May 7, 2009
Flea product swap causes a flap
Summit's strict anti-diversion contract kicks in
By: Edie Lau
For The VIN News Service
When sales slowed on the Vectra 3D flea, tick and mosquito killer in her clinic store, Dr. Dawn Moore Fradkin welcomed the offer she got from the sales representative peddling a competing product.
The agent from Merial said she would take the Vectra off Fradkin’s hands and give her Merial’s Frontline Plus in exchange.
That sounded good to Fradkin, who figured she’d do better with a swap than returning the Vectra to its manufacturer, which she expected would charge a 15-percent restocking fee, if it refunded her at all.
What the clinician didn’t figure was that Summit VetPharm, maker of Vectra, would accuse her of violating its anti-diversion contract.
Summit has the strongest anti-diversion stance of all veterinary pharmaceutical companies. By using tracking technology on every package of Vectra and requiring veterinarians to sign contracts promising to provide the product only to their clients, Summit tries to prevent its goods from being diverted by veterinarians or others to outlets such as Internet pharmacies and general retail stores.
Parasiticide diversion is a sore point in the veterinary community, so Summit’s firm stand usually attracts praise. But in this case, Fradkin felt the company went too far.
Shortly after she swapped out the parasiticides, her distributor rep called, wanting to take her to lunch with her Summit rep. Fradkin declined, saying that she no longer carried Summit’s product. The Summit rep then called her directly; she explained to him what happened.
“The next day, he showed up unannounced without an appointment,” Fradkin recounted. “He sat out front and waited for me, and when I came out, he handed me a copy of the anti-diversion agreement and a copy of their return policy.”
He mentioned the possibility of legal action, Fradkin said, and directed her to retrieve the product and return it to him.
“I was so mad,” Fradkin said. “I just turned around (thinking), ‘Whatever.’ I had three rooms (of clients) waiting.”
Later, Fradkin told her story on a VIN discussion board. Some colleagues echoed her dismay. But one came to Summit’s defense.
“We say as an industry we want these companies to deal with diversion, but then we get upset when they actually do,” wrote Dr. Brenda Johansen. “I’m not saying Summit handled this well, but I do like knowing they aren’t full of crap about preventing diversion.”
Contacted by VIN News Service, the Merial and Summit agents referred questions to their corporate offices.
Summit made no apologies for its hard line. “The anti-diversion agreement is pretty clear,” Joseph Conti, the company’s Senior Director of Regulatory & Development, told the VIN News Service. “The anti-diversion agreement says they will only sell it to a vet-client-patient relationship. Obviously, the Merial rep is not a vet-client-patient relationship. Our fear is that when that happens, there’s nothing to stop the Merial rep from selling it on eBay or into the trade.”
Fradkin said the Merial agent told her she intended to donate the Vectra to a local animal shelter.
Had the product subsequently shown up in the so-called gray market, Fradkin said she would understand Summit’s reaction. “I don’t think it’s right for vets to be third parties and sell product to these retailers that are competing with our profession,” she said. “But taken to the extreme such as in this case — I think it’s a little bit of a difference.”
Fradkin said that originally, she carried both Vectra and Frontline, which she believes are equally effective. At first, Vectra cost less, “so I sold a lot of it,” she said.
Then the price of Vectra went up, and Merial began offering a “buy six get two free” promotion, which gave it the edge. Sales of Frontline Plus went up; sales of Vectra stalled.
Fradkin said she didn’t think twice about Merial’s offer to trade product. She’d done it before with pet shampoo. “(Companies) do it all the time,” Fradkin said.
Dr. Zack Mills, vice president of pet sales for Merial U.S., said the same.
“Switching out products is a standard, long-standing practice in the industry at large,” Mills wrote in a response by e-mail. “Such practice is intended to permit veterinarians to make, in accordance with their own professional discretion and judgment, the best product recommendations for their patients without the concern of losing money on product already in their inventory.”
Mills added: “Merial does not support the sale or redistribution of any vet product where the vet-client-patient relationship does not exist. If our sales reps do obtain any competitive product, they are instructed to either donate product to a non-profit organization where a vet-client-patient (relationship) exists or destroy the product.”
Summit’s Conti said other companies may engage in such practices, but not his. “We think it's unethical,” he said.
At Novartis Animal Health, spokesman Mickey McDermott, asked for his company’s perspective on product swapping, replied by e-mail, “The answer to your question is a ‘devil’s in the details’ one and not simple.
“Sometimes, competitive stock is purchased or in some way compensated for,” he went on. “The question, however, is whether this is simply a promotional measure or for the purpose of ‘buying’ share and interfering with the veterinarian’s professional judgment. Buying share and interfering with the veterinarian’s professional judgment is obviously not acceptable, whereas simply promoting one’s product through such a practice could be considered above-board."
Michael Johnson, who's responsible for VIN's industry relations and a former sales agent for the now-defunct Daniels Pharmaceuticals, said a "slush fund" mentality developed in the days when manufacturers' agents commonly made client visits alongside their distributor representatives.
“If I left my (drug) samples, he could make deals with the doctor,” Johnson said. “It made their life better, and it made me look good.... The idea there is that you’re trying to build loyalty. A good number of manufacturers scratched the back of the distributor rep.”
But taking a competitor’s product in exchange is another matter, he said. “I would never in my wildest dreams take any drug off of a doctor’s shelf,” he said. “Even in my good old days when I’d wheel and deal, I never wanted my hands on that stuff.”
Although a difference exists between taking possession of prescription drugs and over-the-counter medications such as Frontline and Vectra, Johnson acknowledged, it’s still problematic to take another company’s product.
In Fradkin’s case, the Merial rep could have given the veterinarian the Frontline and advised her to send the Vectra back to Summit, and if Summit wouldn’t accept it, ask how to destroy it, Johnson suggested.
As it turned out, Fradkin managed to retrieve the product from the Merial rep and return it to the Summit rep. The agent tried to smooth over the bad feelings. “He said he would make sure that nothing bad would happen to me and he would take care of me and would honor his word,” Fradkin said.
The product was worth between $1,700 and $1,800, she said. The rep said that if his company didn’t reimburse Fradkin fully, he would make up the difference from his own pocket.
Fradkin said she harbors no bad feelings toward the rep but doubts she’ll do business again with Summit.
VIN News Service commentaries are opinion pieces presenting insights, personal experiences and/or perspectives on topical issues by members of the veterinary community. To submit a commentary for consideration, email email@example.com.
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