As pet ownership in Canada continues to rise, so do the associated costs. Canadians now spend an estimated $9.3 billion annually on veterinary services, making the affordability of pet health care a growing concern.¹ In response, the Competition Bureau of Canada has launched a targeted intervention into practices restricting competition within the veterinary medication market. Its detailed investigation, titled Pets, Vets, and Meds: The Case for More Competition, outlines how increasing competition in the pet medication market could ease financial pressures on pet owners, improve access to essential care, and foster innovation—all without compromising pet health and safety.

The rising cost of pet ownership in Canada

Pet ownership has grown significantly in recent years. According to the Canadian Animal Health Institute (CAHI), 60 per cent of Canadian households now own at least one cat or dog, representing approximately 8.5 million cats and 7.9 million dogs. This trend, fueled by the pandemic pet boom, has solidified pets as members of the family. However, this increased demand for pet care services has been accompanied by rising costs.

In 2022, Canadians spent nearly $7.4 billion on pets and pet food, a significant increase from $5.7 billion in 2019. Additionally, the Canadian Veterinary Medical Association (CVMA) reported that households spent $9.3 billion on veterinary services—a steep rise from $4 billion in 2019.

For individual pet owners, the financial burden is notable:

• Owning a puppy costs approximately $5,200 annually, while an adult dog costs $4,137 per year.
• Kittens can cost up to $3,540 annually, with adult cats requiring $2,849 per year.²

These figures, cited by the Competition Bureau from the Ontario Veterinary Medical Association (OVMA), emphasize the significant costs associated with pet care. Veterinary visits, preventive care, and emergency treatments contribute to these expenses. A standard annual check-up can cost between $85 and $130, while emergency visits range from $215 to $1,615 per year.² Despite these growing expenses, nearly one in five pet owners reported difficulty accessing preventive care due to affordability, lack of appointments, or other barriers.

How industry practices limit competition

The Competition Bureau highlights how the veterinary medication market in Canada operates under a system of exclusive distribution practices that limit competition and drive-up costs for pet owners. While both veterinarians and pharmacists are legally allowed to dispense pet medications, the Competition Bureau’s analysis reveals that systemic barriers prevent pharmacists from competing effectively in this space.

Exclusive distribution agreements

Pharmaceutical manufacturers typically sell medications only to distributors, who are largely veterinary-owned. These distributors then sell exclusively to veterinarians, restricting pharmacists’ ability to access these medications. Although manufacturers have started to remove exclusivity clauses from their contracts, distributors have maintained these policies, effectively limiting the availability of pet medications to veterinary offices.

This exclusivity raises several concerns:

• Pet owners have fewer options for filling prescriptions, often leading to higher costs.
• Veterinarians may face perceived conflicts of interest as they financially benefit from dispensing the medications they prescribe.

Regulatory barriers

Provincial regulations exacerbate the issue by restricting pharmacists’ ability to enter the pet medication market. For example:

• In Ontario, veterinarians are prohibited from reselling medications to pharmacists except in specific cases, making it difficult for pharmacists to access the supply chain.
• Similar restrictions exist in British Columbia, Nova Scotia, and New Brunswick, where regulations prevent veterinarians from distributing medications to pharmacies.

Corporate consolidation

Additionally, corporate-owned veterinary practices now account for more than 20 per cent of the market, a notable shift from the predominance of independently owned clinics in 2009. Major players such as Vet Strategy, National Veterinary Association, and VCA dominate the industry. As per the Competition Bureau’s report, this growing consolidation could further limit competition and consumer choice.

The role of online pharmacies

Online pharmacies have emerged as a cost-effective alternative for filling pet prescriptions. These platforms offer significant savings compared to traditional veterinary clinics and provide convenience for pet owners. However, exclusive distribution practices pose challenges to their growth.

Currently, many online pharmacies rely on veterinarians to purchase medications in bulk and resell them. This workaround is unsustainable in the face of stricter enforcement of exclusive distribution policies. Addressing these barriers could enable online pharmacies to thrive, further enhancing competition and accessibility.

Opportunities for reform

The Competition Bureau’s report highlights two case studies which demonstrate how policy changes can enhance competition and benefit consumers.

The United Kingdom

The U.K. government made legislative changes to address similar challenges in the veterinary sector. In 2005, the introduction of The Supply of Relevant Veterinary Medicinal Products Order prohibited unreasonable discrimination in pricing and terms between manufacturers, wholesalers, veterinarians, and pharmacists.

These reforms allowed pharmacists to enter the pet medication market, increasing competition and lowering prices. For U.K. pet owners, this meant greater freedom to choose where to fill prescriptions and access more affordable medications.

Industry stakeholders in the U.K. emphasized the collaborative nature of health care between veterinarians and pharmacists, highlighting the benefits of an open market for consumers. Pharmacists, while not replacing veterinarians, have become valuable partners in providing medications for chronic conditions or preventive care, complementing veterinarians’ roles.

Quebec

In 2021, pharmacists in Quebec secured access to veterinary medications through a national distributor. This breakthrough allowed pharmacists to dispense pet medications, creating more options for pet owners and encouraging competitive pricing.

The success of Quebec’s model underscores the potential for other provinces to follow suit. Notably, following the shift in Quebec, an Ontario-based online pharmacy specializing in pet care gained access to similar medication supplies, further expanding consumer choice.

The bureau’s recommendations

The Competition Bureau offers several recommendations to improve competition in the pet health-care market:

1) Mandate pharmacist access to pet medications. Provinces and territories should allow pharmacists to obtain medications directly from manufacturers or distributors, enabling them to compete with veterinary clinics.

2) Foster collaboration. Veterinary professionals and pharmacists can work together to ensure safe and effective medication distribution while reducing costs for pet owners.

3) Apply a “competition lens” to regulations. Policymakers should consider how existing and future regulations impact market competition, ensuring they encourage innovation and consumer choice.

For further details, read Pets, Vets, and Meds: The Case for More Competition at https://competition-bureau.canada.ca/how-we-foster-competition/education-and-outreach/pets-vets-and-meds-case-more-competition#fn.

References

1. Canadian Veterinary Medical Association (2023). The Economic Impacts of Veterinary Medicine in Canada.
2. Competition Bureau of Canada (Oct. 30, 2024). Pets, vets and meds: The case for more competition.