Good things happen when you fight back
The veterinary profession scored two big victories thanks to old-fashioned lobbying and one company’s court battle.
Whatever side you’re on in politics, it’s safe to say most people believe that money rules the day. The guy with the big wallet wins, the little guy loses.
With a lifetime of politics under my belt, I’ll concede these maxims often prove true. But it’s not always so, and two veterinary pharmaceutical cases prove that the little guy can win when he fights back and refuses to accept that he’s supposed to lose.
The first example you’ll recognize, but it’s worth a reminder. The second one you’ve never heard of, but you’ll read about it to the end and take away lessons for your own business or organization. Let’s jump in.
1. Fairness to Pet Owners Act
The animal health industry knows the story of the ill-named Fairness to Pet Owners Act, dropped on Congress in fall 2010 by big-box retailers and online pharmacies hoping to lure Congress into tilting the playing field so that pet owners stop buying medications from veterinarians. I first met with American Veterinary Medical Association lobbyists in their D.C. offices in September of that year, and betting odds were that the veterinary profession would not beat Walmart or 1-800-PetMeds on Capitol Hill.
Many of you heard this from colleagues: “It’s just a matter of time. Those guys have too much money, and influence. We don’t stand a chance.”
Well, seven years have rolled by and “those guys” haven’t had a single hearing on their bill in either the House or Senate. The number of sponsors hovers in single digits, and enthusiasm wanes. Walmart’s social media call for pet owners to rise up was the tree falling in the forest that no one heard.
What happened? Veterinary medicine rose up instead through organizations like AVMA and state VMAs and through companies like Banfield and Zoetis (then Pfizer Animal Health). They reminded Congress what veterinarians do for America’s families and pets. These small businesses provide great jobs, play by the rules and don’t need Congress steering pet owners to pharmacy clerks to get questions answered about pet medications. Old-fashioned lobbying with a strong message worked, and the little guy won.
2. State Pharmacy Board Bullies
Veterinary medical boards govern veterinary practice in each state and pharmacy boards govern pharmacies. Makes sense, right? Except when state pharmacy boards decide to cross agency borders and start making rules for veterinarians. Why would they do that?
It’s simple, yet profoundly disturbing and unlawful. Many pharmacy boards do not understand the veterinary model and don’t like it. In human medicine, doctors write prescriptions and patients drive to corporate pharmacies to fill prescriptions, or go online. Pharmacy companies like this model, as do pharmacy boards. They don’t understand why veterinary medicine doesn’t fall in line. How can states (and pet owners) allow veterinarians to carry their own pet medications — behind locked cabinets, of course — and deliver vital medications inside the clinic? They’ll concede it’s convenient, but in their opinion it’s not right that veterinarians earn revenues that could be diverted to big-box retailers and national pharmacies, or online distributors.
What most veterinarians don’t understand, however, is that over 25 percent of American state pharmacy boards launched steps to shut down veterinary pharmaceutical practices. Fourteen state pharmacy boards, to be exact, from 2013 until just a few months ago. They were clever, or at least they thought so, and targeted one company and a growing veterinary service that pharmacy boards hoped to squash before it became popular with pet owners (wrong again).
What they didn’t count on was the tenacity of that small Oregon company and the willingness of its executives and board of directors to respond to the challenge in each state.
A Cautionary Tale
Here’s the story of how this company won and a reminder to be on the lookout for actions by pharmacy boards in your state. You may think the board worries only about pharmacies, but never forget its temptation to interfere with veterinary practices to benefit those same pharmacies.
Ten years ago, veterinary practices faced a daunting challenge: how to respond to online marketing of pet medications financed by large commercial interests. Leading veterinary distributors and other companies, including Oregon start-up VetSource, developed technologies and business models for small animal practices to deliver pet medications directly to client residences.
VetSource’s success led to the decisions of 14 state pharmacy boards to initiate investigations or inquiries into whether veterinary practices outsourcing to third-party distributors the home delivery of pet medications somehow violated state pharmacy laws (given the draconian title of anti-kickback statutes). Here are the states: California, Colorado, Illinois, Iowa, Maryland, Michigan, Minnesota, Nevada, Oregon, Pennsylvania, South Carolina, Texas, Virginia and Wisconsin.
Believe it or not, the issue was whether veterinarians would be allowed to direct-ship only if they managed, packed and shipped from the inside of their veterinary clinic. I call it the theory that Santa’s elves would work inside some back closet to turn small animal practices into distribution hubs. Right?
Instead, VetSource and its pharmacy teams warehoused, managed and shipped the medications at the direction of veterinary practices with proper prescriptions. What free enterprise calls a profit, namely the veterinary mark-up from the wholesale cost of the medications, certain state pharmacy boards tried to characterize as kickbacks.
Thirteen state pharmacy boards closed or abandoned the hunt, satisfied that the practices were not illegal but just good business for valued services and products. Nevada’s Board of Pharmacy decided to go after VetSource and any other company helping Nevada veterinarians direct-ship medications to Nevada pet owners.
What Nevada’s board didn’t count on was that VetSource would fight back, as it had in other states. An expensive decision for VetSource? Yes. Lawyers and lobbyists — I handled the Nevada veterinary medical board aspect of this battle — are not volunteers. VetSource went on to hand the Nevada Board of Pharmacy a massive defeat.
Two years of state board, state court and federal court actions preserved the freedom of VetSource and all others to serve Nevada veterinarians and pet owners. The Nevada veterinary board bluntly advised that its statutes and regulations do not limit veterinarians to the Santa’s elves business model, and a Nevada state judge granted summary judgment for VetSource.
Costly but Worthy Fight
The Board of Pharmacy seemingly hoped to light a range fire across the country with sister pharmacy boards, yet Nevada courts and a thoughtful veterinary board supplied the hoses to douse the fire permanently. While the Board of Pharmacy struggles to accept this reality, the fact is it pursued an outrageous legal theory and lost. VetSource exposed the flaws and wholesale absence of facts in the pharmacy board’s actions and was rewarded with victory.
From the perspective of a growing company, it didn’t seem fair to have to justify the company’s existence in 14 states. What would have been easy was to abandon a business model that allows veterinarians to support client relationships with a consumer-friendly home-delivery model. VetSource could have shrugged that the big guys were going to win, so why bother? Sounds familiar, but VetSource chose to fight and the effort paid dividends.
That it took one company from Portland, Oregon, to fund and manage this fight is an unfortunate cost of doing business. But sometimes that’s how you win against the big guys or government.
Policy & Politics columnist Mark Cushing, founding partner of the Animal Policy Group, is a political strategist, lobbyist and former litigator. He serves on the Today’s Veterinary Business editorial advisory board.