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Issue link: https://todaysveterinarybusiness.epubxp.com/i/856474
43 August/September 2017 • TODAYSVETERINARYBUSINESS.COM write prescriptions and patients drive to corporate pharmacies to fill prescriptions, or go online. Pharmacy companies like this mod- el, 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 pharma- ceutical 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 com- pany and a growing veterinary ser- vice 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 pharma- cies, but never forget its temptation to interfere with veterinary practices to benefit those same pharmacies. Ten years ago, veterinary prac- tices faced a daunting challenge: how to respond to online market- ing of pet medications financed by large commercial interests. Leading veterinary distributors and other companies, including Oregon start-up VetSource, devel- oped 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 investiga- tions or inquiries into whether veterinary practices outsourcing to third-party distrib- utors the home deliv- ery 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, Michi- gan, 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 practic- es into distribution hubs. Right? Instead, VetSource and its phar- macy teams warehoused, managed and shipped the medications at the di- rection of veterinary practices with proper prescriptions. What free enterprise calls a profit, namely the veterinary mark-up from the wholesale cost of the medica- tions, 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 Phar- macy 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. Law- yers and lobbyists — I handled the Nevada veterinary medical board aspect of this battle — are not vol- unteers. VetSource went on to hand the Nevada Board of Pharmacy a massive defeat. Two years of state board, state court and federal court actions pre- served the freedom of VetSource and all others to serve Nevada veterinarians and pet owners. The Nevada veterinary board bluntly advised that its statutes and regula- tions 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 veter- inarians to support client relation- ships 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 Vet- Source 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 some- times 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 strat- egist, lobbyist and former litigator. He serves on the Today's Veterinary Business editorial advisory board. 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. Portland, Oregon-based VetSource went to court to preserve its right to direct-ship medications to Nevada pet owners.