Internet pharmacies given another chance
Posted May 15, 2002
On April 16, the Florida Department of Health's Board of Pharmacy reached an agreement with PetMed Express Inc. whereby the company accepted penalties but did not admit guilt. The company was accused of operating an "alternate veterinarian program" that contracted with veterinarians to write prescriptions for animals they had never examined—a violation of Florida law.
"Essentially, PetMed was engaged in an enterprise whereby a customer could log onto their Web site, fill out a questionnaire regarding their animal's health complaints, and that information would then be forwarded to a veterinarian who was either employed by, or under contract with, PetMed," said David Herman, prosecuting attorney in the case for Florida's Agency for Health Care Administration. The veterinarian would review the questionnaire, write a prescription, and send the prescription to PetMed Express, which would fill it.
This modus operandi violates Florida law because the state does not consider the authorizing veterinarian to have a valid doctor-patient relationship. It is also illegal in all but a handful of states, according to Edwin Bayo, legal counsel for the Florida Board of Pharmacy.
The company was also charged with selling drugs not approved by the Food and Drug Administration.
Savemax Inc., accused of violating similar regulations, also accepted penalties but did not admit guilt.
For some Florida Board of Pharmacy members, the April 16 proceedings had a déjà vu quality. The board disciplined PetMed Express in 1999 for distributing drugs to clients who did not have prescriptions for them. The company was also charged with various advertising violations as well as with failing to keep a complete and accurate record of controlled substances, to maintain a daily hard copy of dispensed prescriptions, and to label prescriptions appropriately.
In 1999, the company and its pharmacist settled 56 cases out of court. The penalties included paying investigative costs and a $32,500 fine, attending a continuing education course on pharmacy law, undergoing two years of semiannual inspections, and submitting quarterly pharmacy reports for 30 months.
Several members of the Board of Pharmacy expressed dismay that the company had once again broken Florida law. "I thought that [PetMed Express] understood us well when they were here before," said Helen Fong, chair of the hearing.
"I am very disappointed that you guys are here again, and I do not want to see you in a couple of years from now [breaking the law again] and you pay your $40,000 and it is just the cost of doing business."
Michael Stamitoles, another board member, commented that the current stipulation was eerily similar to the 1999 stipulation, especially one item that stated that failure to adhere to the stipulation terms would be considered a violation of a Final Order, which could result in disciplinary action.
This seems to be the same language that was in the agreement three years ago, said Stamitoles, who mused that, to him, it appeared the company was in violation of a whole bunch of final orders already.
According to attorney Herman, however, that is not the case. "The previous discipline was technically for [violating] different regulations," attorney Herman said. "So, they are not in violation of the previous order."
Nevertheless, the company was once again violating the law, and some individuals questioned whether the company had retained a veterinarian to provide prescriptions, not in an effort to abide by the law but to circumvent it. "I don't understand how that produces a valid vet-animal relationship ... other than trying to circumvent the law and generate profit," Fong said.
On April 16, the Board of Pharmacy formally charged PetMed Express with 36 cases involving 80 counts, including 33 counts of making deceptive, misleading, untrue, or fraudulent representations or employing a trick or scheme in, or related to, the practice of a profession. Thirty counts involved selling or dispensing drugs without a proper prescription.
But these were just the cases that the board had time to formally charge the company with—the agency has, in fact, received over a hundred complaints.
"I have been on the board for five years and I have never seen this many cases [brought against one company]," Stamitoles said.
Through the Florida stipulation, PetMed Express Inc. agreed to three years of probation, random pharmacy inspections, and community service in the form of providing free pharmaceutical services to the public. The company also agreed to dismantle the alternate veterinarian program and pay a fine and investigative costs. (See PetMed Express Inc.: The Verdict). Similar cases that occurred prior to the final ruling will be dismissed.
An original clause that allowed PetMed Express to file for early termination of probation after one year was shot down. "A one-year probation for a hundred and something cases ... it's unacceptable," Stamitoles balked.
In addition to PetMed Express, the Florida Department of Health's Board of Pharmacy reached an agreement with Savemax Inc., which also accepted penalties but did not admit guilt. At the time of the hearing, Savemax was located at the same address as PetMed Express and was charged with violating a Florida law that dictates that a pharmacy permit be issued only to a single entity at a single location. Savemax was also charged with dispensing prescriptions that were not signed by a veterinarian who had examined an animal and with not maintaining certain required records.
According to PetMed Express CEO Menderes Akdag, Savemax is an independently owned and run pharmacy that handles overflow from PetMed Express. Gregory Chaires, legal counsel for both companies, explained, saying, "It is a fair representation that Savemax was initially [started because] of a concern over PetMed's liability, and whether it [would] continue." Savemax, which was charged with three cases, agreed to move its location, undergo one year of random pharmacy inspections, and perform community service. The company also agreed to pay fines and all costs arising from the settlement, including the inspections. (See Savemax Inc.: The Verdict). Similar cases that occurred prior to the final ruling will be dismissed.
The board also penalized and fined four pharmacists employed by the companies during the period of investigation: Gordon Gyor, Gary Koesten, Richard Schwartz, and Martin Wiederkehr.
According to Herman, PetMed Express is essentially being given a fresh chance. The company promises to clean up its act. "I assure the board that compliance is our number one priority," said Akdag, adding that the company had implemented a number of policies, procedures, training, and quality improvement programs to help them attain that goal. In addition, they had enlisted Rod Presnell, a former member of the Board of Pharmacy, as a consultant to review the company's procedures.
One veterinarian who spoke at the hearing was uncomfortable with the settlement. "I felt like the two lawyers have got everything in front of you and are kind of running it through a bit," said John Owens, a Cleveland-based veterinarian. "
But the settlement was one way of cleaning up a messy problem. "If we were to take each case on an individual basis, there would be no end to the prosecution," Herman said. "It would substantially increase the cost to both sides. Each case would have to be investigated, prosecuted, and litigated."
The agreement also got rid of the source of many of the problems. "Anytime you have a plea bargain, you give something to get something," board attorney Bayo said. "In this particular case, the ability to [get rid of] the staff veterinarian program right now is very significant."
Bayo, who is also legal counsel for the Florida Board of Veterinary Medicine, says that other state veterinary boards are being encouraged to pursue action against veterinarians involved with PetMed. "We cannot take action against any vets who are engaged in the alternate vet or staff vet program because none of them held licenses in the state of Florida. The [Florida] Board of Veterinary Medicine has certainly encouraged the other states to take action." So far, Bayo has uncovered a veterinarian in Maryland and another in North Carolina who were involved with the program.
Donald Schaefer, executive director of the Florida VMA, who spoke at the hearing, commented later, "Under the current political reality of the way government agencies deal with corporations that are brought before them with multiple infractions, this was the fairest settlement we were going to get."
Schaefer hopes that the board's chosen inspector will have a veterinary pharmacology background and noted that the chair invited him to submit a list of qualified candidates. He also hopes that, given the offenses, the community service involves an organization that has a veterinarian involved in the diagnosis and treatment plan.
The Board of Pharmacy plans to provide information about the hearing to the National Association of Boards of Pharmacy, which will distribute it to the state boards through its disciplinary clearinghouse. According to several speakers at the hearing, veterinarians in other states have filed complaints against the companies, and the agreement may start a domino effect, with more states pursuing legal action. At press time, the Ohio State Board of Pharmacy had charged PetMed Express with various violations and scheduled a hearing.
Only time will tell whether PetMed Express will take the twice-given advice of the Florida board, but if it doesn't, it faces a tougher battle. According to Bayo, if PetMed Express breaks the law again, "They won't be able to bring a stipulation. They will have to go to trial and take their chances."