[Federal Register Volume 77, Number 131 (Monday, July 9, 2012)]
[Notices]
[Pages 40355-40358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-16594]


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FEDERAL TRADE COMMISSION


Workshop on Pet Medications Issues

AGENCY: Federal Trade Commission.

ACTION: Notice of workshop and request for comments.

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SUMMARY: The Federal Trade Commission seeks public comments in 
connection with a workshop to examine competition and consumer 
protection issues in the pet medications industry. The workshop will 
consider how current industry distribution and other business practices 
affect consumer choice and price competition for pet medications; the 
ability of consumers to obtain written, portable prescriptions that 
they can fill wherever they choose; and the ability of consumers to 
verify the safety and efficacy of pet medications that they purchase. 
The workshop will also examine the extent to which recent changes to 
restricted distribution and prescription portability practices in the 
contact lens industry might yield lessons applicable to the pet 
medications industry. The Commission seeks the views of consumers, 
veterinarians, business representatives, economists, lawyers, 
academics, and other interested parties on these issues. This notice 
poses a series of questions relevant to those issues about which the 
Commission seeks comment. After conducting the workshop and reviewing 
comments, the Commission may prepare a report discussing these issues.

DATES: The workshop will be held on October 2, 2012, in the Conference 
Center of the FTC office building at 601 New Jersey Avenue NW., 
Washington, DC. Prior to the workshop, the Commission will publish an 
agenda and further information on its Web site. Comments in response to 
this notice must be received on or before September 14, 2012.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form by following the instructions in the 
SUPPLEMENTARY INFORMATION section below. Comments in electronic form 
should be submitted by using the following Web link: https://ftcpublic.commentworks.com/ftc/petmedsworkshop (and following the 
instructions on the Web-based form). Comments filed in paper form 
should be mailed or delivered to the following address: Federal Trade 
Commission, Office of the Secretary, Room H-113 (Annex X), 600 
Pennsylvania Avenue NW., Washington, DC 20580, in the manner detailed 
in the supplementary section below.

FOR FURTHER INFORMATION CONTACT: Stephanie A. Wilkinson, Attorney, 
Office of Policy Planning, Federal Trade Commission, 600 Pennsylvania 
Avenue NW., Washington, DC 20580, 202-326-2084, 
[email protected].

SUPPLEMENTARY INFORMATION: The quality and cost of pet medications is 
an

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important pocketbook issue for many consumers. In 2011, 62 percent of 
U.S. households owned a pet, and Americans spent an estimated $50 
billion on their pets,\1\ including nearly $7 billion for prescription 
and over-the-counter (OTC) pet medications.\2\ Drawing on the Federal 
Trade Commission's expertise as a competition and consumer protection 
agency, the workshop will examine ways to inform and empower consumers 
to obtain the highest quality and most cost-effective healthcare 
products for their pets.
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    \1\ American Pet Products Association Industry Statistics & 
Trends.
    \2\ Packaged Facts estimates.
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    Pet owners spend significantly more money on their pets than in 
past decades, and the market for pet medications has grown 
significantly in recent years.\3\ Manufacturers and veterinarians have 
introduced new and improved diagnostic and therapeutic treatments for 
pets; pet medications have become available at some online and brick-
and-mortar retail outlets; and veterinarians and others have 
increasingly emphasized preventative pet care. In addition, market 
participants note, in recent years it has become easier to administer 
flea and tick control products and heartworm preventatives, and the 
products themselves have become more effective. These products comprise 
the bulk of chronic pet medications sold in the United States. Indeed, 
the sale of prescription and OTC flea, tick, and heartworm products 
totaled nearly $3.7 billion in 2011.\4\
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    \3\ The size of the overall U.S. pet industry grew steadily from 
$17 billion in 1994 to over $50 billion in 2011. (American Pet 
Products Association Industry Statistics & Trends.) The size of the 
U.S. pet medications market grew from approximately $4.5 billion in 
2006 to approximately $6.7 billion in 2011, and is projected to 
reach $9.25 billion by 2015. (Packaged Facts estimates.)
    \4\ Id. Of the estimated $6.7 billion in U.S. retail sales of 
pet medications in 2011, 36% was for flea and tick control products, 
and 19% was for heartworm preventatives. (Packaged Facts estimates.)
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Distribution Practices in the Pet Medications Industry

    Historically, veterinarians have been the principal dispensers of 
pet medications because of their unique role in the veterinarian-
client-patient relationship, whereby a veterinarian examines, 
diagnoses, and treats the animal (patient), while also providing 
information to the animal's owner (client). Consumers still purchase 
most of their pet medications from the veterinarians who examine their 
pets, and most pet medication manufacturers choose to distribute their 
products exclusively through the veterinary channel.
    Nonetheless, pet medications are no longer sold exclusively by 
veterinarians. Over the last ten years, brick-and-mortar and online 
retail and pharmacy entities (hereinafter collectively referred to as 
``retailers'') also have begun selling pet medications, especially OTC 
medications. Some evidence suggests that these retailers may offer 
substantial pro-consumer benefits, such as increased convenience and 
lower prices.
    Although retailers may obtain some portion of their pet medication 
products directly from manufacturers or authorized distributors, they 
also rely heavily on secondary supply channels. Most manufacturers 
state that they restrict the distribution of their pet medications to 
the veterinary channel, and that they use well-established tracking 
procedures to ensure the safety and efficacy of their products. Certain 
veterinarians purchase pet medications from manufacturers or authorized 
distributors and then resell some portion of their purchase to 
secondary suppliers for a profit, a practice sometimes referred to as 
``diversion.'' \5\ Some secondary suppliers and retailers claim to have 
protocols in place to verify that the retailers receive bona fide 
products that originated with the manufacturer. Other industry 
participants, however, have questioned whether secondary suppliers and 
retailers always receive bona fide products (as compared to, for 
example, counterfeit product from non-U.S. sources), thereby raising 
potential questions about product safety and authenticity. The workshop 
will examine how competition in sales of pet medications to consumers 
has developed in light of these practices and how prices, product 
supply, and product quality may be affected.
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    \5\ It should be noted that the term ``diversion'' as used in 
human pharmaceutical markets means the illegal trade in prescription 
narcotics, in which products are not being used by the consumer in 
the manner intended. This is distinct from the situation in the pet 
medications market, in which products obtained through secondary 
supply channels are being used by the consumer in the manner 
intended.
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    In the workshop, the Commission seeks to examine issues related to 
the distribution of pet medications from practical, economic, and legal 
perspectives. The Commission invites public comment on questions 
relevant to this topic, including:
     How are pet medications distributed to consumers?
     What are the business rationales for various pet 
medication distribution practices?
     How has competition to sell medications to pet owners 
evolved in light of these distribution practices?
     How do these practices affect prices to consumers?
     How do these practices affect product supply and quality?
     How do these practices affect consumer choice?
     How do these practices affect entry into the pet 
medications market?
     How do these practices affect innovation in the pet 
medications market?
     What efficiencies or inefficiencies are associated with 
these practices?
     What, if any, product safety or counterfeiting issues 
exist with respect to these practices? Have there been instances in 
which false or misleading information about product safety risks was 
disseminated to consumers?
     Are there other factors that should be considered when 
analyzing the competition and consumer protection issues related to the 
distribution of pet medications?

Prescription Portability for Pet Medications

    All industry participants agree that pets should be properly 
examined and diagnosed by a veterinarian to determine the most 
appropriate course of treatment for any medical condition, including 
whether any medication should be prescribed. When a veterinarian writes 
a prescription for a medication to be dispensed and subsequently 
administered by a pet's owner, the prescription must be filled with the 
correct medication and dosage and the owner must have access to 
relevant information about the medication and proper administration 
techniques. Some observers argue that veterinarians are in the best 
position to carry out these responsibilities; these observers believe, 
therefore, that veterinarians alone should dispense prescription pet 
medications to their clients. Others argue that licensed pharmacists 
are equally capable of dispensing pet medications to consumers, 
provided the pharmacists dispense the correct medication and dosage as 
prescribed by a veterinarian; these advocates point out that 
veterinarians can still provide relevant information and follow-up care 
to their clients even if they do not dispense the medication. Concerns 
about the safety of pet medications dispensed by pharmacists appear 
less pronounced for OTC medications, which do not require a 
prescription and typically do not require direct supervision by a 
veterinarian.

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    A consumer cannot legally obtain prescription pet medications from 
a retailer without a written, portable prescription from a 
veterinarian. The American Veterinary Medical Association (AVMA) 
advises veterinarians to honor a client's request for a prescription, 
provided that a valid veterinarian-client-patient relationship 
exists.\6\ This guidance is not mandatory, however. State regulations 
vary as to whether veterinarians are legally required to provide 
written prescriptions to clients, and it is unclear to what extent such 
regulatory obligations may be actively enforced against veterinarians. 
It appears that, while many veterinarians provide written prescriptions 
to their clients when requested, some veterinarians have refused to 
provide prescriptions or otherwise have discouraged their clients from 
obtaining pet medications from retailers.
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    \6\ See Principles of Veterinary Medical Ethics of the AVMA, 
III.C.1.
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    Federal legislation proposed in House Bill 1406 (``H.R. 1406'' or 
``the Bill'') would require veterinarians to provide clients with 
written prescriptions for all pet medications, regardless of whether 
requested, and to inform clients of their right to have pet medications 
dispensed elsewhere.\7\ The Bill also would prohibit veterinarians from 
charging a fee or requiring waivers of liability for providing written 
prescriptions. H.R. 1406 would require the Federal Trade Commission to 
promulgate rules implementing the statute within 180 days of its 
enactment.
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    \7\ See Fairness to Pet Owners Act, H.R. 1406, 112th Cong. 
(2011), available at http://www.gpo.gov/fdsys/pkg/BILLS-112hr1406ih/pdf/BILLS-112hr1406ih.pdf.
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    In the workshop, the Commission seeks to examine issues related to 
the portability of pet medication prescriptions from practical, 
economic, and legal perspectives. The Commission invites public comment 
on questions relevant to this topic, including:
     How varied are current veterinarian practices with respect 
to providing written, portable prescriptions to clients?
     To what extent are consumers aware that they can request a 
portable prescription from their veterinarian and have the prescription 
dispensed elsewhere?
     Which states require prescription portability for pet 
medications? Which do not? Are there states in which a proposal for 
prescription portability for pet medications was rejected by the 
legislature and, if so, why?
     In states that do require prescription portability, what 
recourse do consumers have if a veterinarian refuses to provide a 
written, portable prescription?
     What evidence exists to support a need for federal 
legislation requiring veterinarians to provide written prescriptions to 
their clients?
     What price and non-price benefits can accrue to consumers 
from prescription portability for pet medications?
     What risks or inefficiencies may be posed by prescription 
portability for pet medications?
     Is there a need for federal legislation requiring 
veterinarians to notify clients that they have the right to fill their 
prescriptions at the pharmacy of their choice?
     Is it appropriate to deny veterinarians the ability to 
charge a fee or require a waiver of liability for providing a written 
prescription to clients?
     How might the passage of H.R. 1406 affect price, consumer 
choice, and other forms of competition in the pet medications market?
     How can the prices charged to consumers for pet 
medications by veterinary clinics and retailers best be quantified and 
compared?
     To what extent do retailer prices for pet medications 
affect the prices of medications sold at veterinary practices, or other 
aspects of veterinary clinic operations?
     To what extent would H.R. 1406 affect veterinarians' sales 
of pet medications?
     What compliance costs would veterinarians face if H.R. 
1406 were enacted?
     How might the passage of H.R. 1406 affect pet medication 
distribution practices?
     Should possible amendments to H.R. 1406 be considered?
     Are there other factors that should be considered when 
analyzing the competition and consumer protection issues related to the 
portability of pet medication prescriptions?

Comparison to Fairness to Contact Lens Consumers Act

    Some restricted distribution and prescription portability issues 
existed in the contact lens industry at the time that Congress passed 
the Fairness to Contact Lens Consumers Act (``FCLCA''), Public Law 108-
164. Industry participants have noted both similarities and differences 
between the contact lens industry and the pet medications industry. The 
workshop will examine whether consumer experiences with the FCLCA might 
provide insights about the potential impact of H.R. 1406. The 
Commission invites public comment on questions relevant to this topic, 
including:
     What was the impact of the FCLCA, if any, to consumers?
     What was the impact of the FCLCA, if any, to optometrists 
and ophthalmologists?
     What was the impact of the FCLCA, if any, on entry into 
the contact lens industry?
     What was the impact of the FCLCA, if any, on innovation in 
the contact lens industry?
     What was the impact of the FCLCA, if any, to contact lens 
distribution practices?
     Are there significant similarities or differences between 
the contact lens industry and the pet medications industry, 
particularly with respect to industry distribution practices and issues 
of prescription portability? If so, how should those similarities or 
differences be taken into account in assessing the likely effects of 
H.R. 1406 compared to the FCLCA?
     Are there other factors that should be considered when 
analyzing the competition and consumer protection issues related to the 
FCLCA, and how consumer experiences with the FCLCA might provide 
insights about the potential impact of H.R. 1406?

Instructions for Filing Public Comments

    Interested parties are invited to submit written comments 
electronically or in paper form. We must receive your comment by 
September 14, 2012. Because paper mail addressed to the FTC is subject 
to delay due to heightened security screening, please consider 
submitting your comments in electronic form. Comments filed in 
electronic form should be submitted using the following Web link: 
https://ftcpublic.commentworks.com/ftc/petmedsworkshop (and following 
the instructions on the Web-based form). To ensure that the Commission 
considers an electronic comment, you must file it on the Web-based form 
at the Web link: https://ftcpublic.commentworks.com/ftc/petmedsworkshop. If this notice appears at http://www.regulations.gov/#!home, you may also file an electronic comment through that Web site. 
The Commission will consider all comments that regulations.gov forwards 
to it. You may also visit the FTC Web site at http://www.ftc.gov to 
read the notice and the news release describing it.
    Comments should refer to ``Pet Medications Workshop, Project No. 
P12-1201'' to facilitate the organization of comments. Please note that 
your comment--including your name and your State--will be placed on the 
public

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record of this proceeding, including on the publicly accessible FTC Web 
site, at http://www.ftc.gov/os/publiccomments.shtm. Because comments 
will be made public, they should not include any sensitive personal 
information, such as any individual's Social Security Number; date of 
birth; driver's license number or other State identification number, or 
foreign country equivalent; passport number; financial account number; 
or credit or debit card number. Comments also should not include any 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, comments 
should not include ``trade secret or any commercial or financial 
information which is obtained from any person and which is privileged 
or confidential'' as provided in Section 6(f) of the Federal Trade 
Commission Act (FTC Act), 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 
CFR 4.10(a)(2). Comments containing material for which confidential 
treatment is requested must be filed in paper form, must be clearly 
labeled ``Confidential,'' and must comply with FTC Rule 4.9(c).\8\
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    \8\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See FTC Rule 4.9(c), 16 CFR 
4.9(c).
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    A comment filed in paper form should include the ``Pet Medications 
Workshop, Project No. P12-1201'' reference both in the text and on the 
envelope, and should be mailed or delivered to the following address: 
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex 
X), 600 Pennsylvania Avenue NW., Washington, DC 20580. The FTC is 
requesting that any comment filed in paper form be sent by courier or 
overnight service, if possible, because U.S. postal mail in the 
Washington area and at the Commission is subject to delay due to 
heightened security precautions. The FTC Act and other laws that the 
Commission administers permit the collection of public comments to 
consider and use in this proceeding as appropriate. The Commission will 
consider all timely and responsive public comments that it receives, 
whether filed in paper or electronic form. Comments received will be 
available to the public on the FTC Web site, to the extent practicable, 
at http://www.ftc.gov/os/publiccomments.shtm. As a matter of 
discretion, the FTC makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC Web site. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2012-16594 Filed 7-6-12; 8:45 am]
BILLING CODE 6750-01-P