Violations of Petmed Express

Identification

PetMed Express provides prescription products for heartworm prevention and treatment, thyroid problems, arthritis, diseases and infections. Nonprescription products include treatments for flea and tick control, bone and joint remedies, vitamins and other supplements, and items for bathing and brushing. Despite the violations it has been charged with from 1999 to 2004, PetMed Express has continued to be very profitable as pet owners continue to spend more on their furry friends every year.

History

PetMed Express began business in 1996. In 1999, the Florida Board of Pharmacy disciplined the company for dispensing drugs to clients without prescriptions. The Board also reprimanded PetMed for several advertising violations, for not keeping accurate and required records of prescriptions distributed and inventory of controlled substances, and for not labeling prescriptions properly. The company was fined over $30,000 and also had to pay investigative costs. Management was required to attend a course on pharmacy law, and agree to two years of semiannual inspections.

Further Violations

In 2002, PetMed was charged with numerous counts of violating Florida law, including making deceptive or fraudulent representations of products. In addition, PetMed had been contracting with veterinarians to write prescriptions for animals they had never actually examined, which is illegal in Florida. In addition, the company had been selling flea control products in boxes from other countries, which was considered mislabeling because the dosages were calculated in metric measurements.

Significance

PetMed Express paid a hefty penalty of $100,000, and incurred a three-year license probation in Florida, which was eventually reduced to two years. The company was ordered to end the "alternate" veterinarian program, and properly dispose of the mislabeled flea control items. Other states then began taking action against PetMed as well, including Alabama, Missouri, Texas, and Utah, for violating various state regulations on issuing prescription drugs. PetMed Express was ordered to pay penalties on some of these charges and had to eliminate the alternate veterinarian program in several states besides Florida.

Considerations

PetMed Express trades as PETS on the National Association of Securities Dealers Automated Quotations (NASDAQ) exchange. A class action lawsuit was filed against the company in 2004, alleging violations against the Securities Exchange Act of 1934. The suit accused PetMed Express of misrepresenting its business model, making its financial growth unsustainable. According to the suit, the misrepresentations and failure to disclose certain facts resulted in the company's stock trading at artificially high levels. The case was dismissed in 2005.