FTC pushes for more competition in pet medications market

The Federal Trade Commission released a report in May finding that veterinarians will continue to face increasing competition from nonveterinary retailers for pet medication sales—and recommending ways to make the pet medications market even more competitive.

The FTC began exploring the subject of pet medications largely in light of introduction of the Fairness to Pet Owners Act, which would require veterinarians to provide pet owners with written prescriptions in every instance. Because the “AVMA Principles of Veterinary Medical Ethics” state that veterinarians shall honor clients’ requests for prescriptions in lieu of dispensing, the AVMA believes the bill is unnecessary and burdensome.

Staff with the FTC have sought to answer the following 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?”
• “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?”

In October 2012, the FTC conducted a public workshop to advance the commission’s understanding of these issues. Participants included veterinarians, manufacturers and distributors, retailers, pharmacists, and consumer advocates. Several of the panelists represented the AVMA. The FTC received and reviewed over 700 comments in conjunction with the workshop, including over 580 comments from veterinarians and veterinary hospitals and comments from the AVMA and state veterinary associations.

According to the commission’s 2015 report, “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.”

The report offers the following conclusions:

• “FTC staff believes that improved consumer access to portable prescriptions would likely enhance competition 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.”
• “Finally, increased availability of low-priced generic animal drugs would likely result in significant consumer cost savings.”

The report identified the following as topics that could benefit from additional study: the pricing of pet medications across different channels of distribution, the rate of errors in pet medication dispensing by retail pharmacists and veterinarians, the need for and impact of automatic prescription release requirements, and details regarding the gray market whereby retailers obtain pet medications that manufacturers have restricted for sale through veterinary practices.

The FTC report is available here.

Related JAVMA content:

FTC workshop explores pet medications (Nov. 15, 2012)