State agencies jump on disciplinary bandwagon

Tampa, Fla.-The Florida Board of Pharmacy's benchmark settlement with PetMed Express in April promises to carry weight nationally as regulatory agencies across the country gather evidence against the controversial Internet/mail-order pet pharmacy.

The settlement, which fines PetMed Express $27,799 in investigative costsand $40,000 punitively for the illegal distribution of pet pharmaceuticals,has been criticized for being just $10,000 more than the administrativefine resulting from the company's first disciplinary action in 1999.

This latest setback stems from PetMed Express' "alternative veterinarianprogram," in which staff veterinarians script out for online clientswhose local veterinarians refused to authorize prescriptions for Internetorders. Legally, the practice violates the established veterinary-client-patientrelationships required in many states, but it also sparks veterinarian ire,as practitioners traditionally rely on in-house drug orders to stimulateprofits.

In attendance at the hearing, Dr. Eddie Garcia, a veterinarian from SouthTampa, says factoring in these fines was "obviously part of PetMedExpress' business plan."

"They got their hands slapped again," he says. "They haveso many customers, they can afford a $40,000 or $50,000 fine."

But company attorney Gregory Chaires says while the fines might seemlow, the settlement leaves PetMed Express vulnerable to similar chargesin other states. For example, he says, many states in which PetMed Expresshold licensure can fine the company just for being disciplined in Florida.They also are likely to bring charges of their own.

"PetMed Express is subject to discipline in other states for noother reason than they entered into a settlement agreement in the FloridaBoard of Pharmacy," he says. "Frankly, this is quite common. Thesetypes of fines are a source of revenue for states and a chronic complaintof companies."

Texas looks ahead

While no state agencies DVM Newsmagazine contacted confirm plansto punitively fine PetMed Express for the Florida settlement, state officialsin Texas admit they're investigating their own case against the company.

"We have turned information over to the pharmaceutical board,"says Ron Allen, executive director of the Texas veterinary medical board."I think there is enough evidence to challenge their license, but asettlement agreement is much more likely."

That's because the pharmacy boards are low on the food chain in termsof legal and political muscle, Allen says. "It's not worth it for statesto go gun-to-gun with these companies; it's too costly when they appeal,"he adds.

It is not the Texas Board of Pharmacy's policy to confirm investigationsor make public complaints against companies such as PetMed Express, saysKerstin Arnold, general counsel to the board. "But I anticipate we'llhave more information coming shortly," she says. "We're in theprocess of working with other regulatory bodies on this."

Ohio takes action

By contrast, the Ohio Board of Pharmacy has made public details of itsinvestigation into the company's practices. A hearing highlighting six complaintsagainst PetMed Express and its pharmacists regarding the alleged "retailof dangerous drugs" was scheduled for this month but postponed dueto incoming evidence, says Peg McCoy, spokeswoman with the board's LegalAffairs division.

At presstime, a new hearing date had not been set.

Missouri enforces blockade

The Missouri Board of Pharmacy already has PetMed Express on probationfollowing its 2001 findings that the company distributed drugs while unlicensedin the state. As the result of a state deal, the company can sell pet medicationsto Missouri residents, but not while using its alternative veterinarianprogram.

Further investigation into the company's practices is likely, says Dr.Kevin Kinkade, executive director of the Missouri Board of Pharmacy, butstate law prohibits the details from being released.

"The attorney general's office has filed actions against them concerninginjunctions," Kinkade says, "and the Kansas consumer affairs divisionhas refrained them from doing certain business in Missouri."

PetMed Express' Securities and Exchange Commission (SEC) report revealsthe company already has accrued $8,000 in fines in the state.

Settled in other states

Alabama and Utah are among several other states to already have dealtwith PetMed Express.

Late last year, the Alabama Board of Pharmacy alleged PetMed Expressviolated previously imposed terms of probation by dispensing prescriptionveterinary medicine without valid prescriptions. The company contested theallegation but reached a resolution, entering into a consent agreement withthe state. According to its terms, PetMed Express received five years probation,terminated its alternative veterinarian program in the state and paid $8,000in fines, according to its SEC filing.

As a result of its investigations, Utah denied the company's applicationto renew its out-of-state mail-order license based on actions with the Floridapharmacy board. PetMed Express objected, and its license was renewed.