Several years ago, an envelope arrived at my home that had a big, red “CONFIDENTIAL” stamped on it.
It was a letter from a “veterinary exports” company offering “top dollar” for diverted veterinary drugs.
This company wanted me, a veterinarian, to buy drugs for it and make a quick buck under the table, since this company couldn’t get its own drugs legitimately.
The return address on this envelope looked familiar. The address was identical to one of the largest, most reputable online veterinary pharmacies in America.
What was going on here?
Gray Market Diversion
I get these letters, asking me to buy drugs and divert them, frequently. All vets get them.
They disgust me because they’re asking me to do something that, in my opinion, is highly unethical.
So, I throw them out.
These companies are trying to buy a huge amount of inventory — they don’t care about how the drug has been handled, and they don’t care about the relationship with the client. They just want to sell as much of this stuff as they can to make a quick profit. This is called gray market diversion.
For pet medications, it’s big business. Really big business. A $10 billion business.
Certain pet medications are labeled to be sold as prescriptions by vets only. We buy our medications directly from pharmaceutical companies. Then we prescribe and sell them to you.
When these pet medications are sold outside the veterinary channel and end up in big-box stores or online, they are diverted products sold by unauthorized dealers and are part of the gray market. When you find Heartgard online, for example, it is a diverted product in a very gray zone of integrity.
Anyway, why did I have such a bug in my bonnet about this particular letter marked “confidential”?
Because if the identical addresses meant that this was indeed the same company, then a highly regarded, accredited online pharmacy was behaving in a very shady manner — trying to get vets and their staff to divert products its way.
Let’s put it this way — if this pharmacy were so reputable, why couldn’t it get its own drugs?
People who are in business for the sole purpose of procuring pet medications through gray channels are called product aggregators.
These aggregators contact vet offices and offer to pay money to have the vet buy and divert products to them. A bad-acting vet will buy a large amount of products and resell to an unauthorized online or big-box seller.
The vet, who is using their veterinary license unethically, gets a fee — a kickback.
Why is it unethical? Vets are supposed to buy medications and prescribe them to their patients only. There must be a veterinary-client-patient relationship in order for such a transaction to be considered good practice.
Although unethical veterinarians are definitely a big part of the problem here, the gray market is so huge that these products find their way to online pharmacies and retail stores in other ways.
Veterinary distributors are supposed to sell only to vets, but diversion has occurred:
- Manufacturers like Merial and Bayer (manufacturers of Frontline and Advantage) have been accused of diverting their own products.
- International and counterfeit products have found their way to the gray market.
Product aggregators will get their products wherever they can.
Whoever thought meat-flavored tablets packaged in appealing boxes with swimming dogs and playful puppies were liquid-gold contraband?
I easily found this statement in the SEC filings of one of the biggest online pharmacies:
“We currently purchase a portion of our prescription and non-prescription medications from third party distributors and we are not an authorized distributor of these products.”
Here is the actual excerpt, lifted straight from the report:
And what’s the big deal, exactly? Why should you care?
Because whenever a product is diverted, its safety and integrity can be compromised. We’re talking about your pet’s health and safety.
Even if you have a legitimate prescription from your vet, depending on where you get that scrip filled, if you go online you may be buying a diverted product unknowingly:
- How did the pharmacy get the product?
- Who bought and sold the product?
- How long did it sit in someone’s garage at subzero temps?
- Or did it boil for 1–2 months in a Florida warehouse?
- Why couldn’t that pharmacy get the product legitimately?
If you have a problem with Frontline, does the online pharmacy (or Amazon, or Costco) have the manufacturer’s guarantee? Not according to the manufacturer.
But Frontline is not a prescription med. Diversion of prescription drugs, I believe, is a more serious ethical issue.
I didn’t think the online pharmacy business for prescription medicine was this shaky.
Diversion: Not What the Doctor (Or Your Hairdresser) Ordered
Nine out of 10 consumers don’t know what diversion is, but they’ve probably bought diverted products unknowingly.
I unknowingly bought a diverted product recently: Redken hair conditioner.
I was buying my toothpaste in my local supermarket, turned around, saw some upscale hair products and bought one. “Oh,” I thought. “Redken’s such a big name now, it’s everywhere.”
Well, it’s not supposed to be. The hair care line was diverted.
The company wants you to get its product directly from your hairdresser. Why? Because Redken wants you to use the right product in the right way. Hair care professionals sign an agreement with Redken that they will not divert.
- Did I get the conditioner cheaper at the supermarket? No way!
- But was it an older product? Yes.
- A discontinued product? Yup.
And, according to my hairdresser who is also my client, not right for my hair. (Maybe that’s why I’m in such a bad mood. My hair looks like crap.)
While my hairdresser was fixing my fright-head and I was telling her about the letter from the online pharmacy’s “exporter,” she confided, “I buy my Frontline at Dave’s.” (Dave’s is our local pet store chain.)
“You bought diverted Frontline,” I said, “and I bought diverted Redken.”
- Did either of us get a great price? Nope.
- Did we know that the product was handled properly and that we bought the right stuff? Nope.
- Did we know we were buying diverted products? Nope.
- Two intelligent consumers? We’d thought so. Nope.
The Legality of the Gray Market
While this practice may be unethical or unscrupulous, and while the pharmaceutical companies don’t approve or verify their products when found on the gray market, the gray market is not illegal.
In my opinion, the gray market will turn into a black-and-white market where products are not diverted but safely appear online and in retailers.
The pet medications will be supplied by the manufacturer with quality controls in place, properly stored and delivered to these outlets, and overseen by regulating and enforcement agencies.
But this is not happening yet.
You will probably get an authentic product if you buy from a reputable online pharmacy.
The manufacturer will not, however, ensure the product is authentic and will not guarantee its safety or efficacy. At least, that’s what the major pharmaceutical companies profess.
Its policy on diversion is clear on its website:
“Zoetis does not sell prescription medications for dogs and cats to retail outlets, pet supply stores, internet sites or any other distribution facility where a direct veterinary-client-patient relationship does not exist — nor do we support in any way secondary supply to these businesses.”
Diverted Products Carry Risks
- Has the product been handled properly since it was picked up from the diverter, or was it housed in a boiling-hot warehouse in Florida, Phoenix or China?
- Product safety: Has the product been tampered with or have expiration dates changed? You are already dealing with shady characters who want to turn a profit. These people are in business to make money, not care about pets. Since it’s a gray business, we are definitely dealing with shady business practices.
- Product guarantee: The pharmaceutical manufacturers claim they will not stand behind a product not obtained through a veterinarian.
To this last point, this is what Zoetis has to say:
“Since we cannot be certain how our products reach unauthorized aggregators, we cannot ensure product authenticity from these unauthorized aggregators nor can we ensure that proper storage and handling occurred. Therefore we reserve the right to refuse to honor associated product guarantees for product purchased from unauthorized distributors.”
TV Commercials Representing the Gray Market
Those well-known companies with splashy websites or advertising on TV are not getting their products through veterinary channels.
As Zoetis states:
“Many of these unauthorized dealers advertise products on their website or on television commercials that they do not have in stock and cannot readily obtain. Moreover, even in situations where such advertisements show a picture of the product, it does not mean they have the product in stock…. In all cases these organizations are also using pictures of Zoetis products without our prior knowledge or consent.”
Notice that even a big company like Zoetis is not mentioning any names. That’s because the gray market online companies and big-box retailers are huge and have a lot of lawyers working for them.
When I wrote about this topic in the past and mentioned a company by name that was under investigation, I received a threatening letter from its corporate attorneys stating that they would go after me personally.
Why Buy Diverted Products on the Gray Market?
I would venture a guess that most of you who buy online or in big retail stores are doing it to save money first and for convenience second.
I get it — your life arrives in a box, and you think you’re getting a bargain in that box. Well, think again.
- See if your vet will match your online price for your important pet medications. You might be happily surprised.
- Be honest with yourself about your buying practices. Did you buy anything in addition to your pet medicine when you were on an online website or in a big-box store? Did you ultimately spend more money, not less?
A Personal Perspective
I’m over the gray market thing. I write a prescription for anyone who wants one, give them the best guidance I can about drug safety and try to be fair in drug pricing.
When the writing on the wall was clear 20 years ago — that the pet medication market was getting competitive — I was proactive in my own little hospital when internet pharmacies were still in their infancy.
I priced my prescription medications competitively with the internet and told my treasured clients about the potential risks and unethical practices of the gray market. This policy worked well.
Second, I developed a hospital model that is not dependent on selling medications to thrive. I’m a doctor, not a retailer. If my clients trust me and my recommendations and see that they are not being financially abused, they are probably going to buy their medicine from me.
If I can’t meet a price, usually of a rarely used or very expensive medication and they can get it cheaper, I write a prescription and try to direct them to a reliable source.
I want to help my clients get the right medication for their pets at a good price.
How the Gray Market Affects You
When you see the feathers on your veterinarian ruffle at the very mention of the gray market, think about these facts:
- Compliance goes down when clients shop for their own medications. People often don’t buy enough heartworm preventive for a year, for example, when shopping on their own, or they don’t buy it at all.
- People buy the wrong thing. You might plan to purchase the recommended flea and tick medication at Target, but when you see a cheaper product, you buy that instead. The quality, safety and efficacy of these products is very different. Left to your own devices, you might be wasting your money entirely on a useless, possibly toxic, product or a product that doesn’t check all the boxes your veterinarian outlined for you.
- Human pharmacists and online pharmacies can give wrong or misleading information. This is a real problem because no veterinarian-client-patient relationship exists when you buy from a third party. You cannot always trust the information you get from a non-veterinarian.
Many products are diverted, from athletic wear and luxury goods to electronics and bike racks. But 2 commodities stand out: pet medications and hair products.
The Redken hair products on your box-store shelves are as gray market as the heartworm preventives in the next aisle.
This fact still blows my mind. While people might take their hair very seriously, expired or bogus shampoo is simply not as worrisome as ineffective heartworm preventive. I don’t know what it says about our culture that the quality of our pets’ medications is treated with the same cost-cutting mindset as hair conditioner.
It’s time to wash away this gray market — our pets need safe medications, consumers need fair pricing, and we need to get some integrity back into this marketplace.
This pet health content was written by a veterinarian, Dr. Debora Lichtenberg, VMD. It was last reviewed May 9, 2018.