FIVP believes the remedies proposed by the CMA could rob independent veterinary practices of the freedom and revenue to continue to deliver the quality of care they currently provide.
FIVP welcomes changes that improve animal welfare, increase transparency and deliver better value for clients and their pets.
FIVP, however, says “No” to some of the CMA’s proposed remedies, which present a transactional vision for the future of veterinary care.
We believe that the CMA’s approach to prescriptions and online pharmacies could drive pet owners away from experienced, trained and qualified veterinary surgeons and veterinary nurses, and is not in pets’ or pet owners’ best interests.
Veterinary practices provide a wide variety of services to their registered clients as well as to the wider community of animal lovers and the population in general. The whole country benefits by having veterinary care available 24 hours a day, every day of the year – despite there being no support from the government nor any funding to support it.
Veterinary practices are the fourth emergency service in the UK. However, unlike the NHS, the Police, and Fire and Rescue services, it receives no direct funding. Instead, it relies on cross-funding from other parts of the business.
Any member of the public that finds an injured animal or has an ill pet can pick up the phone and obtain emergency care.
This is because a sense of community is at the heart of every independent practice, as they provide a cross-county, 24/7 service for any animal in need of veterinary care – including an emergency pharmacy service, out-of-hours surgery, and a full dispensary of medicines.
One of the criticisms of the CMA is that they have not appreciated the scale and value of this service to the country and has focused too narrowly on one aspect of the cost of providing this service.
The CMA’s proposed measures will disproportionately penalise small, independent practices to the benefit of large corporates, and tilt the veterinary business landscape even further in favour of the large multi-nationals which have come to dominate the market. This is in spite of the CMA’s own findings that independent practices were, on average, substantially less likely to be excessively charging for their products and services than the large veterinary groups.
Peter Thomas, a partner at Temple End Veterinary Surgery, said: “These proposed measures will lead to an acceleration of the trend towards profit-driven veterinary care and the end of the traditional, local, community-based practices which have so benefitted the country in the past.”
Ensuring essential services remain affordable
For over seventy years, veterinary practices have existed through a system of cross-funding. This business model uses funds generated in one part of the practice to support the provision of services in another.
For example, the availability and provision of free emergency care to animals is covered from the practice’s overall resources, as is the discounted neutering of pets. The overall charge for consultations, medicine reviews, surgical procedures, and more, is likewise supported from income generated from the sale of veterinary medicines. Practice owners independently decide what proportion of total income is spent on equipment, facilities, operations, 24-hour care, community services, and other elements of the practice.
They do this with an overarching commitment to animal welfare, often putting their own needs second.
It is this cross-funding system that has underpinned the independent veterinary practice’s ability to provide a complete and comprehensive 24-hour service.
Why has CMA’s intervention in this been so unpopular?
The CMA’s view seems to be that the savings on medicines achieved by shopping online will result in overall savings for pet owners. On the face of it, it will. However, it may not have considered all the costs.
FIVP has shown that, instead of decreasing costs, the CMA’s remedies will increase the cost of veterinary care to clients. This is because a reduction in income to the practice by clients purchasing medication elsewhere will need a compensatory increase in fees somewhere in the practice.
An alternative for independent practices might be to go out of business.
In addition, the administrative burden of the CMA’s remedies is likely to further increase costs that practices will be forced to pass on to clients.
FIVP’s view is that, if the CMA’s proposals go through in their current form, pet owners will see an increase in their costs. This is something that FIVP, and the CMA, would not wish to happen.
To reduce overall costs to pet owners, the focus should be on encouraging pet owners to use their veterinary practice more, not less.
Is cross-funding a bad thing?
Cross-funding is a decision used in many businesses to ensure that essential services or products remain affordable for their customers and clients. To keep these prices low, other products may incur an additional charge to support the daily costs of the business.
Examples of cross-funding can be seen in just about every aspect of our daily lives.
It can be seen as part of our weekly shop, where some supermarkets endeavour to keep the prices of staple items low for their regular shoppers. This cost is cross-funded through the sale of higher-margin items, such as privately labelled goods.
With air travel, it is the prices of first-class tickets and cargo that the plane carries which can sometimes makes standard-class tickets more affordable.
In restaurants, the costs of wines and spirits are higher than in supermarkets or online to keep the food prices affordable for most customers, and so that staff can be paid a living wage.
In education, international students often pay higher tuition fees than UK residents.
In taxation, those earning more are taxed at a higher rate to support the provision of services to everyone.
Pet insurance services rely on charging a large number of pets a low monthly fee, which provides funds for the medical care of those that need it.
In veterinary practices, clients purchasing preventative and other medicines from the in-house pharmacy support the provision of clinical services to all clients.
The Future of In-House and Online Pharmacies
FIVP’s view is that veterinary practices are best equipped to prescribe and dispense medicines for pets. Only in a practice will clients encounter pharmaceutical expertise, professional knowledge and a unique understanding of their pet.
FIVP believes that some of the CMA’s suggested remedies undermine the incomparable value of the in-house pharmacy.
| In-House Pharmacy | Online pharmacy |
| Medical records checked at the time of dispensing by trained professional | Not checked or cross referenced |
| Face-to-face communication and advice on product usage given | Telephone or no advice |
| Treatment records updated to reflect actual usage | Not updated |
| Insurance forms can be completed on clients’ behalf | Client needs to submit two insurance forms. |
| Low carbon footprint | Higher carbon footprint due to delivery |
| 24-hour immediate availability of medicines for emergencies | 24-72hr delay in medicines arriving |
| 24-hour availability of professional staff in the event of adverse medicine reaction | Unavailable for face-to-face consultations |
| Profits used to support local veterinary care and emergency services | Profits go to entities anywhere in the world |
| Prices are higher | Prices are lower |
The above table shows the completely different service that is provided by the in-house pharmacy when compared to its online equivalent, yet the CMA remedies give the online pharmacy equal or preferred status.
In the long term, a shift to online pharmacies could leave independent practices unable to stock many drugs. It would no longer be economical for small businesses to hold drugs which may go out of date if they do not sell.
Douglas Paterson, director of Apex Vets, said: “This may present a cost saving where the client can wait three days for a turnaround on a written prescription and a postal order from an internet pharmacy. But it is a completely different scenario when a pet runs out of life-saving heart medication on a bank holiday or has a severe urinary tract infection or ear infection. Delaying treatment by a few days whilst waiting for the postman to come would cause the pet to endure significant pain and distress.
“I see this as an unintended consequence of the proposals as they stand, but there is a real danger here of reducing supply and availability of urgent medications out of hours.”
Dane Walker, of DNA Vetcare, added: “I welcome moves towards greater transparency, but the CMA investigation appears to have become overly focused on drug costs and has drifted away from its primary role of addressing monopolies and rising costs for pet owners.
“In my experience, rising fees have not been driven by increased medicine mark-ups, as independent veterinary practices do not inflate drug margins. Instead, comparisons with ultra-low-priced online pharmacies have created the impression that veterinary practices are profiting excessively from medicines.
“This risks masking the real structural issue in the sector: large corporate groups continuing to present themselves as independent while creating local monopolies that ultimately drive prices up.”
So, what changes can the consumer expect should the CMA remedies come into effect?
Perhaps the first change FIVP anticipates will be in the re-packaging and re-presentation of the overall offering to clients. Profession fees will rise, medicine costs will fall, and the overall cost to the client will initially remain similar.
So, for example, a £100 total invoice may change from a £50 consultation fee and £50 medicine cost to a £60 consultation fee, £16 prescription fee and a £24 medicine cost.
Then, when the increased cost of administration of prescriptions come into full effect, overall prices will rise. FIVP estimates this could be by as much as 12 per cent over inflation.
So, a typical overall invoice becomes £112 – made up of a £75 consultation fee, £16 prescription fee, £21 medicine cost, or variations of the above.
Pet owners can expect online pharmacies, many of which are owned by corporate groups, to develop a monopoly on medicine prices, with their huge buying power and reduced overhead costs giving them opportunity to make excessive profit. This means they can sell their medicines to clients at a cheaper rate than independent vets can purchase them for themselves.
An anonymous FIVP member said: “Once the large veterinary groups have more of a stranglehold on the online pet medicine supplies (a situation being encouraged by the CMA’s recommendations), small independent vets will come under increasing pressure and more will leave the market.
“Inevitably, with their increased power in the marketplace, online medicine prices will rapidly rise in line with the price rises already experienced by clients of the large veterinary groups.”
Also to be expected is the increased commercialisation of veterinary practice and the reduction of previous services that were previously included free of charge under the cross-funding system.
In FIVP’s Impact Assessment of independent practices across the UK, approximately 90 per cent of respondents said that they disagreed with these measures, yet to date we see no indication that the CMA are for changing. We hear that “they get it”, but there is no indication yet that they are listening.
Timothy Ferens, a partner at Temple End Veterinary Surgery, said: “The vast majority of those in the veterinary profession agree with the premise behind the CMA inquiry and embrace many of the changes suggested to remedy our clients’ experience. However, given that over 90% of those businesses most affected disagree with a specific part of the proposals, the medicines, we implore the CMA to take notice. It is clear that the medicines remedies won’t reduce the overall cost of veterinary treatment for the majority of clients.
“In a sector that already has declining levels of job satisfaction and mental health, diverting professional time away from patients and clients towards form filling and paperwork will undoubtedly drive more of our superb vets away from this vocation.”
An FIVP member, who wishes to stay anonymous, added: “It feels like the CMA are rearranging the deck chairs while watching the profession sink under corporatisation, and in doing so are inadvertently accelerating the demise of independents by adding bureaucracy, cost, and an ideological push towards online medicine sales.”
In its recent hearing with the CMA, FIVP proposed that choice be given to the consumer rather than a solution imposed by the CMA. This proposal worked on the basis that the consumer would choose how they wished to pay for veterinary care. It is, of course, ultimately the consumer’s decision and their money.
In a survey of independent practices, nearly 95 per cent of respondents said CMA remedies would negatively impact their practice’s finances, while nearly 85 per cent warned of confusion and unexpected fees for their clients.
So is all this change worth it?
The CMA maintains that consumers have been kept in the dark about medicine prices and that these remedies are needed to fix this. FIVP’s view is that they have not been kept in the dark and can easily check prices on any search engine within seconds.
FIVP has proposed that that there are much cheaper and more effective ways to inform consumers, assuming that this is the premise for these remedies.
FIVP judges that these proposed remedies will pile yet more paperwork and red-tape on to small businesses, contrary to a cross-party political consensus that condemns such regulation and considers it to be anti-growth and a drain on productivity.
FIVP is once again urging the CMA to consider the future of the independent veterinary sector, and is calling for an urgent review of its provisional remedies.
Their proposed measures will reorganise the traditional business structure, threatening independent practice’s ability to provide a community-focused service. The CMA is proposing the disassembly of a reliable, well-tested system without recommendations for a sensible replacement.
If the CMA’s remedies go ahead, millions of pet owners could see the monopolisation of veterinary care. Pet owners will see their vet bills rise, their choice becomes limited and, ultimately, animal welfare is put at greater risk.
Read our full response to the CMA’s Provisional Decision Report: https://fivp.org.uk/
