Vetsource's cooperation with competition ruffles feathers

Prescription approvals are latest irritant to veterinarians in shifting marketplace

Published: September 13, 2022
Art by Tamara Rees
Whereas veterinarians used to sell prescription drugs directly to pet owners, today, many pet owners order medications from a pharmacy, often online. Unless they receive a written prescription, pharmacies need authorization from the veterinarian to fulfill the order. How that authorization request is conveyed to veterinarians varies.

When Dr. Richard Selkowitz signed up his veterinary clinic on Long Island to work with Vetsource, an online pharmacy and home delivery service, he hoped it would help him compete with the Amazons, Chewys and Petcos of the world. Like many practice owners, he'd watched his revenues decline as once-robust sales of medications, therapeutics and other products at his clinic were captured by online retailers.

Vetsource creates and administers clinic-branded "stores" that look and function like popular retail websites, while passing a percentage of sales to the clinic. The revenues aren't close to what Selkowitz earned on direct sales, but he figures it's better than nothing.

"This is our defense against people going elsewhere to price-shop," he said.

Or so he thought. When reviewing prescription-approval requests recently on his Vetsource account, Selkowitz noticed that some of those requests were for clients buying not from his Vetsource store, but from Amazon and Petco. What? he wondered, flabbergasted. He felt betrayed.

"You say you are out there helping veterinarians," Selkowitz said. "The whole idea of your company is '[We're] battling the online company,' but you're facilitating it."

When pet owners order prescription drugs from online retailers, they send the retailer a written prescription or they give the retailer contact information of their prescribing veterinarian so the retailer can obtain authorization to fill the prescription. The retailers have various ways of contacting veterinarians to verify prescriptions, and some veterinarians are unhappy about the time and work that may be involved.

Enter Vetsource. CEO Kurt Green told the VIN News Service that the company began about a decade ago developing software tools meant to reduce the administrative burden for veterinarians associated with pet owners ordering drugs and therapeutics elsewhere. Initially, Vetsource reached out to a pet food distributor to expedite authorizations for therapeutic diets.

In brief

"We agreed to take over the process as long as the retailer would commit to using a portion of the veterinary diet proceeds to compensate the authorizing veterinarian for their time," Green said. "We feel this was a win for our veterinary customers and the veterinary community as a whole, as prior to this partnership, the sale of those diets provided no financial benefit to the veterinarians" who had diagnosed the patients' conditions and recommended particular therapeutic diets.

That evolved into the development of an "e-processing tool," software that manages prescription approvals for online retailers who partner with Vetsource. The tool can be used to communicate with any clinic, regardless of whether the practice uses Vetsource, a competitor service or no home-delivery service at all. The tool caught on. "One of the more massive online retailers" approached Vetsource in 2021 about participating, Green said, declining to identify the company.

Green describes a mutually beneficial arrangement whereby Vetsource is paid by third-party sellers for the e-processing service, and veterinarians receive a streamlined approval process and, potentially, compensation for time spent reviewing a request.

While Green sees the arrangement providing perks for his veterinarian clients, some of those clients see it differently.

"We've taken some heat over this," Green acknowledged, "but we're out there fighting for the profession. I wish everybody would buy through either the hospital or their vet-sponsored home delivery provider, but the reality is, it's different now. We're just acknowledging the reality and trying to put the veterinarian in the best-possible position, given the range of different buying habits of different pet owners."

Green said Vetsource customers were informed by email about the program in June 2021.

Selkowitz doesn't remember any announcement. After he discovered Vetsource's relationship with online retailers, he posted about it this July on a message board of the Veterinary Information Network, an online community for the profession and parent of the VIN News Service. He wanted to alert his colleagues. To his surprise, the response was muted.

He said, "The general feeling was, 'Get over it. You shouldn't be selling products, anyway.' " 

Selkowitz isn't ready to get over it. "We are just trying to fight as long as we can," he said.

Time + lost revenue = frustration

Veterinarians were once pet owners' exclusive source for pet medications. Clinics used profits from sales to offset the cost of their services. The advent of online veterinary pharmacies in the 1990s, and more recent trends by retail pharmacy chains to carry veterinary drugs, increased options for consumers while putting the squeeze on veterinarians. The new vendors, willing to sacrifice profit to build market share, slashed markups, driving prices down. 

The fight over who gets to sell veterinary products settled, frustration with online retailers today often coalesces around the prescription approval process. Practitioners bemoan the uncompensated time and effort associated with reviewing and approving prescriptions for sales by third-party retailers.

Dr. Kristy Bennett, who owns a practice in a northern suburb of Washington D.C., said she has zero tolerance for the situation.

"Somehow, these online pharmacies have figured out that they can make us and our staff work for them," she wrote on a VIN message board discussing the profession's grudging acceptance of Chewy in 2020. "We have to look through our records to approve a Rx, take our time to sign something and fax it back or reply to an email, or whatever hoop they want us to jump through, all so they can make a profit, while we make none."

More recently, she told VIN News via email that the retailers make veterinarians look bad. "We are the big, mean vets that are overcharging for prescriptions in the first place (never mind the fact that they have economies of scale and purchasing power galore, have pledged to lose money/profits on sales to establish their client base, advertising budget, etc. etc.)."

Bennett does not have an online store like the ones provided by Vetsource; she offers some medications from her clinic. If a client wants to buy medicine elsewhere, she gives them a paper prescription. "99% of my clients are fine with this policy. We will snail mail the Rx or email a scanned copy, or they can pick it up." 

She said she's had clients complain only a couple of times, after they tried to order from online retailers who wouldn't accept paper prescriptions. "How is this legal?" she asked. "I suspect it isn't, but again, they are deflecting blame to us mean, greedy veterinarians."

Dr. Meghan Ellis, a veterinarian in central North Carolina, has had her share of annoyance with online retailers.

Chewy and PetMeds have online portals that make things easy, she said, but "some of the other pharmacies are a giant pain in the ass since we don't have a fax machine." One requires a phone conversation for approval, but "it takes forever to get ahold of anyone." Another company accepts email approvals "but they will email us and the customer, like, 20 times after we've already taken care of it." Yet another routinely screws up the prescription.

"These are a great source of frustration, and we are probably going to have to do something different in dealing with these pharmacies," Ellis said. "Like giving the client a written Rx, and telling them, 'Good luck, with that.' "

The case for cooperating with online retailers

While he understands veterinarians' annoyance over processing prescription approvals, Green at Vetsource believes refusing to work with web-based retailers may backfire for veterinarians, especially in cases involving pet owners who prefer to shop online.

Regarding veterinarians' use of written prescriptions, Green cautions that handwriting can be hard to read, potentially leading to pharmacy errors or requiring clinics to devote staff time to clarifying a written script. He said that 50% of the time that Vetsource pharmacists receive written prescriptions through the e-processing tool, they have questions that require contacting the clinic.

His argument for facilitating approvals for qualified online retailers is multifold. He maintains that: It simplifies the process for veterinarians; improves clinic record-keeping; supports the connection between veterinarians and clients; acknowledges the reality that some pet owners prefer buying from an online store; and may result in some compensation for veterinarians for time spent authorizing prescriptions.

For veterinarians who are Vetsource clients, third-party requests appear in the same queue as authorizations for the veterinarian's own store, which cuts down on the number of third-party pharmacies contacting the clinic separately, he said.

In addition, Vetsource provides its e-processing tool only to retailers who require a veterinarian-client-patient relationship be in place, according to Green. "While it is true only a licensed veterinarian can submit prescriptions or authorize a therapeutic diet for purchase, there are unfortunately examples of retailers not following the manufacturers' guidelines, which require a VCPR before shipment," he said, adding that partner retailers aren't allowed to ship diets or medications unless Vetsource validates the prescription or authorization. "This safety net is built into our system integrations and is auditable."

Finally, the e-processing tool includes a way for online retailers to pay veterinarians for the time they spend on the approval. There is no suggested amount, and it's not required, Green said, but "we strongly recommend" third-party retailers compensate veterinarians. He added that, on the whole, they do.

Selkowitz isn't so sure. "I have zero idea going into it what we are getting. It is completely up to the retailer … what we get, and it varies," he said. "For some refills, we get nothing. Vetsource tells me that I can look at a report to see what I received, but I haven't looked."

Green declined to identify the retailers that partner with Vetsource, noting that the company's arrangements with retailers limit what he can say about them. Partnerships with Amazon and Petco were identified by Selkowitz.

Services versus products

For some veterinarians, the angst over lost revenues is pointless. They say it's time to charge service fees that reflect clinic operation costs rather than subsidizing lower service fees with earnings from product sales.

Ellis, the North Carolina veterinarian, offers home delivery of drugs and other pet products through Covetrus, a competitor to Vetsource. She said the arrangement doesn't net much. While she enjoys the income from Covetrus, she doesn't depend on it for the long-term success of her business.

Her priority is focusing on the revenue streams she can protect: exams, diagnoses, prescription-writing fees and surgeries.

"Amazon is perfectly happy to lose billions of dollars per year to penetrate this market," she said. "That's their business model. We can't compete with that. And I doubt Covetrus, Vetsource or any of the current players can, either. We're going to lose that war in the long run."

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