{"id":2443,"date":"2018-04-01T00:00:07","date_gmt":"2018-04-01T07:00:07","guid":{"rendered":"http:\/\/phosdev.com\/todaysveterinarybusiness\/?p=2443"},"modified":"2022-03-10T20:06:18","modified_gmt":"2022-03-10T20:06:18","slug":"a-dark-secret","status":"publish","type":"post","link":"https:\/\/navc.sitepreview.app\/todaysveterinarybusiness.com\/a-dark-secret\/","title":{"rendered":"A dark secret"},"content":{"rendered":"

Product diverters are often regarded as traitors in the veterinary community. Practitioners who sell veterinary-channel flea treatments, painkillers and other brand-name products to pet stores and online pharmacies are seen as helping the competition.<\/p>\n

But one longtime California veterinarian isn\u2019t the least bit apologetic about his foray into the gray market. He spoke with Today\u2019s Veterinary Business on the condition of anonymity. We\u2019ll call him Dr. Gray.<\/p>\n

The Beginning<\/h3>\n

It was 2008 and the economy was tanking.<\/p>\n

\u201cWe had just purchased a practice that was supposedly doing $1.7 million a year in business,\u201d Dr. Gray said. \u201cWe quickly figured out that they were doing fraudulent medicine. The previous owner agreed to stay on for a year but was gone in six weeks. He moved to another state.<\/p>\n

\u201cBy the middle of 2009, business was going poorly. I\u2019d never diverted before, but an opportunity arose. A guy I knew in Florida \u2014 I\u2019d met him at a veterinary management meeting \u2014 contacted me to say he was starting a diversion company selling product into the Caribbean.<\/p>\n

\u201cHe told me to call my pharma rep, said he knew her and she\u2019d sell to me. He had me buy 150 cases of flea product, and he paid me 10 percent over what it cost.\u201d<\/p>\n

Until then, his normal order was about 20 cases.<\/p>\n

For him, diversion was a way to keep his business afloat and his staff employed. It wasn\u2019t about helping the enemy. It was a question of survival.<\/p>\n

Dr. Gray said he had an acquaintance in Wisconsin who was primarily a dairy farmer but worked with small animals on the side.<\/p>\n

\u201cHe would buy 400 cases of flea product at a time and make 10 percent [on the transaction]. It kept him alive through the winter. Flea product to a dairy practice?\u201d<\/p>\n

One veterinary pharmaceutical company was honest with Dr. Gray.<\/p>\n

\u201cThey just said, \u2018We make drugs and will sell to anybody,\u2019\u201d he recalled. \u201c\u2018We don\u2019t care what you do with them.\u2019\u201d<\/p>\n

100 Cases at a Time<\/h3>\n

Dr. Gray has been a veterinarian for more than 40 years. In addition to owning practices, he has worked in veterinary medical research and is a certified financial planner.<\/p>\n

As a diverter, he said, he would buy 100 cases of flea products or painkillers at a time, making almost $100,000 a pop.<\/p>\n

\u201cThat order should have made anyone suspicious,\u201d he said.<\/p>\n

His supplier was ecstatic, he said, not suspicious. \u201cMy rep wanted me to buy even more.\u201d<\/p>\n

But another company\u2019s rep noticed.<\/p>\n

\u201cI got into an argument with the rep,\u201d Dr. Gray said. \u201cShe wanted to get into my computer and match my NSAID sales against purchase orders. I declined, and they blacklisted me. So now we buy their flea products and painkillers through our other clinic.\u201d<\/p>\n

In the Know<\/h3>\n

His gray-market life was known to at least four colleagues, he said. When he was considering diversion, he talked it over with them, and they knew when he jumped in. No one reported him.<\/p>\n

While diversion might be considered unethical, it is not illegal.<\/p>\n

\u201cIf I had been reported, the companies would have stopped selling to me, as one did. That\u2019s all,\u201d Dr. Gray said.<\/p>\n

\u201cThe state board doesn\u2019t give a damn whether you divert or not.\u201d<\/p>\n

Within four or five years, he said, generic veterinary medications appeared on the market and, combined with the recovering economy, gave him little reason to divert. He hasn\u2019t done it in about five years.<\/p>\n

\u201cGenerics<\/a> killed the margin,\u201d he explained. \u201cYou can buy flea control at Costco for six bucks a dose. We can\u2019t even buy it for that. How does that happen?\u201d<\/p>\n

Economic Turnaround<\/h3>\n

When the Great Recession broke, Dr. Gray\u2019s clinic business began to improve. He hit about $1.5 million in revenue in 2017.<\/p>\n

He closely follows the stock market and noted the November 2017 news that Amazon is thinking of distributing human pharmaceuticals. That would be a major disruption, he said.<\/p>\n

\u201cIf Amazon does, it will buy drugs in huge quantities. Right now, prices for drugs are so high because no one bargains with the pharmaceutical companies,\u201d he said. \u201cIn working on the Affordable Care Act, the Obama administration agreed that Medicare would pay whatever price the companies charged.<\/p>\n

\u201cIf Amazon gets into the business, it will say, \u2018We want to buy 8 million pills. What price will you give us?\u2019\u201d<\/p>\n

Human pharma companies aren\u2019t motivated to bargain on prices, he said. It\u2019s why a 12-week course of medications needed to treat hepatitis C can cost up to $85,000 in the United States.<\/p>\n

\u201cYou can fly to Egypt first class, spend two weeks at a four-star hotel, eat out every night, see all the sights, get the medication and fly back, and it\u2019s still cheaper than you\u2019d pay in the U.S.,\u201d he said.<\/p>\n

Leave of Absence<\/h3>\n

Dr. Gray doesn\u2019t see himself returning to product diversion in the veterinary channel \u2014 at least for now.<\/p>\n

\u201cIt was something we needed to do at the time to keep cash flow going,\u201d he said. \u201cIf we had another severe enough economic crisis and had to keep everybody eating, and there was a good product on the secondary market, I\u2019d rather divert than fire people.\u201d<\/p>\n

Why talk about his former role as a veterinary drug diverter?<\/p>\n

\u201cI don\u2019t think that badly of it,\u201d Dr. Gray said. \u201cI did it for financial reasons, reasons that made sense to me at the time. My wife didn\u2019t like it, but then she likes getting a paycheck.\u201d<\/p>\n

What would he say to colleagues who are critical of veterinarians who divert?<\/p>\n

\u201cFollow your own conscience,\u201d he said.<\/p>\n

He paused, then added wryly, \u201cFor us minipsychopaths, it\u2019s not a problem.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

How one veterinarian became a diverter of pet medications, and why he might do it again.<\/p>\n","protected":false},"author":66,"featured_media":2440,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"iawp_total_views":0,"footnotes":""},"categories":[339],"tags":[],"class_list":["post-2443","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-april-may-2018","column-features","clinical_topics-merchandising"],"acf":{"hide_sidebar":false,"hide_sidebar_ad":false,"hide_all_ads":false},"yoast_head":"\nA dark secret | Today's Veterinary Business<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A dark secret\" \/>\n<meta property=\"og:description\" content=\"How 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