Your pharmacy and veterinary generic drugs: A win-win solution in the battle for this business
Jeff Rothstein, DVM, MBA
President, Progressive Pet Animal Hospitals
"The Times They Are a-Changing" — that was the title of a meeting I recently led for all of the doctors and managers in my hospital group (Progressive Pet Animal Hospitals). We discussed the results of a recent veterinary care usage study that identified key contributing factors for the decline in the number of dog and cat visits to veterinary clinics in the past several years.1,2 Statistics show that nearly one-third of pet owners have cut back on the number of visits to their veterinary hospital,3 and 45% of clients are postponing care for sick pets.4
Jeff Rothstein, DVM, MBA
As veterinary visits have dropped, pet owners' willingness or ability to spend money on medications has declined as well. Whether it's for heartworm preventives or antibiotics for a urinary tract infection, many clients are less compliant about administering medications to their pets than in the past.
All of these issues reduce veterinary practice revenue and profit, and ultimately challenge practice viability. Most importantly, they threaten the patients' health and quality of life.
Price sensitivity and pharmacy vulnerability
A study published in 1999 revealed that pet owners ranked price low on a list of factors they deemed important when choosing a veterinarian.5 Therefore, veterinarians believed that if the quality of their services remained high, they could raise prices without reducing client demand for services and still increase revenue. This may have been true once, but the times they have "a-changed." The economic recession and the rising cost of veterinary care pose major challenges for future veterinary practice growth.1,2 Pet owners have expressed alarm about the amount and frequency of price increases in veterinary care.1,2
With regard to price sensitivity, the pharmacy is one of the most at-risk areas of a veterinary practice's business. And because the pharmacy has traditionally accounted for about 30% of a practice's gross revenue, this is a real concern. Clients usually choose to have their veterinarian perform all the medical care for their pets, but veterinary-prescribed medications are a commodity that clients can now easily purchase from online pharmacies and retail superstores.
Some veterinarians are resigned to relinquish a majority of their pharmacy revenue and hope to make up for it by providing more medical services at higher costs. But how? Doing so may reduce your pharmacy revenue and could cause price-sensitive clients to seek medical services elsewhere. One study found that 26% of pet owners consistently look for less-expensive veterinary options.1,2
The pharmacy battle will continue to escalate
As an owner of multiple veterinary practices, I think it is important to fight to keep our veterinary pharmacy business because it has a big impact not only on practice profitability, but also on practice value. This alone should be a motivator for you to battle to retain your pharmacy business. And it will be a battle, as the pressures from competitive pharmacies continue to grow. If Congress enacts legislation such as House Resolution 1406 — which would require veterinarians to provide clients written prescriptions for all medications prescribed — this will undoubtedly make it easier for clients to have their prescriptions filled elsewhere based on price.