Ethical question of the month — November 2008
Encouraging horses to run faster by means of whipping is considered a fact of horse racing. Jockeys relate stories of how whipping horses prevented severe accidents by forcing horses to avoid impending collisions. The viewing public on the other hand is voicing loud objections to the whip. Rules to regulate whipping vary greatly among racing associations, breeds, and jurisdictions and are often enforced in an inconsistent manner. Veterinarians are increasingly uncomfortable when they view multiple welts on a horse that they are called to treat for some disease the day after a race. How should veterinarians respond?
Submitted by Robert Wright, Belwood, Ontario
Responses to the case presented are welcome. Please limit your reply to approximately 50 words and forward along with your name and address to: Ethical Choices, c/o Dr. Tim Blackwell, Veterinary Science, Ontario Ministry of Agriculture, Food and Rural Affairs, Wellington Place, R.R.#1, Fergus, Ontario N1M 2W3; telephone: (519) 846-3413; fax: (519) 846-8101; e-mail: tim.blackwell@omaf.gov.on.ca
Suggested ethical questions of the month are also welcome! All ethical questions or scenarios in the ethics column are based on actual events, which are changed, including names, locations, species, etc., to protect the confidentiality of the parties involved.
Ethical question of the month — August 2008
On large livestock farms the cost of the medicines to treat or prevent diseases can total tens of thousands of dollars. Small changes in price, therefore, can have large effects. For example, a reduction of twenty cents a pig in vaccine costs would save a 4000 sow swine producer approximately $20 000 per year. Therefore, conscientious veterinarians strive to minimize their drug costs so that the savings can be passed on to their clients. Because distributors offer discounts to veterinary clinics based on volume, veterinary practices limited to a single species and servicing large farms can buy a product for less than mixed animal practices that often service smaller numbers of any one species. Producers served by veterinary practices with higher wholesale drug costs sometimes conclude that their veterinarians are overcharging and may change veterinarians as a result.
Competition in the marketplace for medication costs is good for producers. However, veterinarians who lose clients not because of poor service but because of an inability to compete on medication costs, believe something is unfair. Is there anything wrong with letting the free market in livestock medicines determine, in part, which veterinarians can succeed and which cannot?
Comments
I don’t blame the producer in the example but it often can be short-term gain for long-term loss. Over time, a herd health attending veterinarian could have removed one of the vaccines entirely from the protocol saving the producer comparable $$$ if cost was a concern. Similarly, a veterinarian often diagnoses a new disease situation occurring on the farm. Changing and using the appropriate vaccine protocol to address this new problem saves the producer far more dollars than saving dollars in vaccine costs, which ironically the original and lower cost vaccine protocol did not address. True farm profitability is always maximized with sound herd health return on investment and not on input cost alone.
As a side note, an organization called the Canadian Veterinary Food Animal Network (CVFAN) has been established to counteract what has been called discriminatory pricing.
All the veterinary buying groups across Canada (there are 5 main recognized ones) purchase product at exactly the same price from the suppliers. The fundamental argument, even from a volume standpoint, is why do pharmaceutical companies position large clinics at a competitive advantage to these massive buying groups.
Roy Lewis, DVM, Westlock, Alberta
Over the past 3 decades, the veterinary profession has invested millions of dollars in the creation of the prime distribution channel for veterinary drugs in Canada. The majority of veterinarians are shareholders in one or more of 4 veterinary owned buying groups {vOBG} (VP, MWDC, WDDC and AVP) that are responsible for distributing in excess of 80% of veterinary drugs sold in this country.
Recently, pharmaceutical companies have been offering new distributors, small groups of veterinarians, and even individual practices lower prices than the vOBG even though the vOBG do equal and often have substantially larger volumes. This is unfair and discriminatory.
The marketplace should determine both drug prices and what practice succeeds. But for the marketplace to be effective, drug companies must adopt price, discount and rebate structures that do not discriminate between distribution channels or between competing distributors and veterinarians.
Dr. Bob Bellamy, Bellamy Harrison Animal Hospital PC Ltd., 790 Lillooet Street West, Moose Jaw, Saskatchewan S6H 8B4; b.bellamy@sasktel.net
Large animal practice in rural settings is becoming more challenging. As much as we would like to see our incomes coming from professional services, the reality is that pharmaceutical sales remain a significant portion of our income. Buying from big cooperative drug distribution centers that market the majority of these products has not been the answer. Despite contravening the competition act of the land, pharmaceutical companies have been undercutting these centers and marketing products to smaller veterinary entities at lower prices. This, in effect, has reduced the competitive ability of many rural practices to market to their clients, and as a result, they have lost business. Not only is this unfair, it is also illegal.
Dave Holroyd, DVM, Edson Alberta
There has always been an unfair playing field for the lower sales veterinary clinic compared with the lay market/feed stores/larger veterinary clinics. The veterinary owned buying groups should have resolved this issue. However, the pharmaceutical companies choose to sell to large clinics and other distributors who have a lower volume than the buying groups…one can’t legislate greed and morality.
The producer may feel the need to purchase vaccines at lowest cost, but he/she needs to realize that the veterinary clinic may have provided a lot of free information and advice at the time of purchase. This information may have to be paid for. And as their veterinarian gets longer in the tooth and there are fewer veterinarians filling the rural positions, the veterinarian may choose to select to work only for clients who purchase from them.
Lis Ladyman, BSc, DVM, OVC ’73
An ethicist’s commentary on large volume practices undercutting smaller practices on vaccine prices
I do not have a satisfactory answer to this genuine ethical dilemma. On the one hand, we find large-volume practices that may have only 1 or 2 clients with huge numbers of animals able, via buying power, to deliver vaccines at rock-bottom prices. This is certainly a benefit to their clients. On the other hand, smaller volume practitioners, who may and usually do provide 1st class medicine to smaller numbers of clients, can well be forced out of business, or at least lose clients to the larger practices.
Intuitively, this seems unfair. But it is also a form of unfairness that cuts across all of free-market capitalism. Precisely the same issue confronts small retailers — hardware stores, clothing stores, groceries — facing competition from corporate giants such as Walmart, Home Depot, Safeway, and Walgreens. It also confronts small producers, such as pig farmers, who compete with such giants as Smithfield — hence the US loss of the vast majority of its pig farmers over the past 3 decades. Thus far, society has not seen fit to restrict this sort of corporate hegemony, though good people are put out of business. It remains to be seen whether the long-term consequences may force such regulation, as the emphasis on cheapness at the register, above all else, may well drive jobs and industries overseas, where labor is cheap, the paradigm case being China. But what will happen to the people who ran small farms and businesses before being forced out? The proliferation of such people may well itself force economic crisis.
One answer is for consumers not to shop by price alone, be it for clothing or hardware or for veterinary services. And that does happen to some extent, mostly with affluent consumers who can buy from humane or organic producers, or perhaps with those who are frustrated with lack of knowledgeable personnel at big stores, and who patronize the local hardware store, willing to pay extra for service. But, such people are the exception.
Something of this sort happens in small animal practice, where clients remain loyal to a veterinarian regardless of possible cheaper service. And it certainly happens in large animal practice as well, where farmers and ranchers have bonded with a practitioner. But it is less likely to happen in industrialized animal agricultural operations, where efficiency and productivity rule.
One hope is that the large clinic with a few large clients cannot provide the service the small practitioner does — coming out at midnight in a blizzard to manage a case of dystocia. It would thus behoove the smaller practice to enter into contracts with such clients to buy vaccines, etc. from the veterinarian at the price he or she needs to charge if the client expects personal service. It may help if the veterinarian forcefully explains that he or she is not price-gouging. I am not sure this strategy would work, given human nature.
Another possibility is for a large number of small practitioners to band together and form a cooperative buying unit to compete with the larger practices.
In the long run, government intervention may be required to help save smaller practices, particularly in a world where there is already a shortage of food animal practitioners. We learned in the 19th century that the Adam Smith ideal of a purely free market can destroy itself in the absence of government involvement to keep a level playing field.
Bernard E. Rollin, PhD