Dr. Michael Paul
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In many companion animal practices, dispensing prescription drugs, nutraceuticals, and parasite prevention and control products
makes up 17 percent to 20 percent of practice revenue. Historically, selling these products has been a relatively passive
revenue source. You decide which drugs you want to inventory, apply a markup (typically 100 percent), and add a dispensing
fee of $5 to $15. Then you dispense the product as indicated and restock.
In 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.
WHEN PRICE TRUMPS ADVICE
Over the years, traditional pharmacies have put just a small dent in our business. Then came Internet pharmacies, which advertised
directly to the pet owner and sold products at a slightly lower price. They also provided extra convenience by delivering
right to the owner's door.
As a profession, we bristled and barked but really couldn't do much, other than compete on price. And the truth is, most pet
owners rarely fill prescriptions over the Internet. When they need a drug, they need it now, not in 48 to 72 hours. Most drugs
dispensed via the Internet are for long-term, repeated administration: parasite control products, NSAIDs, endocrine drugs,
and so on.
Most veterinary drugs or human generics are still dispensed directly from the veterinary practice. But several retail outlet
pharmacies are hoping to take that business away by actively seeking pet owner prescriptions. Pet owners can take their prescriptions
to the SuperStore or the SuperMart and have them filled, in some cases, for minimal cost. Some chains are even filling pet
prescriptions for free. Pretty hard to compete with free. In his book Free: The Future of a Radical Price (Hyperion, 2009), author Chris Anderson points out that after trying a free product, many people will adopt that product for
good. Once buying habits change, it's unlikely that they'll switch back.
Of course veterinary practices don't just sell and dispense products. We provide knowledge and advice and perform services
and procedures. But the Internet jeopardizes that foothold too. In the past 10 years, the number of shoppers using the Web
for information has doubled. Today, 30 percent of your clients go to the Internet before they see you. Another 20 percent
will go to the Internet after they see you to validate or clarify what you told them.
The castle of parasite and heartworm preventives is the first under siege by Web-browsing clients and chain-store pharmacies.
This is no surprise considering that it represents the repeat purchase of a fairly expensive product. If veterinarians lose
that market, we will feel it.
MORE COMPETITION FROM CONGRESS
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—and, no, you cannot charge to write the prescription. If passed, new congressional legislation
will mandate that veterinarians provide a written prescription even if we fill the prescription in house. The AVMA has come
out against this "Fairness to Pet Owners Act of 2011" (H.R. 1406), which Utah Rep. Jim Matheson introduced to save consumers money by giving them the option to purchase pet prescriptions
elsewhere. 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.
Dr. Michael Paul is the former executive director of the Companion Animal Parasite Council and a former president of the American
Animal Hospital Association. He is currently the principal of Magpie Veterinary Consulting. Please send questions or comments
to ve@advanstar.com
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