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“Diversion” is a fun term we in the retail industry use to describe the re-selling of products purchased by one legitimate retailer to another, illegitimate retailer.
Often, it’s illegal. And almost always, it’s unethical. Some vets play this product-swapping game to make an extra buck. And other vets bristle—sometimes Halloween cat-style—when they do. (Read the Veterinary Practice News cover story from April for more insight.)
Yeah, as a topic I know it sounds potentially less than exciting but it’s a fun issue for vet industry geeks like me. It involves you and your money, too, so it makes sense I’d pitch you the line on diverted products like Frontline, Advantage, Heartgard….
Like it or not, we vets are in the retail business. We sell “stuff,” not just our services. Comfortis, Rimadyl, Previcox, whatever…it’s all “stuff.”
Mostly, vets sell products and pharmaceuticals because it’s convenient for you. Some vets say these sales also help to keep you coming back for our services, which we want to sell you not just because we need to make money but because we believe your pets require it.
Problem is, other retailers want to sell you “stuff,” too. They want to get a cut of the stuff the manufacturer or distributor won’t sell them directly.
These retailers (like 1-800-PetMeds) know they can move Revolution at a hefty premium given their low, online overheads and large volume of sales…but Pfizer won’t sell it to them. They’ll only sell it to vets so that they can keep their reputation as a producer of vet-only products with all the benefits that confers (i.e., vet recommendations).
That’s why a small handful of vets buy loads of these products and later sell them back to online pharmacies at a profit. These outlets, in turn, make a big buck on selling them directly to you so that you don’t have to go to the vet to pick up the meds and so that you can save a couple of bucks on each box of Interceptor. That’s diversion, in a nutshell.
That’s a great service, you may think. I like diversion. I don’t want to have to schlep to the vet hospital every time I need a new box, bag or bottle of something. Why not order it online or pick it up while I’m at PetSmart so that I can save some time and a reasonable amount of money, to boot? That’s convenience. And when you have multiple pets that kind of cash savings adds up.
But that’s not how the economics of the vet profession stacks up. Diversion of veterinary-only products throws a monkey wrench into the machinery of the veterinary marketing industry.
Manufacturers, wanting to be sure their veterinarian preachers continue to reveal the Gospel according to Novartis, Bayer or Boehringer-Ingelheim, refuse to stand by their products when sold through non-veterinary retailers.
That means that if Fluffy gets sick and you think the vaccine you bought through Drs. Fosters & Smith did it, you have no legal recourse through the manufacturer. If you bought it from a fly-by-night lowest cost online shop you’re doubly screwed.
Well, how the heck would they know where I got it? Ask Fort Dodge, a big manufacturer of vet vaccines and the new flea med ProMeris. They’ve installed traceability features on ever box, carton and pipette in their new flea med packaging. It’s the new industry standard for all manufacturers looking for ways to prove their product isn’t skirting your veterinarian on its way to you.
Manufacturers want to make it impossible for you to bypass your vet and save your few bucks. That’s because we vets believe we’re in the best position to recommend these products. It’s also because we fear you’ll never use us for more than just a prescription pad if you’re not required to buy them through us. And manufacturers don’t want to lose these vet recommendations by selling to the highest bidder.
So why does your vet freak the heck out when you buy your products elsewhere anyhow? It’s the same s---, isn’t it? In fact, you might think it’s somewhat abusive for your vet to put roadblocks in the way of your ability to get smart and save dollars wherever you can.
Well…yes and no—depending on who you talk to.
Ask most practice owners and they’ll tell you it takes a lot of time, money and education to bring the right products to you. And I won’t disagree:
Staff time on sales and inventory is increasingly expensive now that we’ve opted to pay for a higher priced work force, health insurance and skyrocketing cost of living-enhanced wages. Space is also at a premium since we need to pay for expensive retail locations due to our foot-trafficky business. And don’t forget to factor in the cost of our expertise in selecting the products we think are just right for your pet.
All this makes sense until you begin to consider the human medical model. Well, they don’t make money on all this “stuff” so why should you?
For starters, that’s not exactly true. Last time I went to the dermatologist (for a serious burn I got after cooking with wild abandon one fateful evening), I was plied with about four different (very expensive) products. Sure, I could’ve bought them online but I was there already and I needed to start using them right away so what choice did I have? And my dentist? Let’s not go there…
The bottom line: Human docs still sell “stuff,” but much of it is reserved for certain types of medical practices—typically, the less insurance-heavy variety where they’ve got to make up some money for the expense of their more “retail friendly” locations.
It’s more complex than that, but let it suffice to say that though I hate pushing products (and won’t demand that my clients buy from my place of work), I still understand that the survival of the practice I work for depends to no meager extent on the sale of products I recommend.
Without product sales, the prices for our services would undoubtedly be higher. And yet pushing service prices up would make our clients very angry. As it is my clients complain when I give estimates for spays. Why should I pay $225 for a cat spay when the place down the street does it for $125?
My answer? Well, either they don’t provide all the careful monitoring and pain relief I do or their spay prices are artificially low just to get you I the door. In the latter case, they probably also sell loads of food and cartons of Frontline every month—at a premium you’d be shocked to learn is the norm since you’ve been buying from us for the past ten years. Wanna script for your Derramax from your less-expensive-spay place? Good luck with that.
Again, it’s a lot more complex than what I’ve just presented and varies hugely by provider. But product sales in the vet profession is a sophisticated game of chess a smart pet owner knows how to play—but which many vets and all manufacturers want you not to learn. Can the words “collusion” and “anti-trust” be far behind? Maybe.
Yet there’s no doubt about it. “Diversion” is a bad word. And the unethical reselling that goes on behind the scenes is undoubtedly wrong. The question is: Can the vet industry sustain its current vet-only product marketing model given the pace of our clients’ veterinary industry IQs?
I think not. Which means that soon you may be seeing bigger increases in the cost of services at your vet’s office. Now, was that boring?
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Other than that, no heartworm meds are in stores, and none of the *many* medications: optimune, ear meds, all the pills, on & on! I did ask for a script for 1000 pill bottle of thyroid Soloxine, because that wasn't in stock either& an order was cost prohibitive.
If prices are "raised" too much, then sales volume will decline, because people will feel it necessary to "cut" corners.
A lot of people do it, but I never have felt comfortable or inclined to either purchase vaccines or administer them (via catalog). I also do not do the "cheaper" clinic version of having a tech administer them ----and this is not meant to "offend" any techs on the list!!!!---just my personal preference!!
I firmly believe in supporting my Vet. I have 3 labs and one cat and have always purchased anything that my vet recommended or prescribed from her Clinic. That is until 1 year ago. My 1 year old male Raider was diagnosed with Primary/Typical Addisons Disease 6 months before that. He was taking florinef and because we could not stablize him on it he was switched to Percorten. My vets "cost" on this drug was high ( $345 which would last 1 and 1/4 months ) and I did not know if I could afford the drug at this cost for the lifetime of a very young dog so I researched online and found the drug for less than half the cost. I am in Canada and normally drugs are cheaper here but not this drug. My vet willingly gave me a script for it when I asked. She knows I am not going to take my business anywhere else.
This drug is one that is not supposed to be sold outside of a Vet's Office. In fact the maker claims it cannot be bought any other way. Well I for one am certainly glad I can get it this way, as is my vet. I know I would have found a way to pay for it regardless but this certainly has made a huge difference to me. This is literally a life saving drug and I do not understand why the cost to Vets in Canada is so much more than it is to the Vets in the US when it is made by the same company.
I'm sorry, but if my dog needs a drug that is also a human drug I check the prices at Target and see if it's less expensive. I spend thousands of dollars a year at my vet's office so I HAVE to save money somewhere. So far this year I've had a thryoidectomy for my cat, a laminectomy for my BC and double FHO's for a foster dog. I know my BC needs Deramaxx, but it still chaps me to pay almost $2 a pill. Saving $200 a year by buying through Drs. Foster & Smith would not be insignificant.
To make a comparison from your business to mine, liability of licensed professionals with big insurance policies is a big benefit to people who are harmed. Going the discount route is attractive and often a nice choice for the layman, but doing so is not without perils.
In my business, one of the frauds I fight against is securities fraud. Securities are stocks, bonds, notes, or anything that can be construed to be similar. If you're a middle class retiree and your broker takes your IRA and blows it on leveraged options on technology stocks in foreign markets, we fight to get your money back as that investment wasn't suitable. If your broker takes your long term annuity which should be left alone and sells it to buy another one, and then does it again 6 months later, churning your account and skimming fees and commissions to his benefit but not yours, we get you your money back.
When a financial adviser who is licensed with a securities dealer sells you "off the book" investments that look like safe securities but are actually Ponzi or Pyramid schemes, we go after the securities dealer to get people their money back, even though the dealer knew nothing about the scam and didn't make a penny off of it? Why? Because the people who make the big bucks managing your money have the legal and ethical obligation to supervise their employees and protect the public.
If your child is burned while being baby-sat because the sitter was in a different room and didn't know that little Charlie knew how to turn on the stove and was playing in the kitchen, you don't blame the kid, you blame the sitter. And when you want to collect for the damage, you might sue the sitter, but more importantly, you go after the company who is presenting itself as the trainer and supervisor of the sitter. The deep pockets, but also the deep obligation.
Does Sara down the street have e&o insurance? liability? Are her parent's loaded enough to pay for the pain, suffering, and medical bills for your kid because you hired her on the cheap instead of getting a more professional sitter?
Is this not the very same issue at hand in this post? When the poo hits the fan, who is going to make you whole? Who should have been in a position to maintain the ethics of the industry? Sure, you can go to a discount place, but isn't the recall from China just the extension of that ethic?
Even if the product is exactly the same, if you open an online account with Schwab and buy yourself a stupid investment that is entirely inappropriate for you, and it goes bust.... tough luck. But hey, you save a few dollars on the commissions, for sure!
If your broker does the same, you have a clear avenue for recourse and when enough people sue, the industry takes notice and things change.
Just remember, the less you spend, the less reason anyone has to care if you're happy about it. And when you spend next to nothing, there's next to nothing available to ensure that checks and balances get done.
Getting gouged means you pay more but don't get more, but investing in premium service is putting your money where your values are and getting that insurance in return.
On VPN, this article caught my attention also: FDA Seeks Comments on Third-Party Pet Food Certification (http://www.veterinarypracticenews.com/vet-breaking...) You might want to use your blog to help get the word out. Or did I just do that?! ;-)
I buy my meds from my Vet, mostly because they are right down the street from me and it's a chance to stop in and have them take a peek at my dog to make sure she's in good shape. They don't have a huge mark-up on the Heartworm or Flea/Tick prevention though, so that helps. I think their prices are only about $5 more than the PetMeds-type sites, so it makes much mroe sense to me to support my local Vet than some far-off company.
I'm interested in this ProMeris you mention....discussion about it is all the rage on my breed forum board because of a bad drug reaction. Also, apparently one of the active ingredients is a known carcinogen called Amitraz. I would hugely appreciate any insight you have into this medication (maybe a future post?), because I know very little about it!