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Manufacturers, Veterinarians Target Product Diversion

Veterinary product diversion has been labeled by the AVHO as a primary concern.

Suggested Veterinary Products

Veterinary product diversion has become an issue of concern to many veterinarians, particularly in light of the growing number of discount pet medication websites.

Millions of dollars worth of flea and tick product are sold through online portals and retail pet product stores each year, even though the products’ manufacturers intend the nonprescription products to be sold only by veterinarians.

Over the past year, some veterinarians and manufacturers have begun to address product diversion.

A new veterinary organization, the Alliance of Veterinary Hospital Owners (AVHO), has highlighted veterinary product diversion as one of its key concerns.

Founded in April 2007, the nonprofit organization represents the owners of about 200 veterinary hospitals in 30 states. Its website, www.avho.net, is a portal through which members can discuss issues affecting independent animal hospital owners.

The organization has developed a seal of approval program through which it reviews manufacturers’ business practices for their products. The seal is awarded to companies that prove to AVHO members that they are dedicated to ethical business practices and the integrity of their products. One element considered is the company’s commitment to keeping veterinarian-only products out of other sales channels.

At press time, only Summit VetPharm of Fort Lee, N.J., has been awarded the seal.

Tracking and Recovery

Summit VetPharm reported in February that it had tracked and recovered a cache of its veterinary-exclusive flea and tick product after discovering its nonprescription Vectra 3D on an online sales channel. It was the first demonstration of the company’s proprietary product tracking system, designed to enforce Summit VetPharm’s anti-diversion policy.

A company representative purchased the product through the site to verify its authenticity and then  tracked it to the California veterinarian who had purchased it. Within six hours of legal notification to the veterinarian, the product was no longer available online, the company reports.

Before doing business with a veterinarian, Summit VetPharm requires that person to sign an anti-diversion agreement.

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Specifically, the veterinarian agrees “to sell the products purchased from Summit only to its ‘clients,’ which shall mean the case where the practice has a ‘veterinary-client-patient relationship’…with a purchaser of any product from the practice. For avoidance of doubt, ‘clients’ shall not include other veterinary clinics, wholesalers or retailers of veterinary products, and the practice shall not resell or otherwise dispose of products in any manner except to its clients without Summit’s express written consent.”

Systems in Place

Summit VetPharm’s tracking system, Bloodhound, uses visible and invisible barcoding to prevent alteration of the product’s unique identification information.

“For every package that we ship, we scan it and enter the information into our computer,” said Albert Ahn, DVM, senior director of veterinary services for Summit VetPharm. “When it is delivered to the veterinary hospital, it is scanned again. So if the product is found to have been diverted, we can purchase it, scan it and trace it back to the original purchaser.”

When diversion is detected, Summit VetPharm contacts the purchaser to demand that the product be removed from the retail channel or website, along with any existing web links. Summit VetPharm requires the veterinarian to return all unsold product and terminates its business relationship with him or her.

“Our partnership with veterinarians is critically important,” Dr. Ahn said. “We want to ensure our product stays in the hands of veterinary professionals.

“As we developed the business plan for Summit VetPharm, it became clear that there is a tremendous amount of diverted veterinary products on the market,” he said. “And when you get diversion into the over-the-counter market, you see a reduction in the number of visits that the pet owner makes to the hospital. That’s one less wellness exam and one less chance for the veterinarian to identify emerging problems and health concerns.”


Every ProMeris carton, box and pipette can be traced.

~ Kelly Goss, Fort Dodge Animal Health ~


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A Broader Movement

Last year, when Fort Dodge Animal Health of Overland Park, Kan., rolled out its new dog and cat flea and tick treatments, ProMeris, it also unveiled its Track and Trace system, a proprietary technology to help ensure ProMeris will be available only from veterinarians.

Kelly Goss, director of public relations and communications for Fort Dodge, said the system enables the company to track the product from its point of manufacture, to the Fort Dodge warehouse where it’s stored, to the distributor and, finally, to the veterinary practice that buys it.

“The company and its distributor partners have equipped their facilities with the necessary technology to ensure every ProMeris case, carton, box and even individual pipettes can be traced,” she said.

For example, Goss said, an account may buy a carton of ProMeris from a distributor and resell half the carton to an Internet pharmacy.

"By obtaining one of the ProMeris boxes off the Internet site, Fort Dodge can scan a special barcode on the product to acquire its entire movement history, down to the day it was shipped from the distributor to the practice,” Goss said.

“The company has employees dedicated to monitoring OTC channels. It provides continuous updates to its sales force, as well as veterinarians, about the results achieved by Track and Trace.”

Veterinarians found to be in violation of the ProMeris sales policy are no longer allowed to purchase the product, Goss said.

“While ProMeris for cats has been on the U.S. market for more than nine months, and ProMeris for dogs has been on the market for nearly five months, only a handful of violations have occurred,” she says. “In each case, Fort Dodge addressed and resolved the situation.”

Antitrust Issues

Early this year AVHO launched a letter-writing campaign targeting companies whose veterinarian-intended products regularly show up in stores and online.

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The organization stopped the campaign in February after being notified that Florida’s attorney general had begun a preliminary investigation into it for possible anti-trust practices.

Details of the investigation were not available at press time.

Since it was notified of the investigation, AVHO has publicly shifted away from trying to change how manufacturers do business and toward changing how veterinarians do business.

“If you don’t like the way that some of these major veterinary manufacturers have played you and continue to double talk you, then stop buying from them. Buy from a different company,” a story on the AVHO website says.

“We just learned that we can actually survive, and perhaps even thrive, even without vaccinating pets yearly.

“Here at AVHO, we hope that soon we’ll say the same thing about product sales. It should be considered ‘gravy’ on top of our main economic course, which should be medicine.”

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