[Federal Register Volume 77, Number 131 (Monday, July 9, 2012)]
[Notices]
[Pages 40355-40358]
From the Federal Register Online via the Government Printing 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,
petmedsworkshop@ftc.gov.
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