A court battle over pet prescription sales was thrust into public view this week when Covetrus Inc. emailed its veterinarian customers to say that it is being sued by a large competitor, Chewy Inc., as part of "an aggressive business strategy to dominate services historically led by veterinarians and to undermine the indispensable vet-client-pet relationship."
The message went out soon after Covetrus, which provides online pharmacy services to veterinary practices, filed a legal motion accusing online pet retailer Chewy of trying to suppress competition from veterinarians and potentially causing practitioners "substantial financial harm."
The filing was a response to a suit lodged in New York State Supreme Court by Chewy in May that accuses Covetrus and another veterinary services company of participating in an alleged scheme to direct sales away from the online retailer.
Covetrus is a publicly traded international animal health company providing product distribution and practice management software in addition to online pharmacy services for veterinarians. The company was created from a merger of Henry Schein Animal Health and Vets First Choice in early 2019. Founded in 2011, Chewy sells pet supplies online and is also a publicly traded company.
Laws in most states require veterinarians to provide to pet owners a prescription or authorization to purchase animal medications and other regulated pet products to protect the customer's right to chose their pharmacy. If a Chewy customer does not have a prescription or authorization on file when ordering, Chewy contacts the customer's veterinarian to get it. Chewy alleges that at this point in the transaction, Vetcove Inc., a practice software vendor, and Covetrus conspired to convince pet owners — through deceptive communications — to buy the medication from the veterinary clinic's online pharmacy instead of Chewy.
Chewy says it has suffered irreparable harm and seeks an injunction barring the defendants from "engaging in conduct related in any way to the Diversion Scheme" and seeking compensation for unspecified lost profits, reputational harm and other damages to be determined at a jury trial.
Chewy describes the requirement of receiving a written prescription as "onerous." Covetrus argues that the approval process is essential to the well-being of animals, and that Chewy simply wants to cut veterinarians out of the picture.
The dispute is a new front in an ongoing clash over who will control the lucrative pet medications market. In the past, sales of prescription medications and therapeutics were a steady source of revenue for many veterinary clinics, and offered as a convenience for clients. But during the past decade or so, online pharmacies, as well as retail chain pharmacies, have made deep inroads in the market. Chewy launched Chewy Pharmacy in 2018.
Businesses like Covetrus, Vetsource and MyVetStoreOnline offer clinic-branded online pharmacies to help veterinarians keep some of that business in-house.
Such companies pitch themselves as a bulwark against large internet retailers. Vetsource CEO Kurt Green told the VIN News Service in May that the company was selling a controlling stake to Mars Inc. in part so Vetsource could afford systems and infrastructure to help veterinarians compete with large internet retailers like Chewy.
In Covetrus's email this week, the company described its actions as taken in defense of veterinarians. The letter reads, in part:
"Covetrus has asked the court to dismiss the case because veterinarians — and your pet patients — would be most affected by Chewy's lawsuit and need a voice in this case. Veterinarians risk having your right to compete with Chewy to prescribe medicine and provide competitive options for your own pet patients stripped away if you're not in this case.
"Covetrus is fighting back aggressively, for veterinarians, your practices, and the pets and owners you serve."
Some veterinarians posting on a message board of the Veterinary Information Network, an online community for the profession and parent of VIN News, expressed confusion and skepticism about the email.
"I don't think either company has veterinarians' best interests at their forefront despite the email from Covetrus stating the opposite," Dr. Kelly Whitchurch wrote. "And I don't like being a pawn in their legal battles to line their own pockets."
Other veterinarians said they were more concerned about Chewy and what they see as its efforts to overturn the veterinarian-client-patient relationship. The American Veterinary Medical Association maintains that physically examining pets, participating in an ongoing relationship with pets and their owners, and maintaining records are essential to taking care of the patient. Further fueling veterinarian concern that Chewy is encroaching into the practice of veterinary medicine was the announcement last year that the company was launching a telehealth service.
Vetcove silent; Covetrus and Chewy speak out
Chewy's complaint charges Vetcove used proprietary software to gain access to customer confidential data, then deliberately confused those customers with misleading texts and emails to pressure them into making a purchase from the veterinarians' Covetrus-hosted pharmacy rather than Chewy.
Chewy described the purported plot as a "Diversion Scheme," terminology that might be confusing to some in the veterinary community. In the veterinary context, "diversion" historically has referred to prescription or therapeutic products (including flea control) that are designated by the manufacturer to be sold only by veterinarians being leaked, or diverted, for sale by vendors who are not veterinarians.
Vetcove has not filed a legal response, and citing the ongoing litigation, CEO Alexander Kates declined to comment for this story.
Vetcove began in 2015 as a Kayak-style shopping site for veterinary practice supplies and pharmaceuticals. Today, Vetcove's purchasing platform is used by more than 13,000 veterinary hospitals and nonprofits across the United States.
For its part, Covetrus did not weigh in on the merits of Chewy's claims about Vetcove software specifically, although it denied any close relationship with the company. In the filing — and in its ongoing public relations campaign — Covetrus is focusing on the bigger picture.
Dr. Link Welborn, a small animal practice owner in Tampa and chief veterinary officer for Covetrus North America, told VIN News by email why Covetrus is being so vocal about this fight.
"In my animal hospitals and [in] thousands of others across the country, the response to receiving a prescription authorization request [from Chewy] is for a veterinarian and staff members to determine if the medication being requested is appropriate and, if so, if the dosage is correct, and if the pet has had any recommended medical progress evaluations including follow-up tests to ensure that the medication can be continued safely," he said.
Sometimes, Welborn said, problems with the prescription request cause it to be denied. "In other cases, the medication is appropriate for the pet and the practice contacts the client to inform them of this information and to make them aware that the same medication can be provided from the practice, often at the same price [as] or lower than Chewy," he said.
"By suing Covetrus, Chewy is effectively attacking my practice and the thousands of practices across the country that utilize online prescription management systems like Covetrus to fulfill our online pharmacies."
He continued: "Chewy is attempting to limit choices for consumers by restricting the ability of veterinary practices to contact their clients to make them fully aware of all the options to receive medications/food for their pet. Veterinary practices need to be made aware of Chewy's efforts to limit practices' ability to provide these options to their clients."
Diane Pelkey, vice president of communications at Chewy, provided a written statement today to VIN News in response to questions. Pelkey said the company does not normally comment on active litigation, but had been "made aware of widespread misinformation" being provided to the veterinary community. She said the company wanted "to provide factual information and additional clarity," adding that "Any situation that interferes with a pet's health, a pet parent's right to select the pharmacy of their choice, or that jeopardizes vets is unacceptable to Chewy."
The statement continues:
"Chewy filed a lawsuit against Vetcove and Covetrus which focuses solely on the efforts of those two companies to facilitate the wrongful and illegal diversion of prescription medication orders that pet parents have already placed with Chewy. The vet-patient-client-relationship (VCPR) is not mentioned or contemplated anywhere in the lawsuit and is part of the misinformation being disseminated by Covetrus. We are extremely respectful of the VCPR and how it benefits both the veterinarian and patient.
"Chewy is dedicated to creating a true partnership with vets to improve the overall health and wellbeing of every pet-owning household in America. We view veterinarians as our partners in care and remain dedicated to finding innovative ways to bring technology solutions forward that are designed to help support vets."
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.