Pet drugs could be sold cheaply at pharmacies. This is why they’re not

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Trish Rawsthorne loves her dog, Raven. She’ll do anything for the blue-haired standard poodle, who has Addison’s disease, a disorder of the adrenal glands that requires regular shots of the prescription drug Zycortal.

At first, each vial of Zycortal cost the Winnipeg retired nurse $330. Then, a new owner took over her veterinarian’s clinic, and suddenly the medicine was marked up to $509.

“It was unfair for them to add on a cost just because they could,” she said.

So Ms. Rawsthorne started to look for alternatives. She found one – an online pharmacy called Pets Drug Mart, run out of Toronto, that lists Zycortal for sale at $305.75.

She was relieved to find the more affordable price. But then she was dismayed to discover in September that Pets Drug Mart might be on the verge of closing.

The online store, run out of a bricks-and-mortar licensed pharmacy called Canada Chemists in Toronto’s north end, is one of only a handful of pharmacies in the country that carries pet medication. The drugs are usually dispensed by veterinarians.

The sale of pet medication by pharmacies is legally allowed in Canada, and is widespread in other countries, such as the United States. But it has been hamstrung by what the Competition Bureau and other critics describe as an oligopoly in the production, distribution and sale of pet drugs that favours veterinary clinics.

Pet costs spike alongside inflation, with dog and cat owners digging deep

And rising costs are a key affordability issue for pet owners, who make up 60 per cent of Canadian households, according to the Canadian Animal Health Institute. Statistics Canada data show that the cost of pet food and other supplies was up 8 per cent in August from a year earlier, and up 25 per cent from August, 2020.

Pets Drug Mart was founded by Toronto pharmacist Wendy Chui. She said she first became interested in the pricing of pet drugs about 20 years ago, when her one-year-old dog needed eye surgery. The veterinarian prescribed eye drops that Ms. Chui knew she could get at a third of the cost from a human pharmacy.

“I knew the prices were kind of crazy,” she said. “And when I had the opportunity, I thought, ‘let me get in there and see if I can provide an option to people.’ ”

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At the time, Ms. Chui was working at a hospital. In 2005, she opened her own retail pharmacy in Markham, Ont., and soon after, started compounding drugs for veterinarians. In 2010, she started dispensing her own drugs and in 2013, put the service online under the banner PetsDrugMart.ca. She says that, on average, she charges 40-per-cent less than veterinarians.

From the beginning, she said, getting vet supplies was a challenge. Pharmaceutical companies would not sell to her directly. The sole Ontario-based distributor, the veterinarian-owned Veterinary Purchasing Co. Ltd. (VPCL), wouldn’t sell to her, and neither would national distributor CDMV Inc., based in Quebec.

It is “important to point out that we don’t have any control over who the drug manufacturers choose to sell their products to,” Pat Hinnegan, chief executive officer of VPCL, said in an e-mail to The Globe and Mail.

CDMV said in an e-mail to Ms. Chui, which she shared with The Globe, that they would not sell to her.

“The distribution contracts we have with pharmaceutical manufacturers dictate the terms and conditions we must follow for the distribution of their drugs, including the obligation to sell them only to veterinarians when outside of the province of Quebec,” Marie-Josée Bayard, CDMV’s vice-president of sales and development, wrote in the Jan. 5 e-mail. CDMV did not respond to questions from The Globe, including whether they do sell to any Quebec pharmacies.

So Ms. Chui turned to veterinarians to supply her. She made deals with a few vets, who would order extra products and ship them to her.

But then the industry moved to shut that down.

Distributors and drug manufacturers stopped selling to veterinarians that they suspected were supplying Ms. Chui.

And in 2015, the College of Veterinarians of Ontario (CVO) changed their regulations around reselling drugs. Previously, the regulation said a veterinarian was not to resell drugs “except to another member or a pharmacist.” That was changed to add the resale could only happen “in reasonably limited quantities in order to address a temporary shortage experienced by that other member or pharmacist.”

However, Jan Robinson, registrar of the college, said she considered the change in language minor and that the college never supported veterinarians reselling drugs.

When asked about pricing of drugs, Ms. Robinson said the regulator’s focus was on the health outcomes of animals, not on business operations.

“The College of Veterinarians of Ontario is not in any way attempting to stand in a place of looking at business models or how businesses are managed in the province,” she said. “That is not our job.”

After the rule change, employees of drugmaker Bayer Inc. BAYRY began to lodge complaints of professional misconduct against Ms. Chui and those who worked with her.

A committee of the Ontario College of Pharmacists dismissed a complaint against Ms. Chui, saying the complainant was trying to inappropriately stifle competition for veterinary medication.

But a complaint lodged with the CVO was more successful. By then, one of Ms. Chui’s main suppliers was Richmond Hill veterinarian Howard Covant. After hearings in 2020, two members of a three-person disciplinary panel said Dr. Covant had violated the regulation against reselling. (The third dissented and said there was no evidence an animal had been harmed by the practice.)

In testimony, employees of Bayer said they installed software on veterinarians computers to track sales of products, and they were concerned that resales made it harder for them to track precisely who sold which products to whom.

“Our concern is with resale of the product, because we no longer maintain control over that channel,” Tamara Hofstede, a veterinarian and former Bayer’s manager of veterinary scientific affairs, said at the hearing, according to a transcript. (Dr. Hofstede now works for Elanco Animal Health Inc., which bought Bayer’s animal-pharmaceutical division in 2020. Elanco did not respond to requests for comment.)

Dr. Covant appealed to the Ontario Superior Court of Justice in 2021 and lost. He again appealed to the Ontario Court of Appeal and lost in a decision released Aug. 30. The judges found that the disciplinary committee’s interpretation of the regulation was correct.

Dr. Covant said he was disappointed in the ruling, but would abide by it. However, he thought pet owners had a right to choose where they bought medication and for what price.

“From my point of view, pet owners are the losers,” he said.

In January, Ms. Chui filed a complaint with the federal Competition Bureau, alleging that manufacturers and distributors are using anti-competitive tactics to keep the prices of drugs artificially high. The bureau says it “continues to monitor” the industry, but cannot provide details of continuing investigations.

Ontario is currently drafting an update to provincial legislation governing veterinarians. Ms. Chui attended industry consultations to argue that the province should open up pharmaceutical sales. And she organized an online petition that attracted 18,000 signatures.

The Competition Bureau weighed in, too. “The benefits of competition for pet medication could include more affordable prices and convenience for pet owners,” the agency wrote in a submission.

Ontario’s agriculture ministry confirmed that pharmacists are legally allowed to dispense animal medication, but did not comment on whether the province would address the issue in its forthcoming legislation.

The ministry and the veterinary college both suggested it was a federal issue. Health Canada told The Globe it had no authority over pricing of veterinary drugs.

The Competition Bureau did endorse one CVO rule – that veterinarians must write a prescription to be filled elsewhere, if asked. But the rule does not set a fee for the service.

Nancy Mayberry, a pet owner in St. Thomas, Ont., said she switched veterinarians after one charged her $50 to write a prescription. She is now with one who charges $18. But she still spends $10 a day on prescription dog food for her dog, Kenzie. “I’m spending more money on her food than my own,” she said.

With her last supplier gone and stocks dwindling, Ms. Chui said she isn’t sure how to keep the pet-medication part of her business going without some kind of industry or government change.

“I’m near the end of my rope,” she said.