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Vets no longer corner the market on Pet RXs

FORT WORTH, Texas — Veterinarians, who have traditionally derived about a fifth of their gross income from pet medicines, face ever-new rivals scrambling for a piece of this business in which dog and cat owners may pay markups of 100 to 300 percent on prescription drugs.

It has been years since the entry of mail-order veterinary pharmacies, which have since morphed into online merchants like Wisconsin-based Foster & Smith. But in 2010, Target launched its PetRX pilot program in more than 100 stores in Georgia, North Carolina, Georgia and Minnesota, and other retailers are getting into the business.

"Internet pharmacies are not our real competition, but rather the local discount pharmacies," Tennessee veterinarian Ronald Whitford said in an article written for others in the profession last year. "Any time you cannot dispense with at least a 30 percent markup, you lose! And even then it is not worth the time and effort."

But 30 percent is an excellent profit margin for high-volume chain retailers.

Target's PetRX is now in 670 stores in 25 states, spokeswomen Erin Medsen said.

"The program has been really well-received," Medsen said, noting that Target pharmacists can add flavors like chicken, tuna and roast beef to make liquid medicines more palatable to Rover or Princess. All Target locations with pharmacies not in the program can still dispense drugs for people and pets, she added.

Walgreens has been filling such scrips since at least 2009, when it filled 400,000 in 10 months, according to VIN News Service, which covers the veterinary medicine industry. A spokeswoman said pets can be enrolled in the chain's family prescription plan, but stores mostly carry crossover drugs suitable for people and some pets.

In the past year, Kroger grocery stores quietly rolled out their own pet medication program, frequently undercutting veterinarians' prices, particularly on drugs in its $4 generic program like common antibiotics for animals and people.

Now a bill before Congress would make it easier for dog and cat owners to get written prescriptions for use beyond their vet's office. To some vets, all of the new competition has reached crisis proportions.

The profession is at a critical crossroads, Lowell Ackerman, a vet with an MBA who taught at Tufts University, said in a 2011 article titled "Barbarians at the Gate."

Ackerman said that there is no way vets can compete with $4 generics and that they shouldn't. Instead, he advised them to stock higher-priced, pet-only labeled drugs.

He also recommended that vets set up their own mail-order business, sell pet health insurance, keep the inventory lean and expect to be paid on a professional basis for professional services.

Such drugs as the steroid prednisone, the antibiotic amoxicillin and tramadol for arthritis and pain relief are human-pet crossover drugs that sell for $4 as generics. One Fort Worth veterinary office said it sells the same medicines for $23.

If a veterinary practice survives the next 10 years, it will do so "by being competitive on all shopped service fees and then increasing markups for every other service," said Whitford, the Tennessee vet. Expecting the number of office visits to at least double in a decade, he urged fellow vets to "charge significantly more for sophisticated services.

"Unfortunately, this may put the high-end, sophisticated veterinary care out of reach for most pet owners," he said.

Mike Morris, a veterinarian who operates the Animal Hospital of Fort Worth, expressed surprise that retail discounters didn't pounce earlier on the pet med market.

"I've been puzzled for a number of years over why they haven't been as aggressive," Morris said in a telephone interview. "I wish life was easy and business was easy, but it isn't."

Vets no longer corner the market on Pet RXs 12/17/11 [Last modified: Saturday, December 17, 2011 3:31am]
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