Chewy and Covetrus Face Off in Veterinary Prescription Dispute
By: Isaac Brownstein
A 2017 study shows that 77% of people consider their cats and dogs to be members of the family—and so it isn’t surprising that, collectively, they’re willing to spend big dollars on their pets. According to the American Pet Products Association, Reuters reports, Americans spent $72.56 billion on their pets in 2018 alone with the Federal Trade Commission anticipating pet prescription drug sales to exceed $10 billion annually.
Savvy businesses—including Chewy, Covetrus, Vetcove, and more—have therefore identified lucrative revenue opportunities to take advantage of by selling veterinary products and services, including prescription drugs. Currently, veterinarians still sell most of the pet medications, but cat and dog owners are also exploring newer options to see which ones offer the most convenience and/or lower prices. After all, people are used to shopping around the clock from the convenience of home with just a few clicks and so it’s a natural progression to get pet prescriptions this way.
The result? A gradual chipping away of the predominance long held by veterinarians for direct prescription sales as well as, in 2021, the eruption of a legal clash between two publicly held companies—Chewy and Covetrus—that have entered the pet prescription space fairly recently. The lawsuits between these two companies are not especially surprising. What’s uncertain, though, is how all will unfold and what impact they’ll have—short term and long term—for the veterinary industry where practices have relied upon prescription sale revenues to help run their businesses.
Legal Nuts and Bolts and Parties in the Dispute
On May 19, 2021, Chewy, Inc. filed a lawsuit in the Supreme Court of the State of New York against Covetrus, Inc. and Vetcove—with the legal matter heating up further after Covetrus countersued in August 2021. Here are high level looks at each of these companies:
- Chewy is a publicly traded company, founded in 2011, that sells pet supplies online and, in 2018, added Chewy Pharmacy to their business offerings.
- Covetrus is also a publicly traded company, founded in 2018, and they provide global services for veterinarians. Services include the creation of online pharmacies that are branded for specific practices.
- Vetcove is an independently-owned company founded in 2015. Vetcove is completely unaffiliated with Covetrus and Vet’s First Choice.
In their lawsuit, Chewy alleges that Covetrus and Vetcove collaborated to redirect online orders of pet prescriptions away from their company through improper collection of customer information and deceptive messaging.
Although, on the surface, this may seem to simply be a dispute among businesses that are competing for the same dollars, at the very heart of it is the veterinarian-client-patient (VCP) relationship and how it should be defined. How this lawsuit is ultimately resolved, then, can impact the very nature of the VCP relationship in the future.
According to the American Veterinary Medical Association (AVMA), the physical examination of pets is an essential aspect of their care. So is an ongoing relationship with the animals and their owners and careful record keeping of their health care, including prescriptions. Traditionally, pet owners paid for and received their pets’ prescriptions as part of an in-person visit. How pet prescription processes have been changing—and what’s acceptable for quality pet care—is a central part of the Chewy versus Covetrus lawsuit.
Pet Prescription Processes
In most states, veterinarians provide pet owners with the prescriptions they need for their animal companions or they approve the purchase of regulated medications and other products.
If pet owners decide not to get the prescriptions directly from their veterinarians’ offices, they can then choose a pharmacy to fulfill these approved products—and some of them select Chewy. If someone orders a regulated product from this online company and there isn’t an authorization on file, Chewy will contact the prescribing veterinarian to get confirmation before fulfilling the order.
According to Chewy’s lawsuit, when their customers participated in this process, they were redirected to buy the medications from Covetrus. This was accomplished, they allege, because Vetcove accessed their customers’ confidential data—and these customers were then sent confusing messaging that guided them to make prescription purchases through Covetrus.
It should be noted that more than 13,000 veterinary hospitals and nonprofit agencies use Vetcove’s purchasing platform in the United States.
Chewy states that, because of these actions, their company has suffered irreparable harm. As a remedy, they want:
- an injunction that would prevent Covetrus and Vetcove from continuing this behavior
- compensation for lost profits (dollar amount not stated)
- compensation because of harm to their reputation
About three months after Chewy filed this lawsuit, Covetrus countersued.
In their legal filing, Covetrus states that, because Chewy does not require a written prescription from a veterinarian—instead being willing to contact them for authorization—this is harming the animal’s well-being by removing veterinarians from the health care process. They also claim that Chewy is intentionally suppressing competition, which has the potential to cause veterinarians “substantial financial harm.”
As a further action, Covetrus emailed their veterinarian customers, sharing their belief that Chewy’s business strategy is actually undermining the “indispensable vet-client-pet relationship.”
In response, Chewy says that Covetrus is misrepresenting its lawsuit and business model.
Covetrus is not making comments about Vetcove and any role that its software is playing in Chewy’s lawsuit. Covetrus does deny, however, having a close relationship with Vetcove. As for Vetcove, the company has not responded to Chewy’s lawsuit or Covetrus’s countersuit with the CEO making no public comments on either.
It’s impossible to predict how the court system will decide this case, but it’s almost certain to affect the veterinary industry. If, for example, the court system decides that Covetrus is correct and Chewy’s business model doesn’t fit within a reasonable VCP relationship, that will take the industry in one direction; if the decision tilts in another way, that will affect the veterinary world in another one, as well.