FTC Conducts Workshop on Competition and Safety in Pet Meds Industry

The U.S. Federal Trade Commission (FTC) conducted a day-long workshop, October 2, 2012, “to examine competition and consumer protection issues in the pet medications industry.” Currently pending before the House Subcommittee on Health, a bill (H.R. 1406) introduced in April 2011 by Representative Jim Matheson (D-Utah) would require FTC to issue rules mandating pet medication prescription portability, which could fundamentally change the way such products are sold in the United States. FTC seeks stakeholder input on issues that would affect a $7 billion per year industry and has extended the public comment period to November 1.

An early step in FTC’s investigation, the workshop provided a forum for widely
divergent views as veterinary professional advocates and representatives of
the animal health industry addressed current practices limiting the distribution
of pet medications and the potential impact of a change that would allow
consumers to purchase the drugs from a full range of providers and retailers.
According to veterinary representatives, (i) retaining the status quo ensures
drug safety and efficacy, (ii) pet medication pricing is currently competitive,
and (iii) prescription portability is already required under veterinary ethical
rules and some state laws. They claimed that the proposed legislation was
nothing more than “a solution in search of a problem.”

Counsel for generic drug manufacturers asserted, to the contrary, that portable prescriptions were essential to the development of more competitive pricing. Online pharmacy representatives claimed that their primary concern involves an inability to acquire pet medications from the manufacturers and their consequent shortages, as opposed to lack of prescription portability. Compounding pharmacists agreed with that assessment, noting that an inability to obtain drugs from manufacturers limited their ability to compound drugs not otherwise available in the marketplace. Major retailers asserted that restricting distribution to veterinarians raises consumers’ costs, creates a potential conflict of interest for the prescribing veterinarian and impairs convenience for “one-stop-shoppers” unable to purchase pet medications from retail pharmacies.

The American Society for the Prevention of Cruelty to Animals took the
view that prescription portability would reduce costs to consumers, thereby
increasing animal health and encouraging pet adoption from shelters.

With much of the evidence cited in support of the workshop participants’
positions anecdotal or speculative, FTC also turned to evidence from
the contact lens industry, which has operated under similar prescription
portability legislation since 2003. This evidence was also unavailing given
acknowledgement from panelists about a lack of adequate empirical
evidence whether contact lens portability resulted in increased safety risks to
consumers or lower prices.

The public comment period provides an important vehicle for stakeholders
to ensure that FTC is evaluating full and reliable evidence on these issues. The
Commission has posted on its website the hundreds of comments already
received and will place workshop submissions and PowerPoints® there to help
stakeholders identify specific points to address. Agency officials indicated
that the comments could inform FTC’s report on the matter and will be used
by lawmakers and regulators as they develop further regulatory, legislative or
enforcement responses. This report was prepared by Shook, Hardy & Bacon
Attorney Scott DuPree, who attended the hearing. See FTC News Release, September 19, 2012.