shift toward increased retail sales of 

pet medications, and view that change as simply part of the evolution of the industry. These veterinarians appear to 

be making necessary adjustments to remain competitive in the changing marketplace. See Katie Burns, Bayer Selling 

Flea and Tick Products Directly to Retailers, J. AM. VETERINARY MED. ASS’N (Mar. 1, 2010), 

https://www.avma.org/News/JAVMANews/Pages/100315g.aspx (Dr. Karen E. Felsted, CEO of National 

Commission on Veterinary Economics Issues, stating that veterinary prescription drugs and other veterinary 

products have been readily available outside of veterinary clinics for several years and that many veterinarians have 

already adapted to this changing distribution model, sometimes by shifting the emphasis from product revenues to 

services revenues and running their practices more productively and efficiently); Coffin Comment.
70

diagnostics have become a more significant source of veterinary practice revenues.280 Similarly, 

one veterinary consultant has suggested that veterinarians could compensate for lost pharmacy 

revenues by identifying and filling gaps in animal health care and improving compliance with 

treatment regimens. She reasons that educating pet owners about unmet needs and improving 

compliance serves everyone’s interests, and suggests that if veterinarians “can grow the market 

even a small percentage, we can more than make up for the difference in those buying 

[medications] outside the veterinary channel.”281

Economic theory alone does not support the argument that veterinarians are likely to increase 

their prices for services if they must comply with an automatic prescription release requirement. 

Presumably, veterinarians already set their prices for services and medications at profitmaximizing levels commensurate with their costs, the degree of competition they currently face 

and the nature of consumer demand. For them to have an incentive to charge a different price, 

some factor that affects their profit-maximization would need to change. Thus, it is possible that 

veterinarians may not be able to increase their prices for examinations and other services to 

offset any additional loss of pharmacy revenues, without losing significant business.

282

Accordingly, whether automatic prescription portability would result in higher fees for veterinary 

services depends on the nature of competition for these services, and the degree to which a loss 

of revenue from dispensing pet medications would affect this competition. If veterinarians set the 

prices for services and prescription drugs independently, then greater prescription portability 

may only affect their prescription drug pricing.

283 While automatic prescription portability could 

change the intensity of the competition veterinarians face for the sale of prescription drugs, under 

this assumption of independence it would have no immediate and direct effect on the degree of 

competition that veterinarians face for other services. Thus, it is possible that veterinarians’

prices for other services are not dependent on the degree of prescription portability.

 

280 Workshop Tr. at 22-23 (Douglas G. Aspros). There are a variety of possible explanations for this shift in 

veterinary practice revenues. For instance, losing pharmacy sales to alternative retailers will cause the ratios to 

change, but the change could also occur if new services, such as diagnostic tests, become available to sell.

281 Arp, supra note 35 (quoting Karen Felsted, chief executive of Felsted Veterinary Consultants). See also N. 

Smith Comment at 7; Zeidner (1-800 CONTACTS) Comment at 16 (stating that the ophthalmic sector as a whole 

has experienced significant growth since the passage of the FCLCA).

282 See NCVEI/BAYER USAGE STUDY, supra note 24, at 20-27 (suggesting that veterinary fee increases 

contributed to a decline in visits to veterinary practices); id. at 59 (“Contrary to common belief, demand for 

veterinary services is not inelastic; Frequency and size of fee increases are factors” in the decline in visits to 

veterinary practices); Ackerman, supra note 109 (suggesting that there is a ceiling for the prices veterinarians can 

charge for services and a limit to the veterinarian’s ability to raise fees without commensurate value); Zeidner (1-

800 CONTACTS) Comment at 13-16 (claiming that despite concerns of opponents of automatic prescription release 

for contact lenses, eye examination prices have not increased substantially to compensate for lost product sales).

283 See NCVEI/BAYER USAGE STUDY, supra note 24, at 42 (suggesting that veterinarians consider both 

competition for services and competition for medications when making business decisions).
71

Nevertheless, there may be circumstances in which mandating automatic prescription portability 

could result in a change in the prices for veterinary services. If the loss of prescription drug sales 

were to reduce the profitability of veterinary practices so much that it significantly diminished 

their ability to cover their fixed costs, then it is possible that some practices might close, leading 

to a reduction of competition in affected local markets.284 Veterinarians facing less local 

competition might have an incentive to increase service prices. The likelihood of such an effect

would depend on whether profits from veterinarians’ prescription drug sales cover any fixed 

practice costs and on the degree to which greater prescription portability would affect veterinary 

pharmacy profits.

Another possibility is that veterinarians consider anticipated profits from future pharmaceutical 

sales when they set the prices for services. If anticipated profits from pharmaceutical sales are 

significant, veterinarians may compete more intensively on service prices in order to attract 

customers in the first place.285 If automatic prescription release leads to a reduction in the profits 

from pharmaceutical sales, veterinarians may have less incentive to accept lower margins on 

services in order to establish a customer relationship that could potentially lead to future

pharmacy sales. Under this latter scenario, it is possible that current veterinary pharmaceutical 

prices are above the competitive level, and service prices are below the competitive level, as 

compared to a situation where pharmaceuticals and services are sold by separate sellers. This 

potential cross-subsidization between products and services could result in an allocative 

inefficiency,

286 although whether it would in practice is uncertain. Assuming this cross-

 

284 Although the majority of veterinarians interviewed by FTC staff did not believe that they would go out of 

business due to a decline in pet medications revenues, some stakeholders suggested otherwise. See Maddigan 

(Willamette Valley Animal Hosp.) Comment (“Veterinary economics are currently under great pressure and the loss 

of revenue from pharmacy sales will either result in the closure of many vet hospitals around the country or result in 

higher prices for all services to compensate for the loss of pharmacy revenue.”); S. Anderson (Ass’n for Veterinary 

Clinic Success) Comment (“Diluting veterinary practice income in any way would have a very detrimental impact 

on practices throughout the country, and especially for smaller practices. . . . Some veterinary practices will have 

difficulty in conforming with proposed legislation and I believe that it will force several of these small businesses 

out of business.”). 

285 This type of effect is common in markets where consumers bear significant switching costs from changing the 

product that they use, or where suppliers of a durable good anticipate earning significant profits from aftermarket 

sales of complementary products or services. For example, sellers of photocopiers might anticipate future sales of 

consumables or services when setting the prices of photocopiers. See, e.g., Joseph Farrell & Paul Klemperer, 

Coordination and Lock-In: Competition with Switching Costs and Network Effects, in 3 HANDBOOK OF INDUS. ORG.

1967-2072 (Mark Armstrong & Robert H. Porter eds., 2007); Dennis Carlton & Michael Waldman, Competition, 

Monopoly, and Aftermarkets, 26 J.L. ECON. & ORG. 54 (2010), available at

http://jleo.oxfordjournals.org/content/26/1/54.full.

286 During the FTC workshop, one panelist described the possibility of a similar pricing equilibrium in the 

markets for eye examinations and contact lenses, for which prescriptions have been subject to mandatory release 

since 2004. Dr. James Cooper points out the possible allocative inefficiency that could result from cross- subsidization between products and services. Cooper argues that it is inefficient when the prices for examinations 

and contact lenses are, respectively, below and above the competitive level. Workshop Tr. at 275 (James C. Cooper). 

A comparable inefficiency could occur with respect to veterinary examinations and pet medications.
72

subsidization were currently happening, the ASPCA argues consumers would be better off with a 

pricing model that provides sufficient information to support informed choices about services 

and medications respectively.

287

3. Professional and Ethical Issues Associated with Pet 

Medication Revenues

Some veterinarians have suggested that mandating prescription release might affect the 

economic incentives of veterinarians in other ways that could increase overall service costs for 

consumers. For example, some veterinarians might try to recover potential pharmacy revenue 

losses by providing unnecessary or more expensive services, such as requiring complete physical 

examinations for all prescription refills (which may not be the typical practice for many 

medications), or by writing prescriptions for more expensive injectable medications that can only 

be administered by a veterinarian.288 These tactics may enable veterinarians to maintain or 

increase their revenues without having to increase their specific service fees, albeit with no 

offsetting quality improvements for clients or animals. Although the incentive to engage in such 

tactics could be exacerbated by the loss of pet medication revenues due to automatic prescription 

release, this may raise ethical concerns and it would seem that less scrupulous veterinarians 

already have the incentive to do this, regardless of whether prescription release is mandated.

Indeed, the AVMA Principles of Veterinary Medical Ethics advise veterinarians not to engage in 

this kind of behavior.289

Some observers have argued that there is already an inherent conflict of interest when 

veterinarians recommend and prescribe medications they also sell.290 The fact that veterinarians 

have a personal financial interest in selling pet medications has caused some to question

veterinarians’ incentives to provide the lowest prices to customers.291 In particular, some 

 

287 ASPCA Comment at 5 (“The affordability of veterinary care should not be tied to where the client decides to 

purchase medications. Pet owners should have the freedom to shop around for both affordable veterinary care and 

affordable veterinary drugs. Consumers denied information about the cost of medications and services could be 

paying unnecessarily high prices.”).

288 See, e.g., Maddigan (Willamette Valley Animal Hosp.) Comment; Fankhauser Comment; S. CAL. VET 

SURVEY, supra note 143 (“[I]f I know ahead [that a client may request a portable prescription], I might give another 

injection or add a couple of minutes to surgery”).

289 Principles of Veterinary Medical Ethics of the AVMA, supra note 38 (Principle I.c.) (“The choice of treatments 

or animal care shall not be influenced by considerations other than the welfare of the patient, the needs of the client, 

and the safety of the public.”).

290 Lau, Parasiticide Diversion, supra note 56 (stating that there is an “inherent conflict of interest in a 

veterinarian’s time-honored practice of writing prescriptions for or recommending medications that they also sell” 

and that this aspect of the larger debate surrounding the sale of pet medications often receives little attention).

291 See N. Smith Comment at 5 (comparing veterinarians selling pet medications to a proverbial fox guarding a 

hen house and questioning veterinarians’ “claim of objectivity and aggressively seeking the best customer 

value. . . .”).
73

observers argue that such a conflict of interest can be exacerbated when pharmaceutical 

companies offer financial incentives to veterinarians for recommending or dispensing their

products, a practice they suggest may lead consumers to question the veterinarian’s prescribing 

choices.292 For example, economic self-interest might lead some veterinarians to be biased 

towards over-prescribing medications or recommending more expensive categories of 

medications, in an effort to generate greater revenues. Moreover, small veterinary clinics that

cannot practicably stock a full pharmacopeia might have an incentive to prescribe the limited set 

of drugs they do stock, possibly leading to lower quality outcomes. Some consultants have 

recommended such tactics to prevent the loss of pet medication sales and maximize revenues.

293

However, many veterinarians strongly deny that these financial incentives have any impact on 

what products they recommend or prescribe to their patients.294 Notably, the AVMA Principles 

of Veterinary Medical Ethics advise veterinarians not to accept financial incentives from 

pharmaceutical companies.295

 

292 See Workshop Tr. at 185 (Race Foster); Foster (F&S) Comment at 11 (“Consumers need to know that there is 

no conflict of interest involved when their veterinarian prescribes a particular medication. The present practice by at 

least one large drug manufacturer to financially incentivize clinics to prescribe its medications raises serious conflict 

of interest questions.”); John Russell, Drug Companies’ Loose Purse Strings Court Vets, INDIANAPOLIS STAR (Dec. 

18, 2014), http://www.indystar.com/story/news/investigations/2014/12/18/drug-companies-loosen-purse-strings-to- woo-vets/20492301/ (describing how “the pet medicine industry is allowed to target veterinarians with marketing 

practices banned from the realm of human medicine” and suggesting that this could threaten the objectivity of 

veterinarians who prescribe drugs for pets). See also PACKAGED FACTS REPORT 3D, supra note 12, at 89 (describing 

the Elanco Earnings program that rewards veterinary practices for purchasing Elanco’s parasiticide products); id. at 

94 (describing the Merial 12.12.12. program directed to veterinarians, which may have contributed to 400,000 

additional doses of Heartguard Plus sold in 2012). 

293 For example, consultants have suggested that veterinarians charge premium pricing for products that are not 

readily available at alternative retail outlets, and avoid stocking commodity products (e.g. human generics and OTC 

products) that are available for lower prices elsewhere. Furthermore, veterinary consultants have advised 

veterinarians to resist the urge to save clients money by prescribing human generics, in favor of prescribing 

veterinary-label products, reasoning that these products not only have been approved for safe use in animals, but 

also typically can be priced higher than products available at retail outlets. See Ackerman, supra note 104 (arguing, 

among other things, for the use of injectables that must be administered by veterinarians whenever possible, to 

guarantee compliance and health benefits, and also because these products may be priced higher due to their limited 

availability at retail outlets); MYERS, supra note 104, at 1 (“Prescribe veterinary drugs instead of human generics.

Pharmacies, grocery stores, and warehouse clubs are promoting deeply discounted generics. Writing scripts for 

human generic drugs and sending clients to local pharmacies will encourage them to request scripts for future 

medications. Your goodwill gesture to save clients money may backfire.”); Arp, supra note 35 (referencing 

veterinary consultant, Ernie Ward, DVM, who advises that one tactical and proactive reaction to pharmacy 

competition is switching to medications and products that are exclusive to the veterinary channel).

294 See, e.g., Workshop Tr. at 186 (Wendy Hauser) (“[D]rugs are selected not based on buyback programs or buyin programs, and percentage discounts. They’re selected because they’re the best medications that I can offer my 

patients, period.”);Workshop Tr. at 118 (Mark Cushing) (insisting that veterinarians do not attempt to maximize 

revenues by prescribing high-priced branded veterinary label products, and instead are willing to provide 

prescriptions, often for human generics, that may be filled through retail pharmacies).

295 Principles of Veterinary Medical Ethics of the AVMA, supra note 38 (Principle VI.f.iv.) (“A veterinarian may 

not accept payment of any kind, in any form, from any source, such as a pharmaceutical company or pharmacist, 

manufacturer of medical appliances and devices, for prescribing or referring a patient to said source. In each case, 

the payment violates the requirement to deal honestly with clients and colleagues. The client relies upon the advice 

of the veterinarian on matters of referral and prescribing. All referrals and prescriptions must be based on the skill 
74

D. Analytical Framework for Evaluating Possible 

Limitations on Prescription Portability and 

Proposals to Eliminate Such Restrictions

To evaluate the competitive impact of possible limitations on prescription portability imposed by 

veterinarians on consumers, as well as proposals for reform that would promote greater 

prescription portability, FTC staff recommends that policymakers consider several factors, 

including:

• The existence and extent of any current limitations on prescription portability;

• The degree to which any such limitations impede competition and have

adverse consequences for consumers;

• Whether purported health and safety concerns cited in support of any such 

limitations (e.g., perceived risks of harm to animals) are genuine and 

supported by evidence, or are instead pretextual or speculative;

• Whether any limitations on prescription portability being imposed by market 

participants are narrowly tailored to eliminate genuine risks of harm, or are instead 

greater than necessary to do so; and

• The potential costs and benefits of any remedial measure that would mandate greater 

prescription portability.

FTC staff generally believes that the competitive process should determine output and pricing, 

including for pet medications and veterinary services. FTC staff notes its preference for a 

market-based approach, driven primarily by the interaction of suppliers and well-informed 

consumers. Essentially, staff adopts a presumption in favor of competition – here, the unimpeded 

availability of portable pet medication prescriptions – absent a plausible rationale for how 

consumer interests would be better served by any limitations on the competitive process.

From the workshop record and related staff research, it appears that consumers have increasingly 

been able to secure prescriptions and purchase their pet medications through non-veterinary retail 

channels, but only to a degree. Substantial concerns were expressed that, for a variety of reasons

 

and quality of the veterinarian to whom the patient has been referred or the quality and efficacy of the drug or 

product prescribed.”).
75

already discussed, many consumers either may be unaware of their ability to secure a portable 

prescription or are otherwise inhibited from doing so. Both perspectives support the proposition

that prescription portability for pet medications has the potential to yield significant 

procompetitive benefits for consumers, including lower prices, improved service, and greater 

convenience.

Based on the record of the workshop and additional information regarding the pet medications 

industry, observations from other industries, as well as the relevant economic literature, FTC 

staff believes that currently there are constraints on prescription portability and that these 

constraints likely are limiting competition between veterinarians and retailers in the sale of pet 

medications, which may result in harm to consumers. While the workshop and comments 

identified some possible rationales for limiting access to prescription portability, these rationales

were not supported by evidence sufficient to rebut the basic presumption in favor of competition,

and at least some of the limitations appear to be greater than necessary to address the concerns 

expressed. Staff notes that the health and safety concerns being expressed by some veterinarians 

to support limitations on prescription portability are likely being exaggerated or are pretextual, at 

least in part. Moreover, there may already be sufficient regulatory measures to address any 

legitimate safety concerns.296 Although the precise degree of access to portable prescriptions, as 

well as the magnitude of any harm from restricted access, are unknown, FTC staff concludes that 

competition in the pet medications market likely would be enhanced by, and consumers of pet 

medications likely would benefit from, greater prescription portability. 

However, the workshop record and publicly available data do not enable staff to quantify the

economic impact of automatic prescription release proposals on veterinarians or consumers, 

including administrative burdens, the benefits of increased competition, and potential increases 

in service fees to compensate for any reductions in prescription revenues.

 

296 See discussion of regulatory mechanism, supra notes 219-224 and accompanying text. 
76

IV.Distribution Practices in the Pet 

Medications Industry

The FTC workshop also examined various distribution practices that may have an impact on 

competition in the pet medications industry. These practices include manufacturer exclusive 

distribution policies that require their products to be sold only through veterinary practices and 

exclusive dealing agreements between manufacturers and distributors that prevent distributors 

from carrying competing products from other manufacturers. 

A. Exclusive Distribution and the Secondary 

Market

1. Manufacturer Justifications for Exclusive Distribution 

Practices

Most of the major manufacturers of pet medications in the United States have adopted formal

policies to distribute their products exclusively through veterinarians.

297 These policies generally 

apply to both prescription and non-prescription pet medications. Manufacturers claim that 

exclusive distribution policies promote a number of business objectives, such as ensuring 

product quality, reducing dispensing errors, protecting the VCPR, realizing distribution 

efficiencies, and increasing incentives for product promotion and innovation. However, the 

 

297 See, e.g., Letter from Thomas Zerzan, President, Merial US Operations, to Veterinary Clients (Feb. 11, 2010), 

http://www.aldievet.com/docs/merial_20100219142042.pdf (“Merial’s policy has always been to sell 

FRONTLINE® products only to licensed practicing veterinarians.”); Frontline Plus Canine, MAIN ST. ANIMAL 

HOSP. OF BRADFORD, INC., 

http://www.mainstanimalhospital.com/index.php?option=com_opencart&Itemid=37&route=product/product&produ

ct_id=50 (product webpage stating Merial’s Frontline sales policy as follows: “Why are FRONTLINE Brand 

Products only available through my veterinarian? It is Merial’s sales policy to sell our small animal products only 

where a veterinarian/client/patient relationship exists. Merial believes that the veterinarian is the only professional 

qualified to serve the health care needs of pets, the concerns of their owners and the appropriate use of our small 

animal products such as FRONTLINE Brand Products.”); Letter from Stephen A. Connell, Dir. of Technical, 

Academic and Consumer Servs., Elanco, to Veterinary Clients (2012) [hereinafter Elanco Letter], attached to

Shaprut Comment (“Elanco has maintained a strict policy that limits the distribution of our products to licensed 

veterinarians. Unauthorized sources of Elanco products, including Internet, big box retail and warehouse club 

pharmacies do not purchase Elanco products from Elanco or any of our authorized veterinary distributors.”); Letter 

from Jim Heinle, Exec. Dir., U.S. Companion Animal, Merck Animal Health, to Pet Owners (June 14, 2013), 

http://www.merck-animal-health-usa.com/binaries/Activyl_Letter_tcm96-112654.pdf (stating that Merck Animal 

Health limits the distribution of companion animal medications to licensed veterinarians, and recommends that pet 

owners not purchase products from unauthorized sources, including Internet retailers); Pfizer Comment (#329) at 1; 

Novartis Comment at 3. But see Foster (F&S) Comment at 9 (“For the record, there are drug manufacturers and 

distributors who do not practice restricted distribution. These include Virbac, Farnam, Bayer, FidoPharm, 

Boehringer-Ingelheim, Cardinal Health and Anda.”).
77

primary justification cited by manufacturers for exclusive distribution policies is ensuring the 

safe use of their products,

298 which presumably would reduce their products liability exposure.

The Animal Health Institute (“AHI”), a trade association representing the interests of animal 

health product manufacturers, points out that “many manufacturers have invested tremendous 

resources to educate veterinarians about their products” so that they are better equipped to 

counsel clients on the proper use of these products. Furthermore, the AHI states that 

veterinarians are the “primary monitors of patient use of medication including evaluation for 

interactions in adverse events” and that this “should not be discounted, as many in our industry 

believe that the safety and efficacy profiles for certain animal health products are positively 

impacted by the comprehensive role of the veterinarian.”299

Manufacturers also cite safety concerns about retail pharmacists as the basis for their exclusive 

distribution practices. Pfizer Animal Health (now known as Zoetis), another major manufacturer 

of pet medications, stated that dispensing pet medications through retail pharmacists “creates 

inherent risks because, unlike veterinarians, such pharmacy staff have no formal training on the 

nuances of animal drug interactions or the potential challenges associated with 

administration.”300 Pfizer believes “this could raise potential consumer protection issues and 

potentially compromise animal health.”301

 

298 See, e.g., Novartis Comment at 3 (“The expertise, training and compassion possessed by veterinarians has been 

essential to helping NAH [Novartis Animal Health] achieve its objective of preserving and enhancing the quality of 

life of companion animals and ensuring the optimal application of innovative treatments. Accordingly, NAH brings 

its products to consumers and their pets exclusively through practicing veterinarians. NAH considers these highly 

skilled professionals to be our partners in addressing unmet medical needs. We have found no better, more effective 

way to ensure that innovative science is best directed to the benefit of pets. By distributing these treatments through 

veterinarians, pet owners receive the information necessary to use our products in the most safe and effective 

manner for the benefit of their companion animal.”); See also Elanco Letter, supra note 297 (“We are committed to 

bringing high-quality, innovative products to pets. We believe your veterinarian is your best resource in 

recommending these products to you – and in keeping your best interests at heart. We encourage you to purchase 

veterinary products through your veterinarian, who is trained to make the best recommendations for you and those 

you love.”).

299 Workshop Tr. at 250-51 (Kent D. McClure). See also Elanco Letter, supra note 297 (“To ensure product 

efficacy and quality, we strongly recommend you purchase Elanco products only through your veterinarian. If a 

product is purchased outside of the veterinary-client-patient relationship, the following may occur: [t]he product 

may have been outside a documented chain of custody and we cannot ensure it has been handled according to label 

requirements; [a] product acquired through unauthorized sources, with or without a prescription, will not qualify for 

any product guarantee reimbursements or be eligible for any consumer promotional offers; [w]e cannot guarantee 

the product hasn’t been tampered with in some way; [t]he product may have been defaced and important information 

may be missing; [t]he product may be counterfeit.”).

300 Pfizer Comment (#329) at 3.

301Id. See also Workshop Tr. at 76 (Mark Cushing), 87 (Andrew J. Bane) (arguing that it is a rational decision for 

manufacturers to exclusively distribute their products through licensed medical professionals who are trained to 

understand the physiology and pharmacology of a host of animal species, and that likewise, it is a rational decision 

for distributors to honor these contractual requirements and sell only to veterinarians). 
78

Manufacturers, like some veterinarians, assert that dispensing medications is a critical 

component of the VCPR. They argue that veterinarians should be primarily responsible not just 

for the examination, diagnosis, and treatment regimen of companion animals, which would 

include prescribing medications that are medically appropriate, but also for the dispensing of 

medications – both prescription and OTC. Thus, they seek to protect the VCPR through 

distribution practices intended to restrict dispensing to veterinarians.

302

Finally, many manufacturers argue that exclusive distribution makes the most sense from an 

operations standpoint, as well as for furthering the research and development of new products.

Historically, manufacturers relied upon veterinarians to promote and dispense their animal 

products. Many of them argue that this is still the most efficient method for distributing pet 

medications, especially when launching new products, as this is a cost-effective way to market 

products to consumers and to ensure that the medications will be used properly. They claim that 

extending distribution to other retail channels would require additional sales and marketing costs 

that could result in higher prices for these products or reduced product innovation.303 Indeed, 

some suggest that exclusive distribution spurs product innovation.304

 

302 See, e.g., Novartis Comment at 4 (“Veterinarians understand patient history and drug interactions and serve as 

a control point for dispensing medications, which is key to supporting proper drug usage. Contact points such as 

treatment, prescription, dispensing and follow up appointments with pets and pet owners create a base of experience 

and opportunities for feedback that are unmatched. These contacts, and the continuity of care fostered by a strong 

VCPR, are critical to the effective administration of animal health care. When this continuity is broken the health 

and safety of companion animals are threatened. It is our position that nothing should interfere with this relationship 

or these contact points.”); Workshop Tr. at 85, 87 (Clinton Vranian); Pfizer Comment (#329) at 1 (“From our 

experience, we feel strongly that veterinarians are the most effective educators of pet owners when it comes to 

ensuring animal health. Therefore, we believe that preserving the direct relationship between the veterinarian, the 

client and the patient – in all facets of animal healthcare, including the dispensing of medications – is critically 

important to ensuring pet health . . . .”).

303 See Workshop Tr. at 36-37, 94 (Paul D. Pion); id. at 86 (Clinton Vranian); Novartis Comment at 2-3 (“NAH 

continues to believe that distribution through the professional channel continues to present the best path to enhance 

animal well-being through innovation. . . . Like human pharmaceuticals, prescription pet medications are costintensive to develop and bring to market. . . . However, the market for these products is orders of magnitude smaller 

than in the human marketplace. Thus, there is a business challenge in getting the word out about new and innovative 

treatments in a cost effective manner. As a result, NAH relies heavily on education of the veterinarian through 

personal visits to detail all relevant aspects of the product and accessible technical product support, as pet owners 

generally turn to their veterinarian when their pet has a problem. NAH relies very little on advertising to the general 

public, or even through professional media. . . . The vast majority, if not all, of our marketing practices are designed 

to educate the veterinarian and defer to his or her professional judgment when it comes to patients. . . . [F]or a 

medication to earn a place in a clinic, a veterinarian must believe in the science, integrity and quality of the product 

and the company behind it. He or she will then overlay that information with their experience and the needs of their 

patients. . . . The impression that this business model somehow restricts access to medicine is false. In fact, this 

business model enhances access to a wide range of medicines that could not be developed without it. Much of the 

discussion at the Pet Medications Workshop centered around ‘blockbuster’ drugs. But many of the life-saving 

medicines most important to the health of companion animals have extremely small markets. It is only by 

maintaining the VCPR that these medicines can be made available.”).

304 Novartis Comment at 4 (“For one thing, by educating and distributing our products to practicing veterinarians, 

NAH has built relationships and developed a knowledge base with these veterinary professionals, which has helped 

sharpen our focus on the safety and health of companion animals. Working directly with the veterinarians who 
79

Some non-veterinary retailers suggested that there may be an element of horizontal coordination 

with respect to these exclusive distribution practices,305 analogous to what occurred in the 

contact lens industry in the mid-1990s. As previously noted, both veterinarians and eye care 

professionals are allowed to prescribe and dispense products. During the contact lens antitrust 

litigation, attorneys general from 32 states alleged horizontal collusion between eye care 

professionals and contact lens manufacturers. They established that eye care professionals and 

their trade associations collectively coerced contact lens manufacturers to adopt exclusive

distribution policies by threatening to boycott manufacturers who distributed their lenses to 

alternative retail sellers such as online companies, pharmacies, and big-box retailers.306 Some 

retail stakeholders in the pet medications industry allege that veterinarians and drug 

manufacturers may have a similar relationship.307 Veterinarians appear willing to express their 

displeasure with manufacturers who do not honor exclusive distribution policies.

308 But beyond 

 

administer our products has driven innovation that has resulted in products that deliver therapies for previously 

unmet medical needs in pets.”).

305 N. Smith Comment at 1 (arguing that “coordinated restricted distribution practices undertaken by pet product 

manufacturers and veterinarians” have contributed to a fundamentally flawed marketplace); Valley Vet Supply 

Comment at 3 (“A few of the major veterinary pharmaceutical companies have joined with the veterinary 

practitioners in collusion to keep their prescription pharmaceutical dispensing within the veterinary clinics, to the 

exclusion of licensed pharmacies. Their unwritten message to the practicing veterinarians is, “You choose our brand 

in your practice and we will limit your clients’ consumer choice and competitive pricing options.” This sales policy 

is implemented under the pretense it is necessary to ensure a VCPR. That is a fallacy, as a valid VCPR must exist at 

the time a prescription is written.”); Kroger Comment at 1(suggesting that the limited distribution systems for pet 

medications and “anti-competitive behavior among veterinarians, and the product manufacturers that support them” 

have led to “inflated prices for consumers.”). See also Matter Comment (arguing that drug manufacturers have 

colluded among themselves to maintain an oligopolistic pricing structure for pet medications, and that veterinarians 

are unfairly blamed for the high prices of these products).

306 See In re: Disposable Contact Lens Antitrust Litigation, No. MDL 1030 (complaints filed M.D. Fla. 1994). For 

further discussion of this case, see supra note 226 and accompanying text; Zeidner (1-800 CONTACTS) Comment 

at 3.

307 See supra note 305.

308 See Edie Lau, Bayer Opens Flea Product Sales to Retail Outlets, VIN NEWS SERV. (Feb. 10, 2010), 

http://news.vin.com/VINNews.aspx?articleId=14996 [hereinafter Lau, Bayer Opens Product Sales] (“Bayer’s new 

sales policy elicited a flurry of opinions . . . . Many comments posted on VIN were angry. Some practitioners said 

they would immediately stop carrying Bayer products. Others brainstormed on how they could register collective 

displeasure with the company’s new stance.”); Edie Lau, PetSmart First Retailer to Carry Advantage under New 

Bayer Policy, VIN NEWS SERV. (Mar. 17, 2010), http://news.vin.com/VINNews.aspx?articleId=15360 [hereinafter 

Lau, PetSmart to Carry Advantage] (“Bayer’s move has been both praised and denounced by practitioners. Some 

credit the company with recognizing the realities of diversion and being honest about the benefits of retail trade to 

their business. Others see Bayer as having used veterinarians to cultivate consumer loyalty to their products, then

cutting them out of the sales loop now that the products are well-recognized. So displeased are some about the 

change that they are turning away from Bayer.”). 

In 2008-2009, the Florida Office of the Attorney General investigated a complaint that veterinarians were 

threatening a group boycott of certain manufacturers who they believed were not taking sufficient measures to honor 

exclusive distribution policies and prevent product diversion. Ultimately, a settlement was reached with a veterinary 

trade organization and an individual veterinarian after the Florida Office of the Attorney General alleged that they 

had encouraged a veterinarian letter-writing campaign intended to threaten a group boycott. However, no evidence 

of collusion between veterinarians and manufacturers was reported. See Edie Lau, Merial Details Company Stance 

on Product Diversion, VIN NEWS SERV. (Feb. 26, 2010), http://news.vin.com/VINNews.aspx?articleId=15110

[hereinafter Lau, Merial Stance on Diversion]. 
80

such general accusations, FTC staff is not aware of any specific evidence to support a claim of 

industry-wide collusion between veterinarians and drug manufacturers.

Absent horizontal collusion between manufacturers and veterinarians, economic theory predicts 

that manufacturers would only continue to have exclusive distribution policies if they are 

efficient and profit-maximizing. There could be legitimate, efficiency-enhancing justifications 

for each firm’s independent adoption of these practices, which would explain why they are still 

common across the industry.309 If a manufacturer could increase profits by selling through nonveterinarian retail channels, then it would be in the manufacturer’s interest to choose this method 

of distribution. Still, the potential for exclusive distribution practices to result in consumer harm 

may be greater if the practices are widespread across the industry because the manufacturers are 

engaging in coordinated behavior.

Notwithstanding the benefits of exclusive distribution asserted by most of the major 

manufacturers, not all manufacturers have chosen exclusive distribution policies.

310 At least one 

major manufacturer recently abandoned its exclusive distribution policy in favor of selling 

through both the veterinary and retail channels. Until recently, Bayer Animal Health had an

exclusive distribution policy similar to all the other major manufacturers of pet medications. 

Then, in March 2010, Bayer became the first major drug manufacturer to begin selling pet 

medications directly to non-veterinary retailers in an effort to address the unauthorized sale (also 

sometimes called “diversion”) of its products outside of the veterinary channel.

311 Bayer also 

pointed to ways in which the market for pet medications is changing, with pet owners 

 

309 See, e.g., AHI Comment at 2 (“Manufacturers utilize a variety of distribution channels to sell animal health 

products. Each manufacturer independently determines the channels most effective for the distribution of its 

products. In the companion animal market, manufacturers currently sell their products through distributors or 

directly to veterinarians, veterinary hospitals, retailers, and pharmacies (both on-line and bricks & mortar). Some 

companies limit the channels utilized for the sale of some of their products and some utilize different outlets for 

different categories of products. These types of practices are among those that the FTC has publically acknowledged 

as appropriate and common across industries.”).

310 See Foster (F&S) Comment at 9 (“For the record, there are drug manufacturers and distributors who do not 

practice restricted distribution. These include Virbac, Farnam, Bayer, FidoPharm, Boehringer-Ingelheim, Cardinal 

Health and Anda. This is a big plus for consumers in terms of price and choice and the number of animal patients 

having access to proper treatment.”). However, it appears that the vast majority of animal pharmaceutical sales are 

subject to exclusive distribution. Of the ten largest animal pharmaceutical manufacturers in 2012, at least five of 

them were known to have exclusive distribution policies, representing nearly 75 percent of industry sales in 2012. 

See PACKAGED FACTS REPORT 3D, supra note 12 at 6-7; supra note 297 (describing the exclusive distribution sales 

policies of five of the largest animal pharmaceutical manufacturers in 2012, including Merial, Elanco, Merck, Pfizer, 

and Novartis).

311 See Complaint at ¶¶ 16-18, Bayer Healthcare LLC v. Eli Lilly and Company, No. 1:11cv3047 (S.D.N.Y. May 

4, 2011). For explanation of product diversion, see infra Section IV.A.3, The Secondary Market for Pet Medications, 

at 74.
81

increasingly shifting their purchases to the retail channel, as justification for its decision.

312

Bayer now sells its OTC products to pet specialty retail stores and all of its animal health 

products, including prescription medications, to licensed online veterinary pharmacies.313

Although some industry observers expected other manufacturers to follow suit and abandon their 

exclusive distribution policies, for the time being, all of the other major manufacturers continue 

to market their products exclusively through the veterinary channel.314

2. Non-Veterinary Retailer Concerns About Exclusive 

Distribution

Some industry stakeholders have sought to criticize exclusive distribution practices for pet 

medication by suggesting that they are primarily intended to create and maintain favorable 

relationships with veterinarians by protecting veterinary practices from potential sources of retail 

competition in the sale of pet medications. However, economic theory offers some commonly 

accepted justifications for exclusive distribution practices, i.e., that exclusivity provides dealers 

with the incentive to learn about and promote the manufacturer’s products. Although exclusive 

distribution practices may reduce or eliminate “intrabrand” competition between firms that 

would normally sell the same brands of drugs, they are often thought to enhance “interbrand” 

competition between brands precisely because of this added incentive to promote.315 In the pet 

medications industry, some non-veterinary retailers nevertheless argue that these practices are 

simply mechanisms used by manufacturers to increase price, and not mechanisms to induce 

dealer support and increase interbrand competition.

316 Furthermore, it would seem that 

 

312 See PACKAGED FACTS REPORT 3D, supra note 12, at 61. See also id. at 62 (reporting that Bayer’s Animal 

Health Division has increased its pet medication revenues and consolidated its position in the market since its 

channel cross-over).

313 See Lau, Bayer Opens Product Sales, supra note 308; Lau, PetSmart to Carry Advantage, supra note 308; 

Edie Lau, Bayer Wins Some, Loses Some, VIN NEWS SERV. (Apr. 28, 2010), 

http://news.vin.com/VINNews.aspx?articleId=15609 [hereinafter Lau, Bayer Wins Some].

314 See PACKAGED FACTS REPORT 2D, supra note 14, at 78-80; PACKAGED FACTS REPORT 3D, supra note 12 at 63, 

65.

315 Economic theory suggests that unless the manufacturer creates a financial incentive for dealers to promote the 

manufacturer’s product, dealers will fail to devote any resources to promoting the manufacturer’s product. See

Benjamin Klein & Kevin M. Murphy, Vertical Restraints as Contract Enforcement Mechanisms, 31 J.L. & ECON.

265 (1988). Furthermore, a dealer that devotes resources to promoting a manufacturer’s product may have higher 

costs than a dealer that fails to devote such resources, which could enable the non-promoting dealer to undercut the 

promoting dealer’s price. In these situations, the manufacturer may protect the dealer by limiting “intrabrand” 

competition through some mechanism, so as to prevent non-promoting dealers from “free riding” on promoting 

dealers’ efforts to increase consumer demand. See Lester G. Telser, Why Should Manufacturers Want Fair Trade, 3 

J.L. & ECON. 86 (1960).

316 See Foster (F&S) Comment at 9 (suggesting that price support is the only reason drug manufacturers refuse to 

sell pet medications to fully licensed pharmacies, particularly those with Vet-VIPPS certification); id. at 4 (“As far 

as we can tell, restricting distribution has only one purpose: to maintain prices at higher levels than they would be 

with open competition. Who pays? Consumers.”); Kroger Comment at 1 (stating that exclusive distribution builds 
82

veterinarians should already have an economic and ethical incentive to learn about and promote 

pet medications that are effective in treating their animal patients, regardless of whether they 

receive the additional incentive of exclusivity.317

Economic theory suggests that procompetitive benefits may accrue from exclusive distribution 

practices. Given the prescribing authority of veterinarians, it is critical for manufacturers to 

persuade veterinarians to recommend and prescribe their products.318 Certainly, educating 

veterinarians about the efficacy of their products is a principal way to persuade them to prescribe 

certain products. But manufacturers may also strategize that, by promising exclusive sales 

opportunities, they can more effectively incentivize veterinarians to become knowledgeable 

about their products and recommend and prescribe them,

319 thereby enhancing “interbrand” 

competition between veterinarians that sell different brands of drugs within the same therapeutic 

class. Furthermore, some manufacturers offer additional sales incentives to veterinarians and 

their staff for recommending and prescribing their products.320 While these incentives may

enhance interbrand competition among different drugs within the same therapeutic class, some 

observers have questioned the ethics of manufacturers offering such incentives to veterinarians, 

and have suggested it exacerbates a conflict of interest that exists when veterinarians have the 

exclusive power to both prescribe and dispense pet medications.321

Some stakeholders particularly question whether there is any procompetitive basis for restricting 

the distribution of OTC animal products, which require neither a visit to the veterinarian nor a 

 

loyalty from the veterinarians by allowing them to benefit financially, but that consumers will pay inflated prices as 

a result).

317 See Principles of Veterinary Medical Ethics of the AVMA, supra note 38 (Principle VI.) (“A veterinarian shall 

continue to study, apply, and advance scientific knowledge; maintain a commitment to veterinary medical 

education; make relevant information available to clients, colleagues, and the public; and obtain consultation or 

referral when indicated.”); id. at sec. VI.b. (“Veterinarians should strive to improve their veterinary knowledge and 

skills, and they are encouraged to collaborate with other professionals in the quest for knowledge and professional 

development.”).

318 Workshop Tr. at 113-14 (Nate Smith) (“The brand value associated with that vet recommendation is I can 

charge higher prices, I can have higher margins, because it’s what the veterinarian has established from a brand 

perspective as the most efficacious, the most optimal medical treatment.”).

319 See, e.g., Jim Downing, Gilded Lilly? Bayer Challenges Elanco Claims, VIN NEWS SERV. (June 24, 2011), 

http://news.vin.com/VINNews.aspx?articleId=18945 (“Restricting retail sales of pet medications to licensed 

veterinarians with valid veterinarian-client-patient relationships is meant to be mutually beneficial: Veterinarians 

market drugs for the pharmaceutical companies in exchange for the assurance that clients won’t be able to purchase 

those products outside of a veterinary clinic.”).

320 See PACKAGED FACTS REPORT 2D, supra note 14, at 59 (“A key premise of pet medications marketing is that 

veterinarians will, whether directly or indirectly, help to sell the products, driven by their own desire to provide 

clients with the best healthcare options available and to realize higher practice revenues and profits. Accordingly, all 

of the large pharmaceutical marketers of pet medications court veterinarians, with sales representatives routinely 

calling on animal hospitals and private practices to promote their products and distribute free samples and gifts.”).

321 See supra note 292 and accompanying text. 
83

prescription, although a veterinarian may recommend such products. FDA-approved 

nonprescription animal drug products are considered safe and effective for their intended use, 

including administration by pet owners, if administered as directed on the label.322 Thus, some 

stakeholders argue that the justifications asserted by manufacturers for restricting the distribution 

of prescription pet medications do not apply, or at least do not apply to the same degree, for OTC 

pet medications.

323

Pharmacy stakeholders similarly question the manufacturers’ safety-related justifications for 

exclusive distribution and contend that qualified pharmacies should not be subject to restricted 

distribution policies, and should be allowed to purchase pet medications directly from the 

manufacturers or their authorized distributors.324 If a retail pharmacy can demonstrate that it is 

fully licensed and operating legally, they argue, then there should not be significant concern 

about whether the pharmacy can safely dispense pet medications.325 Moreover, if a retail 

pharmacy can demonstrate specific expertise in veterinary pharmacology, stakeholders question 

why directly distributing pet medications to this type of pharmacy would generate any greater 

safety risk than distributing these products through the traditional veterinary channel. Some 

pharmacy stakeholders claim that the safety concerns cited by manufacturers (which are similar 

to the concerns cited by veterinarians) are frequently exaggerated and, in many instances, 

 

322 Telephone Interview with Kim-Jung et al., supra note 126 (By definition, an approved OTC drug is one for 

which adequate directions can be provided for a layperson to use safely and effectively. This would not apply to 

unapproved products available through certain retailers). Furthermore, FDA-approved nonprescription drug products 

intended for use in humans may be administered to animals under the direction of a veterinarian, in the presence of a 

valid veterinarian-client-patient relationship, and as according to the Federal Food, Drug, & Cosmetic Act and 

implementing regulations regarding extra-label drug use in animals (Title 21, Code of Federal Regulations, Part 530-

Extralabel Drug Use in Animals). 

323 See Foster (F&S) Comment at 2 (“The entire point of being labeled an OTC product is to assure the public that 

the product has been judged safe for consumer use without a prescription and that consumers can shop online or 

walk into a store and buy the product, no doctor visit needed.”); Magee (F&S) Comment at 11 (“In my opinion there 

is no medical justification for drug manufacturers restricting distribution of over-the-counter pet medications . . . .[I]t is hypocrisy of the highest order for a drug manufacturer to go to the trouble and expense of licensing a 

medication as over-the-counter and then claim, for so-called safety reasons, it should only be dispensed through 

veterinarians.”).

The AVMA seems to offer somewhat conflicting statements regarding OTC products. On the one hand, the 

AVMA acknowledges that prescriptions are not required for OTC products and that the FDA has determined that 

directions for their use should be adequate for the public to follow. AVMA FAQs, supra note 52, at 1. On the other 

hand, the AVMA appears to agree with manufacturer justifications for selling OTC products only through 

veterinarians, claiming that “it seems more likely that the product will be used properly . . . if the veterinarian is 

supplying the medication and is counseling the pet owner on the proper use of the medication.” Id. at 2.

324 Magee (F&S) Comment at 12-13 (claiming that “the recommendation by the AVMA that a veterinarian should 

honor a client’s request for a written prescription is moot if the client cannot fill the prescription anywhere except a 

veterinarian’s office” and that, in its opinion, exclusive distribution “restricts competition and the consumer winds 

up paying higher prices.”); id. at 15.

325 Foster (F&S) Comment at 8 (“There is no reason to deny products to licensed pharmacies which are compliant 

with pharmacy laws and regulations.”). See also supra notes 220 and 237 and accompanying text.
84

unfounded.326 Some also believe that manufacturers provide false or misleading information to 

consumers to dissuade them from purchasing pet medications through non-veterinary retail 

channels.327

Furthermore, as previously discussed, a regulatory mechanism already exists to address the 

concern that pharmacists may dispense medications in a manner other than prescribed by 

veterinarians,

328 which may further weaken manufacturers’ purported safety justifications. Also 

previously discussed, pharmacy stakeholders argue that non-exclusive distribution would not 

threaten the VCPR,

329 and therefore manufacturers should not rely on this justification for 

restricting distribution to veterinarians only. In particular, pharmacy stakeholders have urged 

drug manufacturers to consider Vet-VIPPS certification when making decisions about the 

distribution of prescription pet products to online veterinary pharmacies, as this would appear to 

mitigate any actual or perceived safety risks associated with these pharmacies.330

Some non-veterinary retailers have also noted the apparent contradiction that arises when the 

same exclusive distribution practices do not always apply to central fill pharmacies. Central fill 

pharmacies provide veterinary practices with a turn-key online pharmacy solution, in which 

veterinarians can direct their clients to a proprietary website where the client can fill a 

prescription online or purchase OTC products, and have these products shipped to them at 

home.331 The veterinarian selects the products it wants to offer clients and sets the prices for the 

products, and then pays the central fill pharmacy a service fee for maintaining the website, 

 

326 Foster (F&S) Comment at 4 (describing safety concerns as a “false issue”); PetCareRx at 2-3; Valley Vet 

Supply Comment at 4 (“And the claim that pharmacists may not be equipped to fill a veterinarian’s prescription as 

written because the pharmacist has not trained in veterinary pharmacology or physiology is overstated. Pharmacists 

complete rigorous training and continuing education, and are will equipped to fill any health provider’s valid 

prescription. In addition, the veterinarian with a VCPR has the knowledge and ultimate responsibility for prescribing 

the proper medication and dosage.”). See also supra note 225.

327 PetCareRx Comment at 3 (“Some [manufacturers] also actively discourage purchase of their products from 

third-party pharmacies. These tactics include exaggerating safety concerns about pharmacy-purchased products, 

refusing to honor guarantees or warranties for, or accept returns of, products purchased from sources other than 

veterinary offices, and refusing to provide even informational support to purchasers of such products.”); Workshop 

Tr. at 147 (Race Foster); Foster (F&S) Comment at 7-8 (“. . . there is a cohort of some manufacturers and a few 

veterinarians who paint every online pharmacy with the same brush, claiming directly or implying to consumers that 

no online pharmacy is truly qualified to fill pet prescriptions. . . . However, not every online pharmacy falls into that 

category.”).

328 See discussion of regulatory mechanism, supra notes 219-224 and accompanying text.

329 See Foster (F&S) Comment at 4 (“As a requirement for a pharmacy to purchase medications from a 

manufacturer, maintenance of the direct veterinary-client-patient-relationship is a false issue. F&S only dispenses 

products when it receives a veterinarian’s prescription from a veterinarian or pet owner who has obtained a 

prescription from a licensed veterinarian through a valid client-patient-relationship.”).

330 See discussion of Vet-VIPPS program, supra notes 49-52 and accompanying text.

331 In addition to online pharmacy solutions, central fill pharmacies may also offer detailed reporting services and 

other medication management services to veterinary practices.
85

inventory, payment processing, and shipping operations. Central fill pharmacies claim to 

“operate as an extension of the veterinarian’s pharmacy and to fit within the context of the 

current veterinary pharmaceutical network.”332 Non-veterinary retailers argue, however, that it is 

inconsistent for drug manufacturers to sell directly to central fill pharmacies, yet claim that their 

policy of selling exclusively through veterinarians is based on safety concerns. It appears that 

pharmacists trained in veterinary pharmacology, not veterinarians, typically dispense pet

medications for central fill pharmacies. Indeed, some central fill pharmacies do not appear to 

have veterinarians on staff.333 Non-veterinary retailers suggest that some manufacturers sell 

directly to central fill pharmacies, but not to other types of pharmacies, because veterinarians 

benefit from these arrangements and the central fill pharmacy’s financial interests are aligned 

with their interests.

334 Of course, to the extent that this central fill system gives veterinarians a 

greater degree of control or ability to supervise the dispensing and use of the drugs than if the 

client went to an independent retail pharmacy, then the apparent contradiction may not be as 

significant.

3. The Secondary Market for Pet Medications

A secondary distribution system for pet medications has emerged over time, in which sales occur 

outside of the traditional veterinary-exclusive distribution model. This secondary market enables 

non-veterinary retailers to purchase pet medications despite stated manufacturer restrictions 

intended to limit distribution to veterinarians. It appears to have developed as a response to longstanding manufacturer policies of exclusive distribution, growing consumer demand for 

alternatives to purchasing pet medications from veterinarians, and the development of new 

methods for distribution, such as online retailing.

335 Retail pharmacies that wish to sell pet 

medications to their customers have stated that they often face difficulty purchasing products

directly from manufacturers, and must instead turn to secondary distribution sources.336 By some 

 

332 Workshop Tr. at 54-55 (Andrew J. Bane). See also id. at 32-33 (Paul D. Pion).

333 See, e.g., We’re VetSource, VETSOURCE, http://www.vetsource.com/#About: (describing VetSource as 

employing pharmacists and pharmacy technicians, but not veterinarians). See also Magee (F&S) Comment at 14.

334 Magee (F&S) Comment at 13-14. “Hypocritically, drug manufacturers sell to pharmacies, but only to those 

who have a financial arrangement in place with veterinarians. This directly contradicts the drug manufacturer 

assertion that prescription pet medication should only be sold by those with a valid [veterinary]-patient-client- relationship.” Id. at 15. See also PACKAGED FACTS REPORT 3D, supra note 12, at 158-59 (describing how Vets First 

Choice, a leading central fill pharmacy, offers a solution that helps protect veterinary practice revenues in an 

increasingly competitive environment).

335 See generally PACKAGED FACTS REPORT 3D, supra note 12, at 153 (“Although much is made of the gray 

market in this category, it appears to be a natural outcome when manufacturers elect to restrict supply to more 

expensive channels.”); Workshop Tr. at 103-04 (Clinton Vranian) (“It’s clear that this is an economic force and 

where there’s sufficient demand for a product, the consumer or the market is going to find a way.”).

336 See PetMed Express, Inc., supra note 21, at 6 (“Historically, substantially all the major pharmaceutical 

manufacturers have declined to sell prescription and non-prescription pet medications directly to us. In order to 
86

estimates, one-quarter of the sales of pet medications were attributable to secondary distribution

in 2009, which may have amounted to hundreds of millions of dollars or more.337 It appears that 

a significant volume of pet medications, particularly OTC flea and tick medications, continues to 

be diverted to non-veterinary retailers.

338

The secondary distribution system functions in a number of observed ways.339 Typically, 

wholesale distributors that are not specifically authorized by manufacturers to distribute their 

products (i.e., “unauthorized distributors”) solicit veterinarians to purchase excess pet 

medications from manufacturers or authorized distributors, and then sell them a portion of their 

inventory.340 These unauthorized distributors, in turn, aggregate these product supplies and resell them to non-veterinary retailers for ultimate sale to consumers.

341 This practice is often 

 

assure a supply of these products, we purchase medications from various secondary sources, including a variety of 

domestic distributors.”); PetCareRx Comment at 2 (“PetCareRx must purchase its pet medication supplies from 

different categories of suppliers for one main reason: historically, manufacturers have restricted their sale of 

prescription pet medications only to veterinarians and, in some purchase agreements, have prohibited veterinarians 

from re-selling such medications to distributors or third-party pharmacies. While some manufacturers have 

abandoned this anticompetitive practice, others continue to proffer the antiquated and flawed view that safety 

concerns warrant restricting distribution of prescription pet medications to veterinarians.”).

337 See Edie Lau, The Flea Market, VIN NEWS SERV. (Apr. 6, 2009), 

http://news.vin.com/VINNews.aspx?articleId=12576 [hereinafter Lau, Flea Market].

338 According to SymphonyIRI sales data, “vet-only” brands have significant sales in the mass-market retail 

channels, which is noteworthy given that these brands do not appear to be authorized for distribution in the 

supermarkets and mass merchandisers that represent the large majority of SymphonyIRI-tracked sales. PACKAGED 

FACTS REPORT 2D, supra note 14, at 68-69 (noting that Merial’s Frontline brand has been a leader in the non- veterinary retail channel for the dog and cat categories for several years, despite Merial’s exclusive distribution 

policy).

339 For extensive discussion of the secondary distribution system for OTC pet medications, see a series of articles 

written by Edie Lau, Jim Downing, and Peggy Guy (pseudonym) for the VIN News Service, from 2009 through 

2012. Lau, Flea Market, supra note 337, https://web.archive.org/web/20120618130806/http://news.vin.com/VINNews.aspx?articleId=12576 (archived 

version) (the table at the top of this archived version of Edie Lau’s article provides links to each article in the 13-part 

series on product diversion that ran from 2009 until 2011); Edie Lau, Veterinarian Investigates Illicit Diversion of 

Flea Products, VIN NEWS SERVICE (May 8, 2012), http://news.vin.com/VINNews.aspx?articleId=22512 (the first 

article in a 3-part series from 2012).

340 The use of the term “unauthorized distributor” is not intended to imply that something illegal is necessarily 

occurring, as many of these distributors appear to be fully licensed within the states in which they operate. These 

distributors also may be referred to as “aggregators.”

341 See generally Workshop Tr. at 31 (Paul D. Pion).

Stakeholders have described other variations on this general approach. One retail pharmacy described a scenario 

in which “a single entity, often a veterinarian, becomes an unauthorized distributor and creates a network of other 

veterinarians who purchase an oversupply of product from manufacturers. The oversupply from this network of 

veterinarians is then aggregated into a central supply source that is sold – i.e. diverted – directly to retailers.” Powers 

(F&S) Comment at 2.

In another scenario, an employee of a drug manufacturer (e.g. sales representative) and a veterinarian solicit a 

retailer to purchase a large volume of prescription or OTC pet medications. By involving a veterinarian, the 

manufacturer can still claim that it sells only through veterinarians. The veterinarian is generally paid for this effort 

through rebates and quantity discounts, and the retailer typically pays 15 to 20 percent more than the veterinarian 

pays. Id. at 1-2. 
87

referred to as “diversion.”342 It remains unclear how many veterinarians are involved in the 

diversion of pet medications, but it is thought to be substantial. Generally, the veterinary 

community regards product diversion as unethical,

343 and many manufacturers with stated 

exclusive distribution policies publicly criticize the practice. Perhaps as a result, some wholesale 

distributors and the retail pharmacies that purchase inventory from them appear to take steps to 

protect the identities of veterinarians who sell products into the secondary market.344

Manufacturer efforts to address veterinary diversion appear varied. Some observers believe that 

manufacturers may be complicit in supporting the secondary distribution system, despite public 

claims to the contrary. They allege that manufacturers and distributors are, to a large extent, 

involved in the diversion of pet medications, and that manufacturer sales representatives are 

often encouraged to divert product in order to meet their sales quotas.345 To the extent that this is 

 

In addition, the NABP has identified the following practices: (1) veterinarians who serve as consultants to 

pharmacies or wholesalers, purchase drugs under their license, and then transfer the products to the pharmacy or 

wholesaler; (2) veterinarians who own pharmacies, purchase drugs under their veterinary license, and then transfer 

the products to the pharmacy; (3) wholesalers who purchase pet medications directly from manufacturers, despite 

claims by manufacturers that these products are restricted to the veterinary channel; and (4) wholesaler distributor 

license obtained under the name of a veterinary hospital that later goes out of business, only to have a distributor 

continue to purchase products under the veterinary hospital’s license. Workshop Tr. at 63-66 (Gregg Jones).

342 For purposes of this report, the term “veterinary diversion” generally refers to veterinarians who sell pet 

medications to unauthorized wholesale distributors or non-veterinary retailers (e.g., retail pharmacies), thus creating 

the secondary market for pet medications. This report does not analyze situations where veterinarians sell 

prescription drugs to consumers without first establishing a VCPR or where non-practicing veterinarians operate 

retail establishments that sell prescription drugs to consumers without requiring a valid prescription.

In the human medications industry, the term “diversion” always implies something illegal is occurring, such as 

the diversion of controlled substances to unlicensed sellers and, ultimately, consumers who lack a proper 

prescription. With respect to the animal market, there are some widely varying regulations that deal with veterinary 

drug distribution, and the term “diversion” may not always imply something illegal and therefore may not have the 

same negative connotations. Workshop Tr. at 107-08 (Gregg Jones).

343 Until recently, the AVMA Principles of Veterinary Medical Ethics described veterinarian merchandising of 

prescription drugs outside the context of a VCPR and the resale of medications outside the manufacturer sales 

policies as unethical. See Principles of Veterinary Medical Ethics of the AVMA,

http://web.archive.org/web/20120729082115/http://www.avma.org/issues/policy/ethics.asp (approved Nov. 2010) 

(Principles III.C.2. & VI.D.). However, the newly revised AVMA Principles of Veterinary Medical Ethics no longer 

include this language. See Principles of Veterinary Medical Ethics of the AVMA, supra note 38.

344 The NABP stated that there are pharmacies that remove secondary bar coding on certain types of pet 

medications intended to identify the veterinarian that purchased the product. The pharmacies may also remove these 

medications from the original packaging, place them into proprietary vials, and dispense the product in a similar 

manner to human drugs. See Workshop Tr. at 63-66 (Gregg Jones).

345 See Workshop Tr. at 31 (Paul D. Pion) (“Manufacturer and distributor reps, it turns out, are a big part of this. 

How high it goes up that they're encouraged to do this, to make their numbers, and to increase their income, we don't 

know. But we know that they're a big part of this. And there's a lot of indications that manufacturers, despite saying 

that they don't want to sell into these channels, and distributors, are doing so directly as well.”); id. at 103-05 

(Clinton Vranian) (suggesting that some manufacturers use the secondary market to obtain sales they might not have 

obtained through the veterinary channel). One retail pharmacy stated that diversion is sanctioned by manufacturers 

who publicly claim to sell products exclusively through the veterinary channel, while privately allowing their sales 

representatives to engage in product diversion to retailers. According to this stakeholder, manufacturers use this 

practice to increase their sales volumes through retailers, but at inflated prices to the consumer. Powers (F&S) 

Comment at 1-3. See also Foster (F&S) Comment at 5-6 (“We have first-hand knowledge of drug manufacturer reps 

trying to set up product diversion.”).
88

true, it may indicate that the benefits of exclusive distribution have been overstated, and that 

some industry participants are moving away from exclusive distribution through veterinarians 

towards more multi-channel distribution strategies. At least one manufacturer states that it has 

generally given up trying to stop diversion, but continues to try to prevent counterfeit products 

from reaching the market.346 Other manufacturers state that they implement measures to try to

stop veterinary diversion, although such measures may not be totally effective.

347 It appears that 

many veterinarians are skeptical of claims by manufacturers that they do not support product 

diversion.348

It has been reported that pet medication manufacturers may refuse to guarantee their products if 

they are not purchased from a veterinarian.349 Indeed, veterinarians sometimes tout this as a 

reason that consumers should purchase products only from them.350 However, it appears that

 

346 At the workshop, Novartis explained that it had a history of trying to stop diversion, but found that it was 

impossible. “[A] secondary supply can be done legally and it’s not our place to prevent a legal business from 

operating in any way.” Novartis also stresses that it aggressively pursues counterfeit or unapproved product reaching 

the secondary market, but otherwise does not implement measures to control diversion. “Our best estimate is 

between two and five percent maybe on an annual basis winds up in the secondary market. The cost of trying to stop 

that, setting aside competitive issues, is just cost prohibitive. We focus on bringing clients back to the veterinarian 

and controlling what we can control. In the end, our objective through these measures is to protect the quality and 

health and life of animals. It’s not to protect the channel, control distribution, limit competition or support inefficient 

businesses.” Workshop Tr. at 103-05 (Clinton Vranian). 

347 See Lau, Merial Stance on Diversion, supra note 308 (referencing conversations with executives at Merial, 

Lau states “the company is limited in its ability to aggressively pursue diverters [of OTC Frontline] because 

diversion [of this product] is not illegal and because Frontline is the market leader, putting Merial under particular 

scrutiny to avoid breaking laws against restraint of trade, anti-competitive behavior and collusion.”). 

Elanco also has a stated policy of trying to stop diversion. “Since 2010, Elanco has identified close to 400 

veterinarians/diverters who failed to meet our corporate sales policy and their ability to purchase Elanco Companion 

Animal products has been revoked. Elanco is constantly evaluating new ways to identify and stop those who choose 

to participate in this deceptive action.” Yet, Elanco acknowledges that, despite these efforts, it is aware that some of 

its products are being sold by online and retail pharmacies. Elanco Letter, supra note 297.

348 See Lau, Flea Market, supra note 337 (“Judging from fiery discussions that crop up repeatedly on Veterinary 

Information Network (VIN) online discussion boards, a prevailing sentiment is that manufacturers have used and 

betrayed veterinarians: used, by enlisting veterinarians to promote their products, promising them exclusive claim to 

the retail profits; and betrayed by not enforcing the policies once pet owners came to trust the brands.”); Lau, 

Parasiticide Diversion, supra note 56 (“Many clinicians are passionately upset that drug companies as a whole are 

failing to control distribution of product that the companies themselves say should be sold only by veterinarians.

Rumor says that some of the companies are complicit in making their product available to general retailers and 

online pharmacies. Companies say they fully support veterinarians and don’t tolerate diversion, but most refuse to 

detail how they combat over-the-counter sales or explain how so large a volume of product escapes their control.”).

349 See, e.g., Elanco Letter, supra note 297. There appear to be multiple levels of manufacturer product support, 

the most basic being purchase price reimbursement or product replacement in the event of a defective product. There 

is also diagnostic reimbursement, the highest level of technical support in which the manufacturer pays for 

diagnostic analysis to determine the reason for a pet’s adverse reaction to a medication. Workshop Tr. at 129-31 

(Clinton Vranian).

350 See e.g., Shaprut Comment; The Danger of Veterinary Internet Pharmacies, ANIMAL MED. CTR. OF S. CAL., 

http://www.animalmedcenter.com/news-and-press/article/the-danger-of-veterinary-internet-pharmacies (“You 

should also know that neither the drug maker nor your veterinarian will stand behind a product’s guarantee if you 

purchase the product online.”); Frequently Asked Questions, CLANTON ANIMAL HOSP., 

http://www.cahvet.us/faq.html; Pharmacy, SUNNYCREST ANIMAL CARE CTR., 

http://www.sunnycrestanimalcare.com/services/veterinary-care/pharmacy/.
89

manufacturer policies about whether to guarantee products purchased from non-veterinary 

retailers vary, and that some manufacturers actually do guarantee their products, regardless of 

where they are purchased.351

Veterinary diversion (i.e., veterinarians who sell pet medications to wholesale distributors or 

non-veterinary retailers) may arguably be inconsistent with some state laws and policies relating 

to the distribution of pet medications.352 At the FTC workshop, some industry stakeholders 

argued that veterinary diversion of prescription pet medications is almost always illegal.353

Conversely, some industry stakeholders argue that veterinary diversion of prescription and OTC

pet medications may be legal in some states, particularly where veterinarians are allowed to 

obtain wholesale distributor licenses, or that legality is uncertain.354 Even where these practices 

appear to violate state laws, the workshop and additional research produced scant evidence of 

 

351 For example, Novartis provides technical support for its products irrespective of point of sale. To receive 

diagnostic reimbursement from Novartis, a veterinarian must initiate the complaint, but this does not depend on the 

product being purchased at the veterinary clinic. Workshop Tr. at 130-31 (Clinton Vranian). According to an article 

published by VIN News Service, spokesmen for Merial and Pfizer stated that they guarantee their products 

regardless of where they were purchased. Lau, Parasiticide Diversion, supra note 56 (suggesting that drug 

companies must not be overly concerned about counterfeit pet parasiticide products because they are willing to 

guarantee these products regardless of whether they are purchased through a retail channel). Elanco, on the other 

hand, has a stated policy of refusing product guarantee reimbursements for prescription and OTC products acquired 

through unauthorized sources. Elanco Letter, supra note 297.

352 A few states appear to have statutes that explicitly prohibit veterinary diversion of prescription drugs, or have 

issued legal advisory opinions or official written guidance indicating that veterinary diversion is illegal. Most states, 

however, do not have veterinary or pharmacy practice statutes that expressly address veterinary diversion of 

prescription or OTC pet medications. At most, some states require that veterinarians must establish a VCPR before 

dispensing, distributing or selling pet medications, and these requirements might be construed to prohibit veterinary 

diversion to wholesale distributors and non-veterinary retailers. Some state veterinary board officials informed FTC 

staff that they interpret these statutes to prohibit veterinary diversion, while other state veterinary board officials 

informed FTC staff that they are uncertain whether existing statutes prohibit veterinary diversion or they believe it is 

allowed. Also, it appears that in many states where veterinary diversion of prescription pet medications may 

arguably violate some state laws, the sale of OTC pet medications is largely unregulated and veterinary diversion of 

these products may not be prohibited, particularly where veterinarians are allowed to obtain wholesale distributor 

licenses. 

353 See, e.g., Workshop Tr. at 58 (Andrew J. Bane) (arguing that diversion of prescription pet medications occurs 

in violation of veterinary practice and state pharmacy board statutes in nearly every state and claiming that 

“[g]enerally, veterinarians are authorized to dispense prescription products via the respective veterinary practice acts 

of the states within which they practice. These acts require that the prescription dispensing by the veterinarian is to 

occur within the context of the valid Veterinarian-Client-Patient-Relationship. This requirement is violated when 

veterinarians wholesale products outside of the context of this relationship to other businesses. Additionally, anyone 

reselling prescription products needs to be properly licensed according to the state boards of pharmacy, just as is 

required of legitimate wholesale veterinary distributors.”).

354 According to the NABP, under the Food, Drug and Cosmetic Act, human drug distributors must be licensed by 

their resident state and human drug sales must be tracked back to a manufacturer or authorized distributor, in 

accordance with rules established by the FDA. These requirements do not exist for veterinary drug distribution, 

however, and the licensing of wholesale distributors of veterinary drugs varies widely by state. Workshop Tr. at 65

(Gregg Jones). Furthermore, there are no audit trail requirements for veterinarians to demonstrate whether they 

purchase products under their veterinary license and resell under their wholesale license. Id. at 107. See also id. at 

129 (Paul D. Pion) (claiming that state pharmacy veterinary boards have often been unable to clarify for him 

whether veterinary diversion is legal in their state); Lau, Flea Market, supra note 337 (“Diversion [of OTC pet 

medications] may violate company sales policies, but it is not illegal per se.”).
90

significant enforcement efforts by the states,355 despite claims within the veterinary community 

that veterinary diversion of pet medications is widespread. For those veterinarians who engage in 

diversion, therefore, the profitability of diversion apparently outweighs any concerns about 

prosecution or sanctions. This may be particularly true for the diversion of OTC products, which 

appear to account for a large portion of the secondary market and for which the risk of 

prosecution may be lower than for the diversion of prescription products. For purposes of this 

report, FTC staff does not take a position as to whether veterinary diversion of pet medications is 

legal. Instead, FTC staff recognizes the fact that a secondary market for pet medications exists 

and analyzes the relevant competitive implications.

4. Competitive Impact of Secondary Distribution

Secondary distribution systems are often viewed as procompetitive, and responsive to consumer 

demand.

356 In the pet medications industry, the secondary distribution system facilitates

increased competition between veterinarians and other retailers, resulting in additional 

purchasing options and potentially lower prices for consumers, particularly for OTC flea and tick 

products. However, several industry stakeholders argue that there are significant inefficiencies 

associated with this secondary distribution system that result in less access and higher prices for 

 

355 But see Kan. Bd. of Veterinary Exam’rs v. Maloley (KBVE 2006) (Case No. 3052.11) (board disciplinary 

action against a veterinarian who purchased prescription and OTC veterinary products from manufacturers and 

distributors and resold them to other establishments, including Internet retailers, in violation of established 

marketing polices and without having a VCPR with the ultimate consumers who received the products from the 

retailers); Kan. Bd. of Veterinary Exam’rs v. Otto (KBVE 2006) (Case No. 04047) (board disciplinary action against 

a veterinarian who solicited and arranged for the purchase by himself and other Kansas veterinarians of large 

quantities of OTC pet medications for resale to persons other than the end user, including other retailers); Tex. Bd. 

of Veterinary Medical Exam’rs v. Box, Agreed Order 2009-24 (Oct. 26, 2009) (board disciplinary action against a 

veterinarian who allowed a retailer seller of veterinary drugs and supplies to use his license to purchase bulk 

veterinary pharmaceutical drugs and supplies; it appears that the Respondent rectified the situation by becoming 

licensed as a wholesale distributor of prescription drugs with the Texas Department of State Health Services); Tex. 

Bd. of Veterinary Medical Exam’rs v. Wilkinson, Negotiated Settlement, Docket Number 1991-16 (Feb. 1991) 

(board disciplinary action against a veterinarian who allowed his license to be used for the unauthorized delivery of 

prescription drugs to a retailer; failure to register as a wholesale drug distributor; and not establishing a VCPR with 

the end-user of the prescription drugs). See also Jessica Tremayne, Kansas veterinary board takes actions against 

DVM licenses, DVM360.Com (May 1, 2006), http://veterinarynews.dvm360.com/kansas-veterinary-board-takesactions-against-dvm-licenses (stating that the Kansas Board of Veterinary Examiners sent a letter to about 2,400 

licensed Kansas veterinarians stating that legal action will be taken against them if caught reselling products in a 

manner that violates manufacturer directions).

356 See PetCareRx Comment at 1; Kroger Comment at 1-2; PACKAGED FACTS REPORT 3D, supra note 12, at 37 

(“For many years, flea/tick spot-ons have been subject to massive gray market (unauthorized) distribution of 

products that are supposed to be restricted to the veterinary channel . . . . While this perhaps boosts flea/tick care 

sales by making the products more affordable and more widely available in non-veterinary channels, it is putting 

even more price pressure in the market, as Frontline has experienced.”). 

Some stakeholders acknowledge that the secondary market may have expanded consumer access to pet 

medications, but continue to debate the extent to which the secondary market may have led to lower prices. See 

Workshop Tr. at 38 (Paul D. Pion) (“the gray market starts to appear, and what this did was expand the market. It 

reached consumers who didn't go to veterinary clinics. It didn't really lower prices much, because it was still all 

mostly coming through veterinary chains, and so there wasn't much of a margin, because veterinarians weren't 

marking them up as much as people believe, in general.”).
91

consumers when compared to a system in which non-veterinary retailers could procure an

inventory of pet medications through primary distribution.

357 As discussed in more detail below, 

these claimed inefficiencies include a longer distribution chain, unstable supply, and greater 

inventory requirements. 

Workshop participants explained how in a direct distribution system, pet medications typically 

pass from the manufacturer to an authorized distributor to the veterinarian before being sold to 

the consumer. In a secondary distribution system, pet medications may pass through two 

additional entities before reaching the consumer, including an unauthorized wholesale distributor 

(sometimes called an “aggregator”) and a non-veterinary retail outlet.358 Thus, the secondary 

distribution system typically involves additional price mark-ups that would be taken at both the 

wholesale distributor and the non-veterinary retailer levels. These additional steps and mark-ups 

may result in higher costs to retailers, and ultimately higher prices to consumers.359

Although it has been noted that many non-veterinary retailers currently offer lower prices for 

certain pet medications than some veterinary clinics, some of these retailers have claimed that 

they could offer prices that are even lower if they could procure products through a more direct 

and efficient system that did not involve these additional steps.360 For example, some non-

 

357 Foster (F&S) Comment at 5-6 (“[B]y refusing to sell direct to retailers but selling to them under the table, 

manufacturers are forcing extra layers of cost into the system. . . . In addition, pet owners cannot always be assured 

that their preferred pharmacy will have the products they need when they need them, because the diversion process 

removes a regular supply of products to retailers.”); Powers (F&S) Comment at 2 (“Consumers suffer because the 

multiple steps involved in diversion artificially inflate prices and create an inconsistent supply for retailers and pet 

owners.”). See also Workshop Tr. at 70-71, 73 (Nate Smith).

358 An exception would be if a manufacturer knowingly entered into some type of diversion scheme, in which it 

sold product directly to a veterinarian, who then sent the product directly to a retailer. Some stakeholders have 

reported that in these situations, product may be officially sold to the veterinarian, but actually sent directly to a 

warehouse owned by the retailer. Retailers may still pay significant mark-ups for these products, but the product 

flows through fewer entities.

359 Workshop Tr. at 100 (John Powers) (“Any product, whether it’s hardware or housewares, where you include 

another step in the distribution channel, is going to raise prices for the consumer ultimately. Most companies have a 

minimum mark-up they can work on and still be profitable. Cost enters into that equation. So, every incremental cost 

you add, from the time the product is manufactured until it gets to the ultimate retailer, will definitely affect the 

price of that product to the consumer.”). See also id. at 98-99 (Nate Smith) (“[Y]ou're always going to look at how 

many players are there in a supply chain, how many times is a product received, touched, reaped, distributed, 

shipped somewhere else.”).

360 See PetCareRx Comment at 3-4 (“Consumers who do purchase prescription pet medications from third-party 

pharmacies may pay higher prices than they would have if pharmacies could obtain all drugs directly from 

manufacturers or from distributors that purchase directly from manufacturers. This is because purchasing 

veterinarians’ surplus directly or indirectly through distributors creates unnecessary inefficiencies and can result in 

supply shortages, both of which increases costs for pharmacies, which are then passed on to consumers.”); Foster 

(F&S) Comment at 5 (stating that with diversion, retailers pay prices that are “15% higher or more, with no payment 

terms, and no volume price breaks,” resulting in higher prices to consumers); Powers (F&S) Comment at 1

(“[T]hrough product diversion consumers, pharmacies and retailers become victims of elevated prices, inconsistent 

supply and restricted consumer choice.”); N. Smith Comment at 5 (“Of course, the prices pet owners are charged for 

filling prescriptions from alternative channels are inflated because of the inability of those channels to obtain 

product directly from manufacturers.”).
92

veterinary retailers expected to pay lower prices for Bayer’s products once they became available 

for direct distribution.361 This assumes, of course, that the manufacturers would not change

wholesale prices in the event of a change in distribution strategy. Also, if exclusive distribution 

motivates veterinarians to sell the manufacturers’ products, eliminating the exclusivity could 

cause the quantity sold to decrease, notwithstanding any price reduction. In other words, price 

reductions may not increase consumer welfare if veterinarians would be less inclined to promote 

and prescribe newly developed pet medications that have benefits for consumers and their pets.

Non-veterinary retailers complain that another problem with secondary distribution is unstable 

product supply. There may be times when retailers are unable to procure certain products, which 

limits their ability to fill prescriptions for consumers.362 Compounding pharmacies are 

particularly concerned about their ability to procure reliable product supplies.

363 Due to this 

instability, non-veterinary retailers may be compelled in some instances to purchase large 

quantities of product in advance whenever it becomes available. This may require significant upfront capital and inventory space, which may also add extra costs. Some of these costs may be 

passed on to consumers.364 Several retail stakeholders allege that all of these inefficiencies result 

 

361 See, e.g., Lau, Bayer Wins Some, supra note 313 (PetMed Express CFO, Bruce Rosenbloom, stating that the 

company hopes to purchase the Bayer products “at a better price than we got it previously” now that it can buy 

direct); Interview with representatives from PetCareRx, Inc. (Jan. 22, 2015) (to understand whether PetCareRx paid 

lower prices for Bayer Animal Health products as a result of the manufacturer’s direct distribution of products to 

PetCareRx).

362 See Workshop Tr. at 60-61 (Brad Dayton); id. at 146 (Race Foster) (“Today, in our pharmacy, we have more 

prescriptions on file than we are allowed drug to fill.”). But see Jim Downing, PetMed Express Stumbles, VIN NEWS 

SERV. (Dec. 8, 2011), http://news.vin.com/VINNews.aspx?articleId=20606 (citing Foster as stating that since 2009, 

obtaining OTC pet medications through secondary distribution channels has become much easier for retailers). 

363 The International Association of Compounding Pharmacists (“IACP”) expressed concerns about its members 

being able to meet the needs of patients due to their inability to procure finished drug products directly from 

manufacturers or authorized distributors. Workshop Tr. at 69-70 (David G. Miller). The FDA requires that 

compounding of medications for veterinary use must be done with commercially-available finished drug products. 

See id. Compounded products are very important to veterinary practice, as various animals may require that certain 

medications be prepared in a specific way that is amenable to their consumption or other application. See generally 

Indep. Pharmacy Alliance Comment at 1 (“Many owners seek compounded pet medications that can be ingested in 

liquid form or blended with pet foods to ensure better medication treatment and pet cooperation to ensure pet 

medication utilization.”). IACP states that, because of manufacturer sales policies, compounding pharmacies cannot 

buy drugs directly and, instead, must obtain products from veterinarians, which leads to potential disruptions in the 

supply chain. See Workshop Tr. at 68-69 (David G. Miller).

364 See Foster (F&S) Comment at 6 (“Consumers . . . pay in aggregate millions of dollars a year more than they 

would have if normal market forces were allowed to come into play. In addition, pet owners cannot always be 

assured that their preferred pharmacy will have the products they need when they need them, because the diversion 

process removes a regular supply of products to retailers.”); PetMed Express, Inc., supra note 21, at 6 (“We cannot 

guarantee that if we continue to purchase prescription and non-prescription pet medications from secondary sources 

that we will be able to purchase an adequate supply to meet our customers’ demands, or that we will be able to 

purchase these products at competitive prices.”); id. at 7 (“We need to properly manage our inventory to provide an 

adequate supply of these products and avoid excessive inventory . . . . In the event that subsequent orders fall short 

of original estimates, we may be left with excess inventory. Significant excess inventory could result in price 

discounts and increased inventory carrying costs. Similarly, if we fail to have an adequate supply of some SKUs, we 

may lose sales opportunities. We cannot guarantee that we will maintain appropriate inventory levels. Any failure on 
93

in higher prices for consumers, and may restrict the consumer’s ability to access pet medications 

from non-veterinary retail outlets. Retail pharmacies have stated that consumers may face longer 

wait times when purchasing pet medications from a retail pharmacy that must rely on secondary 

distribution, which may not always make products available on a reliable and predictable basis, 

thereby impeding consumer access to these products.365 One retailer suggests that inconsistent 

supply may deter some retail pharmacies from entering the market, thereby depriving consumers 

of the benefits of this additional competition.

366

Some workshop participants expressed the opinion that the market for pet medications is very 

dynamic and as it continues to evolve, many of these inefficiencies are being resolved. For 

example, some manufacturers have embraced the retail channel voluntarily.367 Other participants 

disagreed, stating that they are still subject to arbitrary supply decisions made by 

manufacturers.

368 These non-veterinary retailers claim that they are left with many prescriptions 

on file that cannot be filled as a result of these manufacturer decisions.

369 Although 

manufacturers did not directly comment on this situation as part of the FTC’s record, as is 

discussed in the next section of the report, it is possible that they would have legitimate 

justifications for these refusals to supply, such as maintaining the integrity of a distribution 

system that is optimal for their business operations.

5. Product Pedigree and Safety Issues Associated with 

Secondary Distribution

Many concerns have been raised about the quality and integrity of pet medications distributed 

through secondary distribution and dispensed by retail pharmacists. Several stakeholders contend 

that secondary distribution for pet medications creates substantial risk of adulterated or 

counterfeit compounds being introduced into the supply chain.370 Furthermore, they contend that 

 

our part to maintain appropriate inventory levels may have a material adverse effect on our financial condition and 

results of operations.”).

365 Workshop Tr. at 98 (Brad Dayton) (stating that time delays are the biggest inefficiency).

366 PetCareRx Comment at 3-4.

367 See Workshop Tr. at 101-02 (Clinton Vranian).

368 Id. at 102 (John Powers) (stating that some manufacturers that used to encourage retailers to carry their 

prescription products have recently made the decision to cut off their supply).

369 See, e.g., id.

370 See Workshop Tr. at 57 (Andrew J. Bane) (“[T]his gray market distribution channel creates substantial risk of 

adulterated or counterfeit compounds being introduced.”); id. at 122-23 (David G. Miller); GADA Comment at 5 

(“Once product is diverted from the manufacturer’s authorized distribution channel, product quality and integrity 

cannot be ensured.”); SVHP Comment at 2 (“The SVHP also believes that the existing gray market utilized by nonveterinarians to obtain prescription veterinary medicines invites fraud, deception and safety issues for pets and their 

owners.”); Brown Comment (#521); J. Forbes Comment; Cf. Kroger Comment at 2 (“There will be operators of high 

quality documentation and handling. We are participating in this distribution method, and are highly confident in our 
94

without proper regulatory oversight, products are less likely to be stored and shipped according 

to manufacturer recommendations.

371 Concern also has been expressed about the lack of 

transparency in the chain of custody (sometimes referred to as the product’s “pedigree”) for pet 

medications that are procured through secondary distribution. Without a traceable product 

pedigree, it becomes more difficult for pharmacists and consumers alike to verify the authenticity 

(and thereby the safety and efficacy) of pet medications.372 Under these conditions, when a 

treatment failure occurs, it is challenging to determine whether it is the result of an adverse 

reaction to a legitimate product or whether the product did not perform properly because it was 

adulterated or counterfeit.373 For these reasons, pharmacists and retailers state that they would 

prefer to purchase pet medications directly from a manufacturer or through an authorized 

distributor.374

The NABP has described the “normal” distribution chain that exists for human prescription 

medications, in which drugs move directly from the manufacturer to the wholesale distributor to 

the pharmacy or practitioner. In a closed distribution system such as this, the NABP has a high 

level of confidence in the integrity of the products sold by retail pharmacies because the 

distribution pedigree can be established definitively. At the FTC workshop, a representative of 

the NABP explained that this type of system has not been developed for animal drug distribution 

through retail pharmacies.375 The NABP would prefer a “normal” distribution chain for 

prescription pet medications sold by retail pharmacies as opposed to a secondary distribution 

 

business partner, and the standard operating procedures that have been built to ensure a safe supply channel. 

Unfortunately there will be operators of poor quality storage and distribution, which could be a threat to safety.”).

371 See Workshop Tr. at 57 (Andrew J. Bane) (“The lack of regulatory oversight means that the appropriate 

mechanisms are not in place to ensure that prescription products are stored and shipped under their required 

conditions.”); id. at 122-23 (David G. Miller).

372 See id. at 57 (Andrew J. Bane) (“On the matter of gray market distribution of veterinary prescription products, 

we feel that this unregulated product trafficking has the potential to endanger pet health. . . . This also means that 

there's a lack of transparency in the chain of custody of the products for the dispensing pharmacists as well as for the 

pet owner.”); id. at 108-09 (Nate Smith) (stating that diversion can be problematic for retailers if it compromises 

their ability to establish a proper chain of custody); Gay (VetRxDirect) Comment (#576) (“Without pedigrees in the 

distribution of prescription veterinary medicines, there is a significant risk of fraud, substitution, and mishandling.”).

373 Workshop Tr. at 122-23 (David G. Miller).

374 Id. at 122 (David G. Miller) (“Our preference is to always purchase either directly from the manufacturer, or 

through a wholesaler who has a direct relationship that is licensed and regulated.”);Workshop Tr. at 108 (N. Smith) 

(“We would prefer sourcing the product from the manufacturer to know that that supply chain has had all the 

integrity, all the controls.”). See also Edie Lau, Are Pet Drugs Like Contact Lenses?, VIN NEWS SERV. (Sept. 19, 

2012), http://news.vin.com/VINNews.aspx?articleId=24419 (“PetMed Express would like very much to purchase 

pet medications directly from manufacturers. ”).

375 Workshop Tr. at 65-66 (Gregg Jones).
95

system in which it can be difficult to determine a product’s distribution pedigree and be assured 

of the product’s quality and integrity.376

However, it should be noted that products sold through secondary distribution are not necessarily 

unsafe. Most Vet-VIPPS accredited pharmacies obtain their products from secondary wholesale 

distributors, and they are required to demonstrate that these products are authentic and originated 

with the manufacturer.377 Furthermore, several retail pharmacies stated that they have adopted 

measures to ensure that these products have been handled and stored appropriately while in the 

distribution chain.378 Other observers state that problems with product safety are not limited to 

non-veterinary retailers who rely on secondary distribution, and can occur at veterinary clinics 

and retailers alike.379

Several non-veterinary retailers who must purchase products through secondary distribution 

expressed the belief that implementation of the same type of distribution system that exists for 

human medications, whereby all retailers purchase pet medications directly from manufacturers 

or authorized distributors, would help to eliminate existing inefficiencies associated with the 

secondary market. They argued this would ensure the safety, authenticity, and efficacy of 

products sold by non-veterinary retailers. Indeed, retail pharmacists already purchase human 

medications from most of the same manufacturers that market pet medications. Direct sales to

non-veterinary retailers, they maintained, would also address many of the concerns expressed by 

veterinarians surrounding secondary distribution.380 For instance, veterinarians expect assurances 

 

376 Telephone Interview with Gregg Jones, Compliance Manager, et. al., Nat’l Ass’n of Bds. of Pharmacy (Sept. 

11, 2012).

377 Conversations with the NABP confirm that evaluation of supply sources has been included in the Vet-VIPPS 

accreditation process since early 2012, to mitigate any risk that products may be counterfeit or adulterated. 

Pharmacies that rely on secondary distribution sources must demonstrate that the drugs they acquire are authentic 

and originated with the manufacturer. Telephone Interview with Carmen Catizone, Exec. Dir., Nat’l Ass’n of Bds. 

of Pharmacy (July 12, 2012); Telephone Interview with Gregg Jones, Compliance Manager, et. al., Nat’l Ass’n of 

Bds. of Pharmacy (Sept. 11, 2012). See Edie Lau, Accreditation Body Questions Pharmacists on Veterinary Drug 

Suppliers, VIN NEWS SERV. (June 28, 2012), http://news.vin.com/VINNews.aspx?articleId=23189 (stating that 

supply sources are now being evaluated as part of the Vet-VIPPS accreditation process).

378 See PetCareRx Comment at 2; Kroger Comment at 2; Workshop Tr. at 131-32 (John Powers) (noting that VetVIPPS certified online pharmacies are required to have a policy for handling and storing product).

379 Workshop Tr. at 131-32 (John Powers) (stating that both the veterinary and retail channels have problems with 

misused, expired, or poorly handled products).

380 See Workshop Tr. at 122-23 (David G. Miller) (“We need to open the marketplace up so that legitimate, 

licensed pharmacies can purchase the same way that a veterinarian can purchase [directly] from . . . a manufacturer 

or wholesaler. Then there will be no need for a secondary market.”); Foster (F&S) Comment at 6 (“By eliminating 

manufacturer driven diversion practices, prices will remain affordable and proof of distribution becomes transparent, 

traceable, and trusted. Veterinarians and consumers deserve transparency from drug manufacturers.”); Valley Vet 

Supply Comment at 3 (“The proper licensing of veterinary pharmacies provides safety and efficacy for the consumer 

purchasing animal medications (pet, equine, and food animal). Full cooperation and validation in product 

distribution from veterinary drug manufacturers would further ensure product validity, safety and efficacy.

Mandatory EDI sales reporting (a common practice) from licensed pharmacies back to pharmaceutical 
96

that the products their clients purchase from non-veterinary retailers have a known pedigree and 

have been handled properly.381 Having a distribution system in which legitimate retailers could 

purchase pet medications directly from the manufacturer or an authorized distributor would seem 

to provide this assurance.

Non-veterinary retailers also asserted that having direct relationships with pet medication 

manufacturers would allow them to access valuable product information and technical support. 

Typically, manufacturers provide training and educational materials to veterinarians and 

authorized distributors regarding the proper use and handling of their products.382 Under the 

current system of exclusive distribution, however, retail pharmacists typically do not receive this 

training and information from manufacturers and it is unclear whether secondary distributors 

provide it. To the extent that manufacturers could offer product guidance and education to nonveterinary retailers if they had direct relationships with them, many safety concerns associated 

with secondary distribution could be further alleviated.383 Certainly, this is an advantage that 

Bayer has touted since establishing direct relationships with non-veterinary retailers.384

 

manufacturers could provide tracking of product sales to the end user for added distribution security and 

assurance.”); Workshop Tr. at 53, 131 (John Powers).

381 Workshop Tr. at 82 (Paul D. Pion). Similarly, the Society of Veterinary Hospital Pharmacists argues that “the 

integrity of these products must be ensured by requiring distributive pedigrees and legitimate distribution channels 

that would minimize the risks and dangers demonstrated by the current gray market.” SVHP Comment at 2.

382 Pfizer Comment (#329) at 2 (“We train veterinary distributors and veterinarians on proper transportation, 

handling and storage, and we track those metrics to ensure the quality and integrity of our products – which helps to 

ensure their ultimate safety to pets. Despite our efforts, the same cannot always be said in situations where our 

products are diverted away from the veterinary market and sold outside of our tracked and verified distribution

channel (e.g. gray market distribution).”). See also AHI Comment at 3 (“[M]any manufacturers have invested 

tremendous resources to educate veterinarians about their products.”); Workshop Tr. at 126 (David G. Miller) 

(explaining that manufacturers teach veterinarians about the products that they develop and bring to market); id. at 

86-87 (Clinton Vranian) (stressing the importance of manufacturer education of veterinarians).

383 See PetMed Express, Inc., supra note 21, at 4 (“We believe having strong relationships with product 

manufacturers will ensure the availability of an adequate volume of products ordered by our customers, and will 

enable us to provide more and better product information.”). See also SVHP Comment at 2 (“The SVHP also 

recommends consideration and collaboration on the part of the Board of Pharmaceutical Specialties, boards of 

pharmacy, pharmaceutical companies, and veterinary drug distributors to develop a system to qualify pharmacists 

and pharmacies that have the expertise to dispense companion animal prescription medications.”); Brown Comment 

(#521) (stating that a direct distribution system would eliminate concerns about product pedigree in the secondary 

distribution system, but that pharmacists still would not be able to safely dispense pet medications without 

comprehensive training in veterinary pharmacology).

384 In an interview discussing Bayer’s decision to end its exclusive distribution policies, Dan Peizer, marketing 

manager for Bayer Animal Health, described how Internet and brick-and-mortar retailers would now be able to 

receive direct product support from Bayer. “This is important because it assures retailers that they are providing pet 

owners with product direct from the manufacturer backed by our full technical support.” An Advantage for Pet 

Stores, PET BUS. (Dec. 1, 2010), www.petbusiness.com/articles/2010-12-01/An-Advantage-for--Pet-Stores. See also

Distributor Locator, BAYER ANIMAL HEALTH, https://web.archive.org/web/20120111135750/http://www.bayer- ah.com/petSpecialty/index.cfm (archived version) (instructing pet specialty retailers that they can purchase Bayer’s 

animal products directly from an authorized distributor, which assures them that they are receiving quality product 

backed by the support of Bayer Animal Health; reliable supply and availability; and merchandising and marketing 

support from the distributor and Bayer Animal Health).
97

Some manufacturers respond to these arguments by reiterating the benefits of exclusive 

distribution and their preference for maintaining their relationships with veterinarians as the best 

way to promote their products and ensure their safe and effective use. They suggest that it could 

be cost prohibitive for them to provide all retailers with product training and support similar to

what they provide veterinarians, and could ultimately increase the prices of certain products for 

consumers.

385 Ultimately, if it were in the manufacturers’ interest to abandon their exclusive 

distribution policies, economic theory suggests they would consider doing so. At some point, the

potential for increased sales opportunities in the non-veterinary retail channel, combined with 

increasing consumer demand for purchasing pet medications from these retailers, may ultimately 

provide manufacturers with sufficient incentive to change their policies.386

B. Distribution Practices and Other Factors

Affecting the Development of Generic Animal 

Drugs

1. Limited Consumer Access to Generic Animal Drugs

In the human drug industry, generic drugs have proven to be a source of significant price 

competition, saving consumers, businesses, and taxpayers billions of dollars every year on drug 

costs.

387 Similarly, generic animal drug stakeholders argue that their products could provide costeffective alternatives to name brand pioneer animal drugs and carry the potential for significant 

savings to consumers.388 Yet, there are very few generic pet medications currently available,

389

 

385 See Workshop Tr. at 124 (Clinton Vranian) (suggesting that product training for pharmacists regarding 

veterinary products “may wind up increasing the price of certain products.”). See also supra note 303 and 

accompanying text.

386 See, e.g., PACKAGED FACTS REPORT 3D, supra note 12 at 61 (describing how in certain circumstances, the 

sales opportunities outside the veterinary channel far outweigh the concerns regarding negative pushback from 

veterinarians and distributors); Lindsey Wojcik, Another One Bites the Dust, Pet Bus. (Jan. 31, 2012), 

www.petbusiness.com/articles/2012-01-31/Another-One-Bites-the-Dust- (describing Bayer’s expansion into the 

non-veterinary retail channel and suggesting that other manufacturers could follow suit).

387 FED. TRADE COMM’N, supra note 88, at 9; GADA Comment at 3-4 (“The extensive availability and use of 

human generic drugs over brand name alternatives results in enormous cost savings.”); See Reiffen & Ward, supra

note 88; GENERIC PHARM. ASS‘N, GENERIC DRUG SAVINGS IN THE U.S. 1 (6th annual ed. 2014), 

http://www.gphaonline.org/media/cms/GPhA_Savings_Report.9.10.14_FINAL.pdf (indicating that human generic 

medicines saved the U.S. healthcare system “nearly $1.5 trillion over the past 10 years (2004-2013)”).

388 GADA Comment at 1; K&L Gates Comment at 1 (“[G]eneric animal drugs dispensed by retail pharmacies 

provide an alternative to inject price competition into the animal drug distribution/dispensing system while 

maintaining the high standards of safety and quality that pet owners rightly demand.”).

389 See supra note 89; K&L Gates Comment at 5-6; Workshop Tr. at 47-48 (Michael H. Hinckle).
98

despite an established FDA pathway for approving generic animal drugs.390 As a result, the kinds 

of savings realized on the human drug side have not occurred for pet medications. Industry 

analysts cite several factors that may be limiting the development or success of generic animal 

medications.

Generic animal drugs have not had the same penetration levels as human generic drugs because

there has only been a recent focus on developing companion animal specific medications and 

there are no “intervening insurance and employer programs mandating the selection of generic 

alternatives when available.”391 But some industry analysts believe that generic animal drugs 

have strong market potential, given that many of the patents on branded animal drugs have 

expired and FDA review of a generic animal drug often takes less than five years.392

In a recent survey, veterinarians who are willing to purchase, prescribe and dispense generic 

drugs indicated that they do so to ensure that pets get the needed course of medications and 

because of concern for pet owners’ ability to afford high-priced branded drugs.393 Other potential 

benefits to veterinarians of offering generic animal drugs to their clients may include “higher 

markups and increased margins, increased prescribing options, and improved compliance since 

generic drugs cost pet owners less.”394 However, industry analysts contend that prescribing 

generic animal drugs could actually lower veterinarians’ profits or lead to a further shift to the

non-veterinary retail channel.

395 Thus, some veterinarians may be reluctant to prescribe generic 

 

390 21 U.S.C. § 360b(n). Generic animal drugs are subject to an FDA approval process that is similar to human 

generic drugs, in which applicants “must demonstrate that the drugs are safe and effective for their intended use and 

are manufactured under the same quality standards that apply” to the branded drugs. GADA Comment at 1.

391 PACKAGED FACTS REPORT 3D, supra note 12, at 54.

392 Id. at 55 (“That approximately 90% of the drugs used for animals have no generic equivalent also signals 

strong market potential. Many of the patents on relevant drugs have expired, and the time needed to gain additional 

FDA review of a generic pet drug is relatively short: less than five years, compared with the decade or more it takes 

to develop a human drug from scratch. Accordingly, some analysts predict that generics will account for half of all 

pet medications within a decade.”); id. at 57 (“With several patents on branded pet drugs having already expired and 

many more scheduled to expire in the next few years, competition in pet generics can only be expected to intensify. . 

. .”).

393 PACKAGED FACTS REPORT 2D, supra note 14, at 64 (referencing survey conducted by Advanstar Veterinary 

Healthcare Communications). See also PACKAGED FACTS REPORT 3D, supra note 12, at 58 (“As the market 

develops, generic pet medications will likely also become more attractive to pet owners from a price perspective. . . . 

Moreover, as veterinary costs continue to go up, those savings may be even more important on the pet side, where 

the vast majority of pet health costs are paid out of pocket as opposed to through insurance programs.”).

394 PACKAGED FACTS REPORT 2D, supra note 14, at 63. See also Frequently Asked Questions, PUTNEY, 

http://putneyvet.com/education/faqs (describing benefits of generic animal drugs to veterinary practices); Veterinary 

Viewpoints, PUTNEY, http://putneyvet.com/education/viewpoints (veterinarians describing patient compliance and 

financial benefits of stocking and prescribing generic animal drugs).

395 See PACKAGED FACTS REPORT 3D, supra note 12, at 38 (“. . . the race to market of generics may boost sales in 

the short term by increasing volume sales, but the longer term may be a dampening effect on dollar sales due to 

generics’ lower prices. Any ‘new’ sales via retail channels will also involve market cannibalization, since they will 

come primarily at the expense of veterinary channel sales.”).
99

animal drugs to their clients. If a significant number of veterinarians view generics as less 

profitable, manufacturers may perceive lower potential demand, which could discourage further 

development of generic products.

Absent significant demand for generic products in the veterinary channel, generic manufacturers 

appear skeptical of their chances for attaining a sizeable share of animal drug sales. Although 

generic manufacturers could try to rely on alternative retail outlets, such as online and brick-andmortar retail pharmacies, the sales opportunities available through these retailers is lower than

through veterinarians, particularly for prescription drugs.

396 Furthermore, there are 

approximately 25,000 veterinary clinics that treat companion animals in the United States,

397 and 

these practices are diverse in terms of geography and size.398 From some manufacturers’

perspectives, the only effective way to penetrate the fragmented veterinarian channel is to rely on 

distributors who have established sales forces that service a large number of veterinary practices.

This is especially true when launching new products.399

Small generic animal drug manufacturers, in particular, claim that they cannot afford to 

distribute products themselves or support national sales and marketing forces, and therefore 

access to distributors is critical to their success. However, nearly all of the large pioneer drug 

companies utilize distributors and these drug companies represent a significant portion of the 

distributors’ business. Stakeholders claim this gives the pioneer drug companies substantial 

influence over distributors that can be used to restrict generic manufacturers’ access to 

distributors.

400 As a result, the ability of veterinarians and consumers to purchase generic animal 

drugs may be limited,401 which in turn may reduce the incentives for generic animal drug 

manufacturers to develop them.

 

396 See supra notes 31 and 37 and accompanying text; GADA Comment at 2.

397 AVDA Comment at 1 (“The primary market for veterinary supplies consists of some 55,000 veterinarians 

practicing in more than 25,000 veterinary practices throughout the United States.”); GADA Comment at 3.

398 GADA Comment at 3.

399 See, e.g., Workshop Tr. at 109-10 (Clinton Vranian); GADA Comment at 3.

400 GADA Comment at 3.

401 Id. at 5 (“The traditional model under which pet owners obtain pet medications has some inherent efficiencies.

Distributors offer a wide array of products from numerous manufacturers and in essence, serve as a one-stop-shop 

for veterinarians. In turn, when pet owners have their pets treated by veterinarians, they can often get the medical 

advice and services and the medications they need all at the veterinary practice as part of the same transaction. As 

discussed above, blocking generic drugs from this model means generic drug manufacturers cannot take advantage 

of these efficiencies and cost-effective generic drug options become less available to pet owners.”).
100

2. Exclusive Dealing Agreements May Have an Effect on Generic 

Entry

Some generic manufacturers claim that at least some pioneer drug manufacturers are impeding 

competition from generic entrants by entering into exclusive dealing agreements with 

distributors that prohibit them from also distributing generic drugs that might be substituted for 

their own branded products. The evidence at the FTC workshop on the existence and effect of 

such agreements, however, was contradictory.402 It was suggested by some that exclusive dealing 

agreements are not common within the pet medications industry. Yet others claimed that they are 

prevalent at least for the top brands. One explanation for this inconsistency may be that there are 

two types of exclusive dealing agreements that have been used in the pet medications industry –

those preventing distributors from carrying competing pioneer products and those preventing 

distributors from carrying generic versions of pioneer products. 

Several stakeholders agreed that the first type of exclusive dealing agreement, in which, as a 

condition for carrying a manufacturer’s branded products, distributors agree not to carry

competing branded products, is no longer common due to the high level of consolidation that has 

occurred among distributors.

403 It may be the case that there are currently so few distributors, 

that the exclusive agreements prohibiting distributors from carrying competing pioneer products 

no longer make economic sense for a variety of reasons. The second type of exclusive dealing 

agreement, in which pioneer manufacturers prohibit distributors from carrying generic versions 

of their products, may exist, but it is not clear how common the practice may be. Representatives 

of generic drug manufacturers point to examples of these agreements and describe how they 

create barriers to generic entry in the animal drug market.404 Alternatively, they argue, the 

 

402 In general, exclusive dealing agreements may have procompetitive justifications or may result in 

anticompetitive harms, depending on the particular circumstances surrounding the agreements. Potential benefits of 

exclusive dealing agreements may include enhanced marketing support or other services for the manufacturer’s 

brand that are useful to consumers. Potential harms of such agreements may include dominant manufacturers 

blocking rivals from accessing a necessary sales channel, thereby marginalizing them, forcing them out of the 

market, or deterring their entry into the market in the first place.

403 Workshop Tr. at 115-16 (Paul D. Pion) (explaining why these types of agreements are no longer common, that 

they are in no one’s interest except the manufacturer, and that neither consumers nor veterinarians benefit from these 

agreements in terms of price or convenience.); id. at 36-38 (explaining how, in the past, these types of agreements 

artificially inhibited competition, and kept prices to consumers higher than they would have been otherwise); id. at 

112-13 (Andrew J. Bane) (stating that there are fewer instances of manufacturer-distributor exclusive agreements in 

recent years and that pharmacists are not likely to enter into any exclusive arrangements with manufacturers); Lau,

Bayer Wins Some, supra note 313 (describing exclusive dealing agreements that Merial had with certain distributors 

until 2009, in which “Merial prohibited distributors who carried their flea, tick and heartworm products for dogs and 

cats from selling competitors’ flea, tick and heartworm products.” The article states that these agreements with the 

largest distributors eventually ended due to distributor consolidation.).

404 See GADA Comment at 3-5 (claiming to be aware of at least two large pioneer companies that entered into 

these types of exclusive dealing agreements with large, national distributors); Workshop Tr. at 116-17 (Michael H. 

Hinckle); Frequently Asked Questions, supra note 394 (“Some large pharmaceutical companies require distributors 
101

pioneer manufacturers may “limit the fees and/or margins earned by the distributor if the 

distributor offers generics. These restrictive agreements are unique to animal health distribution 

channels [as compared to human health distribution channels].”405 In response, a distributor 

representative argued that these types of exclusivity agreements are not common, and do not 

raise any competitive concerns.406

If such agreements are in effect, they may not only impact generic manufacturers’ ability to enter 

the animal drug industry, but also the ability of larger pioneer manufacturers who decide to 

launch generic versions of animal drugs. For example, Novartis launched a generic version of a 

blockbuster product, that it claimed provided superior efficacy at a lower price and was well 

received by the veterinarians that tried it. Novartis claimed that it was unable to capture more 

than two percent of the market, however, because distributors refused to carry the product.

Novartis presumed that this was due to exclusive dealing agreements that distributors had with 

the pioneer manufacturer of the blockbuster product, but could not confirm this. To the extent 

that exclusive dealing agreements protect manufacturers from generic competition, Novartis 

expressed the belief that they are anticompetitive.407

3. Restricted Distribution Practices May Have an Effect on

Consumer Access to and Innovation for Generic Animal Drugs

Some generic manufacturers claim to have discontinued research and development programs for 

generic pet medications because they did not believe they could achieve sufficient market

penetration to justify the investment. They state that this was due to the combined effect of 

manufacturers’ exclusive dealing with distributors and exclusive distribution practices with 

veterinarians:

Knowing that pioneer drug companies can control a major share of the market via 

distribution deters developing generic drugs. Developing a generic drug and 

taking it through the FDA approval process requires significant investment that 

can cost millions of dollars and take many years. Generic companies are typically 

much smaller than pioneer companies and have fewer resources and therefore, 

every product has a significant impact on the bottom line. Furthermore, business 

 

to sign agreements stating they will not distribute a generic product that competes with one of their name-brand 

products. This limits where veterinarians can access FDA-approved generics.”).

405 GADA Comment at 3.

406 Workshop Tr. at 112, 118 (Mark Cushing).

407 Id. at 111 (Clinton Vranian).
102

owners and investors are reluctant to fund development of generic drugs if they 

are unable to get their products to the majority of the market.

When generic drug manufacturers are blocked from ensuring that their products 

reach significant numbers of customers and that their development costs are 

recouped, they are likely to determine the costs of development outweigh the 

potential return on investment. The company may choose not to pursue the 

generic drug, and perpetuate the limitations on the number of generic drug options

available to veterinarians and pet owners.

408

These stakeholders argue that pioneer drug manufacturers use restrictive distribution practices to 

deter competition from generic animal drug manufacturers. “By cutting the pharmacy out of the 

supply chain, pioneer animal drug manufacturers have largely denied generic companies the

ability to provide their more affordable products to consumers and thereby maintained their 

higher prices.”409 Likewise, they claim that by offering veterinarians the exclusive sales 

opportunity for branded pet medications, and thereby ensuring a higher profit margin for the 

veterinarians, the drug manufacturers reduce the threat of generic competition because 

veterinarians will support the branded products and will be less likely to prescribe generic 

products.410 They note that in the distribution model created by the pioneer manufacturers, there 

is no incentive for any player (manufacturer, distributor, or veterinarian) to inform consumers 

that substitutable equivalent generic animal drugs may be available at their local retail 

pharmacies for lower prices. In addition, there is no third party payer pressure to substitute 

 

408 GADA Comment at 4-5. See also Workshop Tr. at 116-17 (Michael H. Hinckle). However, some generic 

animal pharmaceutical companies continue to develop products. See, e.g., Veterinary-Approved Products, PUTNEY, 

http://putneyvet.com/products; Frequently Asked Questions, supra note 394.

409 K&L Gates Comment at 5. One workshop participant opined that without direct access to branded products, 

retail pharmacies will be less likely to carry generic products because the sales opportunities will be too limited and 

thus there is no incentive for mainstream wholesalers to carry generic pet medications. Workshop Tr. at 48-49, 97

(Michael H. Hinckle). This argument may be inconsistent, however, with evidence presented that retailers have been 

increasing their presence in the branded pet medications market through secondary distribution. See supra Section 

II.B, Retail Options Available to Consumers of Pet Medications, at 9; Section IV.A.3, The Secondary Market for Pet 

Medications, at 74.

410 See K&L Gates Comment at 2 (“[T]he current distribution and dispensing practices are the result of a 

combination of veterinarians’ desire to dispense directly to their clients and animal drug companies’ marketing 

efforts that cater to that desire. . . . Veterinarians benefit from the profit margin on the drugs they dispense, and drug 

manufacturers benefit from veterinarian support of the branded drugs without the need to compete with generic 

products dispensed by pharmacies or retail outlets. The real loser, however, is the consumer who pays a higher price 

to receive the brand pet medication from his or her veterinarian when an equivalent generic drug could have been 

purchased from a pharmacy at a much lower price absent this arrangement.”); Kroger Comment at 1 (stating that 

branded manufacturers use exclusive distribution to limit the threat of generic competition, and thereby maintain a 

higher pricing structure for their products).
103

generic products in an effort to reduce prices. “As a result, one does not see the same degree of 

competition and savings for generic animal drugs as we see for generic human drugs.”411

Generic drug stakeholders also claim that the absence of generic competition may reduce the 

incentives of pioneer manufacturers to develop innovative new pet medications. They explain 

how branded companies are incentivized to develop new and improved human drugs when they 

know they will face generic competition after their patents expire. They argue that in the animal 

drug industry, however, “the absence of generic competition allows pioneer companies to 

continue to raise prices on and market drugs whose patents have expired, decreasing their 

incentive to innovate.”412 These statements may be inconsistent, however, with evidence of 

increased product innovation and growth in the pet medications industry.413

4. Prescription Portability May Have an Effect on Consumer 

Access to Generic Animal Drugs

Some have argued that automatic prescription release would increase consumer demand for 

affordable pet medications, and that this market pressure would result in increased demand for 

and hence the supply of generic animal drugs. As described above, consumers may not be aware 

of their option to receive a portable prescription. If they were more aware of that option, and 

hence more inclined to seek cost savings by shopping for pet medications, demand for low cost 

generic drugs might also increase.

414 Generic drug stakeholders argue that without this market 

pressure and the resulting consumer demand for generic pet medications as manifested in 

 

411 K&L Gates Comment at 5-6. As discussed in greater detail infra, notes 417-422 and accompanying text, some 

stakeholders have indicated that the lack of automatic generic substitution for pet medications may constrain market 

opportunities for generic alternatives, even when pet owners do fill veterinary prescriptions through retail channels.

412 GADA Comment at 5. See also K&L Gates Comment at 7; Workshop Tr. at 202 (Michael H. Hinckle) 

(“Prices would be lower if we had a robust, generic industry, and it would also be helpful for everyone in the sense 

that a robust generic industry drives the innovator companies to develop the new generation of products instead of 

using marketing techniques to continue to evergreen their existing products.”). 

413 See supra notes 15-16 and accompanying text. 

414 Workshop Tr. at 167-70 (Michael H. Hinckle) (arguing that potential cost savings might be available to 

consumers “if they had a prescription and if there was a distribution process that would allow the substitutable 

generics to get into the retail pharmacies.”). See also K&L Gates Comment at 6 (“The current practices, and 

specifically veterinarian reluctance to provide portable prescriptions, deny consumer access to affordable generic 

drugs that are dispensed at the retail pharmacy. While it is true that many state-level veterinary practice ethical rules 

call for veterinarians to provide a prescription upon customer request, these rules fail to take into account the natural 

trepidation that pet owners feel in requesting a prescription. In actual practice, if the prescribed drug is stocked by 

the veterinarians, the office staff typically provides the drug at check-out without any mention of the customer’s 

other options. Only when the veterinarian elects not to stock the prescribed drug is the customer typically provided 

with a prescription.”); Workshop Tr. at 202 (Michael H. Hinckle) (“There is definitely a problem that needs a 

solution . . . when Congress passed the Generic Drug Act for animal drugs, it had reason to believe that eventually 

[consumers] were going to get affordable drugs. That’s not happening, and I think it’s in large part because there’s 

not enough demand because people just don’t ask for the prescriptions many times. For whatever their reason may 

be. That lack of demand means that there’s not a market for the generic drugs.”).
104

portable prescriptions, it is unlikely that retail pharmacies will stock these products.415

Furthermore, they state that:

Veterinarians and pioneer drug companies have set up a distribution and dispensing 

system that prevents competition and restricts consumer choice. Without a federal law 

requiring prescription portability and disclosure of the consumers’ options, pet owners 

are unlikely to ever enjoy the cost savings that FDA-approved generic animal drugs 

provide.416

5. Automatic Substitution Might Increase Consumer Access to 

Generic Animal Drugs

One workshop participant identified an important difference between the human and animal drug 

industries that may have contributed to the slow adoption of lower-priced generic animal drugs –

the lack of automatic generic substitution for pet medications.417 In the human medications 

industry, all 50 states permit pharmacists to automatically substitute generic versions of branded 

drugs, if they are available, resulting in significant cost savings to consumers. At the time of the 

workshop, these types of regulatory schemes did not exist in many states with respect to animal 

medications. To the extent that this is still an issue, there appear to be some regulatory and 

legislative measures that, if implemented, could facilitate automatic substitution for generic 

animal drugs. The FTC has taken the position that laws facilitating human generic drug 

substitution benefit consumers.418 Although the FTC has not studied this issue with respect to 

animal generic drug substitution, some of the same underlying principles may apply.

The FDA lists all approved human drugs in a publication commonly referred to as the “Orange 

Book,” and all approved animal drugs in a publication known as the “Green Book.”419 One 

generic animal drug representative claimed that there are some discrepancies between the Orange 

Book and the Green Book that, if resolved, may help facilitate automatic substitution for generic 

animal drugs. For example, the Orange Book contains therapeutic equivalence codes used by 

 

415 See Workshop Tr. at 168-69 (Michael H. Hinckle).

416 K&L Gates Comment at 11.

417 Workshop Tr. at 49, 117 (Michael H. Hinckle).

418 See FED. TRADE COMM’N, DRUG PRODUCT SELECTION 273 (1979), available at 

http://www.bookprep.com/read/mdp.39015008517792; ALISON MASSON & ROBERT L. STEINER, BUREAU OF ECON.,

FED. TRADE COMM'N, GENERIC SUBSTITUTION AND PRESCRIPTION DRUG PRICES: ECONOMIC EFFECTS OF STATE 

DRUG PRODUCT SELECTION LAWS (1985), http://www.ftc.gov/sites/default/files/documents/reports/genericsubstitution-prescription-drug-prices-economic-effects-state-drug-product-selection-laws/massonsteiner.pdf.

419 Approved Animal Drug Products (Green Book), U.S. FOOD & DRUG ADMIN. (Jan. 2015), 

http://www.fda.gov/animalveterinary/products/approvedanimaldrugproducts/default.htm.
105

pharmacists to determine which human generic and human pioneer drugs are interchangeable, 

and some states have adopted these codes as the sole standard for determining when a pharmacist 

may substitute any generic drug for any pioneer drug. Because approved animal drugs are not 

listed in the Orange Book, pharmacists in these states may be prohibited from dispensing generic 

animal drugs when a pioneer animal drug is prescribed.420 This generic animal drug 

representative argued that providing therapeutic equivalence codes in the Green Book and 

allowing this to serve as the standard for automatic substitution of generic animal drugs could 

improve consumer access to generic pet medications.421 Currently, the FDA does not include 

therapeutic equivalence codes in the Green Book.422

Generic manufacturers may also need to address the dissemination of potentially misleading 

information regarding the effectiveness of generic animal drugs. One workshop participant 

claimed that veterinarians disparage the quality of generic animal drugs, the FDA approval 

process, and whether these products really are equivalent to their pioneer counterparts. He noted 

that these are the same issues the generic drug industry faced with medical physicians 15 to 20 

years ago, and that it will require an educational effort that may take some time.423 Several 

comments received from veterinarians suggest that they may question the effectiveness of 

generic pet medications.424

 

420 K&L Gates Comment at 3-4.

421 See id. at 13 (“The pro-competitive effect of H.R. 1406 could be greatly enhanced by a provision requiring 

FDA to publish therapeutic equivalence codes for animal drugs in the same manner as the agency does for human 

drugs. . . . [B]y publishing its bioequivalence determinations in a form that is familiar to pharmacists (i.e., the 

therapeutic equivalence codes published in the human drug Orange Book), FDA could facilitate consumer access to 

generic animal drugs that the agency has determined are fully interchangeable with their pioneer counterparts.”). 

Although arguably the FDA provides enough information on its website for pharmacists to determine whether a 

generic animal drug is interchangeable with a pioneer drug, the substitution process would be much easier for 

animal drugs if the Green Book contained these codes. See id. at 3.

422 See Approved Animal Drug Products (Green Book), supra note 419. 

423 Workshop Tr. at 189-90 (Michael H. Hinckle). This may already be happening, at least to a certain extent. See, 

e.g., Education Center, PUTNEY, http://putneyvet.com/education (focusing on initiatives to educate veterinarians 

about the value and efficacy of generic animal drugs).

424 See, e.g., B. Taylor Comment (“Generic products lack consistency and veterinarians should have the right not 

to prescribe them for the pet’s best interest.”); S. CAL. VET SURVEY, supra note 143 (“Many clients get generic 

Rimadyl from online pharmacies; about half seem to switch back to brand name Rimadyl because they say the 

generic doesn’t seem to be effective.”). Indeed, even the AVMA appears to question the differences between the 

brand name version and the generic version of a pet medication. See AVMA FAQS, supra note 52, at 2 (“[W]e have 

heard some anecdotal and unconfirmed reports of pets that had been receiving a brand name medication, but did not 

do as well when given a generic version of the same medication. Although all USP versions of a drug meet the 

purity standards for that drug, all of the ingredients and the processes involved in making the trade name versions 

are often protected by patent or other intellectual property laws, and there may be differences in the minor 

ingredients that could produce slightly different results between the versions, while still providing the main drug that 

meets USP standards. Think of it as following a recipe – even if you have the same ingredients and follow the 

instructions, the end result might vary a little bit. This is not a common problem with medications, and is often 

resolved by switching back to the effective [i.e., branded] version of the medication.”).
106

V. Concluding Remarks and Topics That 

Might Benefit From Additional Study

A. Summary of Conclusions Regarding 

Prescription Portability, Industry Distribution 

Practices, and Generic Animal Drug 

Development

FTC staff believes that improved consumer access to portable prescriptions would likely enhance 

competition in the pet medications industry. Many consumers are already aware of their ability 

to receive portable prescriptions from their veterinarians and many veterinarians already provide 

portable prescriptions. It appears that there are still many consumers, however, who are either 

unaware of their ability to obtain portable prescriptions from their veterinarians or are inhibited 

from requesting them. Likewise, it appears that some veterinarians refuse to provide portable 

prescriptions to their clients or engage in behaviors intended to discourage clients from 

requesting portable prescriptions and filling them elsewhere. Legislative and regulatory efforts to 

mandate aspects of prescription release have the potential to enhance consumer awareness about 

the ability to purchase pet medications from non-veterinary retail outlets and improve consumer 

access to portable prescriptions, but FTC staff does not have sufficient data to evaluate the 

overall economic effect of any specific proposal. FTC staff will continue to monitor legislative 

and regulatory developments, and evaluate the need for and effects of greater prescription 

portability in the pet medications industry.

Many stakeholders argue that exclusive distribution and exclusive dealing practices by pet 

medication manufacturers are prevalent in the pet medications industry to the detriment of pet 

medications consumers. Although these types of practices can sometimes have adverse effects, 

they may also benefit consumers, and pet medications manufacturers claim to have legitimate 

business reasons for engaging in these practices. The increasing availability of pet medications at 

alternative retail outlets indicates that the market may be in a period of transition and that market 

forces may already be addressing some of the competitive concerns raised by certain 

stakeholders, at least to some degree. Ultimately, these restrictive distribution practices could 

come under increasing competitive pressure in the marketplace and may be difficult to sustain, 

particularly if portable prescriptions become more widely available and retail pharmacies

continue to compete to fill them. FTC staff is interested to see how this industry continues to 

develop, in light of consumer demand for safe, low-priced pet medications. Industry stakeholders 

are encouraged to continue expressing their views regarding exclusive distribution and exclusive 
107

dealing practices to FTC staff, so that we can consider their effects on competition for the sale of 

pet medications.

Finally, increased availability of low-priced generic animal drugs would likely result in 

significant consumer cost savings. There appear to be multiple factors dampening the incentives 

of generic manufacturers to develop and market generic pet medications. Legislative and 

regulatory proposals designed to improve incentives for drug manufacturers to develop and 

market generic animal drugs could be considered by policymakers, and further study may help to 

support such proposals. Furthermore, efforts to empower pharmacists with the information and 

authority necessary to substitute generic animal drugs for pioneer animal drugs also could be 

considered.

B. Topics That Might Benefit From Additional 

Study

There remain a number of issues that could benefit from further study that would contribute to a 

better understanding of the competitive dynamics of the pet medications industry. In particular, 

we note that at present, there is little systematic empirical research on (1) the pricing of pet 

medications across different channels of distribution, (2) the rate of errors in pet medication 

dispensing by retail pharmacists and veterinarians, (3) the need for and impact of automatic 

prescription release requirements, and (4) details regarding the secondary distribution system for 

pet medications. 

1. Pet Medications Pricing

Currently, there appears to be a lack of empirical evidence on the degree of price variation 

among the different retail distribution channels (e.g., veterinary practices, online retailers, brickand-mortar retail stores and pharmacies) in which prescription and OTC pet medications are 

sold, and whether changes in the competitive environment have had any impact on prices. For 

example, it is possible that veterinarians have responded to competitive pressure from online and 

brick-and-mortar retail outlets by reducing their prices, at least for certain categories of products. 

Any such pricing effects may be different for prescription versus OTC products. FTC staff 

recognizes that it may be difficult to identify publicly available data to analyze pet medications 

pricing across distribution channels, but maintains that comprehensive empirical research in this

area would be beneficial in further considering the issues addressed in this report.

2. Pet Medications Dispensing Errors

Several industry participants defended limitations on prescription portability on the ground that 

retail pharmacists who are untrained in veterinary pharmacology are more likely to commit pet 
108

medication dispensing errors than veterinarians. As noted earlier, some state veterinary medical 

associations have begun to track alleged medication errors by retail pharmacists, and the FDA 

appears to have established a process for tracking alleged pet medication dispensing errors made 

by retail pharmacists and veterinarians. It remains difficult, however, to identify substantiated 

instances of pet medication dispensing errors. Continued systematic monitoring of this issue 

might be useful in understanding the frequency of pet medication dispensing errors by retail 

pharmacists as compared to veterinarians, and ultimately, whether safety concerns about retail 

pharmacists’ qualifications to dispense pet medications are justified. 

3. Automatic Prescription Release Requirements

At present, there does not appear to be comprehensive data regarding consumer awareness of 

their ability receive a portable prescription from a veterinarian. Neither does there appear to be 

data of the degree to which this awareness may vary by state according to the regulatory 

requirements for prescription release. Furthermore, there is only limited data available on the 

frequency of veterinarians’ refusals to provide a written prescription upon request or other efforts 

to discourage consumers from requesting portable prescriptions. A consumer survey might be 

able to shed light on these types of questions surrounding the need for a regulatory requirement 

for automatic release of pet medication prescriptions.

Continued monitoring of state legislative efforts regarding prescription release for pet 

medications might help to identify natural experiments that would permit empirical analysis of

the likely effects of any national policy change, such as the ones proposed by H.R. 4023 and S. 

2756. As already noted, several states have adopted policies requiring veterinarians to provide 

prescriptions to clients upon request, while other states have not. If additional states adopt 

automatic prescription policies, or other policies that change consumers’ ability to obtain a 

portable prescription, there may be an opportunity to study the effects of such changes on the 

behavior of consumers and veterinarians.425 For example, it would be helpful to know whether 

such policies have any impact on consumer awareness of their ability to comparison shop for pet 

medications at both veterinary practices and retail pharmacies, and whether such awareness has 

any impact on consumers’ purchasing decisions. Also, it would be helpful to know whether 

veterinarians alter their prices for pet medications in response to increased competitive pressure 

resulting from these policy changes, or whether they alter their inventory decisions or prescribing 

 

425 This may be accomplished by identifying changes in relevant factors that occur in the states that adopt 

prescription release policies from the time before the policy is adopted to the time after the policy is adopted, and 

then evaluating these same factors in the states that do not adopt such policies. Thus, the states that do not adopt 

prescription release policies would serve as the control group by which to compare any changes that occur in the 

states that do adopt such policies. In economic terms, this is known as a difference-in-differences approach.
109

habits in any way. Lastly, such policy changes may also provide an opportunity to examine the 

effect of greater prescription portability on the medication sales of veterinary practices and the 

pricing of their services, as well as the pricing of medications available from retail outlets.

4. Secondary Distribution System

Some industry stakeholders have attempted to estimate the size of the secondary distribution 

system. Nevertheless, it would be useful to have more systematic information on the actual size 

of the secondary market, in terms of both dollar and unit sales, although FTC staff acknowledges 

that it may be difficult to collect data that would permit such an analysis. Other details that might 

be helpful to know, but difficult to ascertain, include the cost structure of the secondary 

distribution system for pet medications, including any inefficiencies that may result in higher 

prices to consumers relative to more direct distribution. In addition, it could be valuable to know 

more about the frequency of adverse events that occur in animals that take pet medications 

distributed through the normal distribution chain (i.e., purchased from veterinarians) versus the 

secondary distribution chain (i.e., purchased from non-veterinary retail outlets). This information 

would allow an analysis of the claimed economic and product safety concerns associated with 

the secondary distribution of pet medications.
110

Appendix A: 

Public Comments Cited in the Report

The Federal Trade Commission received over 700 public comments in response to our request 

for comments related to the pet medications workshop.426 To assist readers of this report, below 

is an alphabetical list of the 77 comments that are cited in the report. All names and affiliations 

were self-reported.

Comment Name Full Name of Commenter

Link to 

Comment

AAHA Comment American Animal Hospital Association 

(AAHA)

Link

AHI Comment Animal Health Institute (AHI) Link

S. Anderson (Ass’n for 

Veterinary Clinic Success) 

Comment

Scott Anderson,

Association for Veterinary Clinic Success

Link

A. Anderson Comment Ann Anderson, DVM, Quarry Hill Park 

Animal Hospital

Link

APAW Coalition Comment Advocacy for Pets and Affordable Wellness 

(APAW) Coalition

Link

ASPCA Comment American Society for the Prevention of 

Cruelty to Animals (ASPCA)

Link

AVDA Comment American Veterinary Distributors 

Association (AVDA)

Link

 

426 FTC Announces Pet Medications Workshop; Will Explore Competition and Consumer Protection Issues 

Related to the Pet Medications Industry, FED. TRADE COMM’N, http://www.ftc.gov/policy/public- comments/initiative-433.
111

AVMA Comment American Veterinary Medical Association 

(AVMA)

Link

Bach Comment Gregory Bach, DVM Link

Baragiola Comment Baragiola (consumer/pet owner) Link

Black Comment Black (consumer/pet owner) Link

Boylan Comment (#255)427 Meredith Boylan (consumer/pet owner) Link

Boylan Comment (#256) Meredith Boylan (consumer/pet owner) Link

Bradley Comment Karen Bradley, DVM, Onion River Animal 

Hospital

Link

Brady Comment Kathy Brady (consumer/pet owner) Link

Brown Comment (#521) Brown Link

Busansky Comment Busansky (consumer/pet owner) Link

Carrier Comment Lee Carrier (consumer/pet owner) Link

Chesko Comment Liz Chesko (consumer/pet owner) Link

S. Clark Comment Scott Clark (consumer/pet owner) Link

Coffin Comment Steve Coffin, DVM, Interbay Veterinary 

Care Center

Link

 

427 Comments are numbered when there was more than one comment received that listed the same commenter 

name and/or organization name. The numbering refers to the order that they are listed on the public comments 

webpage. Id.
112

Colligan Comment Suzanne Colligan (consumer/pet owner) Link

Ellis Comment Crystal Ellis (consumer/pet owner) Link

Fankhauser Comment Fankhauser Link

J. Forbes Comment Julie Forbes, DVM, Brea Veterinary 

Hospital

Link

Foster (F&S) Comment Race Foster*, DVM, co-founder, Drs. 

Foster & Smith (F&S)

Link

GADA Comment Generic Animal Drug Alliance (GADA) Link

Gay (VetRxDirect) Comment 

(#576)

William Gay, VetRxDirect Link

Gonzalez Comment Denise Gonzalez (consumer/pet owner) Link

Greeley Comment Shannon Greeley, DVM Link

Hamilton Comment Gayle Hamilton (consumer/pet owner) Link

Higgins Comment Cathi Higgins (consumer/pet owner) Link

Hilton Comment Hilton (consumer/pet owner) Link

Hirsch Comment Robert Hirsch, Light Research 

(consumer/pet owner)

Link

Holum Comment Donald Holum (consumer/pet owner) Link

Indep. Pharmacy Alliance 

Comment

Independent Pharmacy Alliance Link
113

Int’l Bd. of Veterinary Pharmacy 

Comment

International Board of Veterinary Pharmacy Link

K&L Gates Comment K&L Gates LLP (law firm), on behalf of 

“an affected client”

Link

Kaplan Comment Jonna Kaplan (consumer/pet owner) Link

Kordell Comment (#298) J. Kordell Link

Kroger Comment The Kroger Company Link

Lee Comment Nathan Lee, University of Tennessee 

College of Veterinary Medicine (UTCVM)

Link

Loehrer Comment Marcella Loehrer (consumer/pet owner) Link

Maddigan Comment John Maddigan, co-owner, Willamette 

Valley Animal Hospital

Link

Magee (F&S) Comment Gordon Magee, Drs. Foster & Smith (F&S) Link

Maine VMA Comment (#281) Maine Veterinary Medical Association Link

Malon Comment Erin Malon Link

Martin Comment Bernice Martin (consumer/pet owner) Link

Matter Comment Sharon Matter, VRS Link

NACDS Comment National Association of Chain Drug Stores 

(NACDS)

Link

Neely Comment Austin Neely, DVM Link
114

Neville Comment Neville (consumer/pet owner) Link

Novartis Comment Novartis Animal Health US, Inc. Link

Oregon VMA Comment (#422) Oregon Veterinary Medical Association Link

Oregon VMA Comment (#175) Oregon Veterinary Medical Association Link +

Attachment

Pedersen Comment Stacey Pedersen, DVM, Capitaland Animal 

Hospital

Link

PetCareRx Comment PetCareRx, Inc. Link

Pfizer Comment (#329) Pfizer Animal Health Link

Pieper Comment Martha Pieper, Smart Love Press 

(consumer/pet owner)

Link

Powers (F&S) Comment John Powers*, executive vice president, 

Drs. Foster & Smith (F&S)

Link

Rafalow Comment Trish Rafalow (consumer/pet owner) Link

Rodgers Comment Amy Rodgers (consumer/pet owner) Link

Roth Comment Juliana Roth (consumer/pet owner) Link

Shaprut Comment Avi Shaprut, DVM, Kearny Mesa 

Veterinary Center

Link +

Attachment

Sherman Comment D Sherman (consumer/pet owner) Link

N. Smith Comment Nate Smith*, formerly in charge of retail 

strategy for Walmart’s pet department

Link
115

Stangl Comment Mira Stangl (pharmacy technician) Link

Stevens Comment Terry Stevens, University of Tennessee 

College of Veterinary Medicine (UTCVM) 

Pharmacy

Link

SVHP Comment Society of Veterinary Hospital Pharmacists 

(SVHP)

Link

B. Taylor Comment Beth Taylor, DVM Link

Valley Vet Supply Comment Valley Vet Supply Link

Washenfelder Comment Marc Washenfelder , DVM Link

Webb Comment Catherine Webb, DVM, Lindquist 

Veterinary Care Ctr.

Link

West Comment Harvey West (consumer/pet owner) Link

Wilson (Priority Veterinary 

Mgmt. Consultants) Comment 

(#475)

James Wilson, DVM, Priority Veterinary 

Mgmt. Consultants

Link

Yoo Comment Yoo (consumer/pet owner) Link

Zeidner (1-800 CONTACTS) 

Comment

R. Joe Zeidner*, general counsel, 1-800 

CONTACTS

Link

*Also participated in the workshop as a panelist.
Federal Trade Commission

ftc.gov