ETHICS
The ethics and legalities of rebates to farm managers By Kenton Morgan, DVM, DACT
As consumers, we have become accustomed to rebate programs, in which an after-purchase price discount is received at a predetermined time. You can receive a cash rebate after purchasing a new practice vehicle. Your dis- tributor or pharmaceutical manufacturer may offer rebates for purchasing certain quantities of product. The rebated incentive is paid to the person or entity that made the original product/service purchase. (See “Ethics: Navigating your practice in light of animal health company incentives and rebates,” EVE, Feb. 2016)
A question on the practice of veterinarians providing rebates came up during the ethics session at the 2018 AAEP Annual Convention. Based on that discussion, I recently posted this issue on the AAEP Ethics Talk Rounds/ listserv and I would like to share some of that discussion.
It was reported there have been instances where large veterinary accounts, such as breeding or training farms, are offered rebates from veterinarians or their respective practice. These rebates are typically based upon the dollar amount of business transacted between the veterinary practice and the farm during the preceding year. Here is the scenario: (1) On these farms, there are many different horse owners. (2) The owners are billed directly from the veterinarian/practice, and these invoices are paid directly back to the same. (3) The expectation is that this farm will do business exclusively with this veterinarian/practice. (4) The rebate is paid directly to the farm manager or sometimes the farm owner. (5) The horse owners at these facilities are unaware of this arrangement with the farm manager/owner.
A potential problem arises when a farm manager or farm owner receives and then keeps the rebate. Since the horse owners have paid for the veterinary services throughout the year, they should receive an appropriate portion of the rebate—if one is paid. If this does not occur, then the rebate could be considered a kickback and construed by many to be unethical.
It was noted during the online discussion that, in some states, this arrangement violates the veterinary practice act and would be considered illegal. In those states, the answer is clear: Don’t do it. In other states, it is not a violation of the practice act requirements. Check your own state practice act if you are considering anything resembling this type of activity.
The online discussion also raised the issue of transparency. Without the knowledge of this activity by horse owners (who are paying the bills), it begs the question of whether it is ethical?
I would like to share some of the input from contributors to this discussion:
Regardless of its legality, I believe it is patently unethical: The real origin of the revenue stream is not the trainer/ farm owner/farm manager but the owner of the horse; should not the owner then benefit from any rebate?
owner not informed of this business model? Transparency is nothing to be feared when ethical practices are employed.
manager to prioritize the value of the rebate over the value of choosing the equine practitioner more expe- rienced/competent in diagnosing and treating the horses’ problems?
From another member: The question is not: is it legal? The question is: is it right?
I also liked the Rotary “Four-Way Test” shared by another member: 1. Is it the truth?
2. Is it fair to all concerned? 3. Will it build goodwill and better friendships? 4. Will it be beneficial to all concerned?
And lastly: Do not worry whether or not an action is legal. Worry whether or not it is ethical. Ethical trumps legal—and anytime it does not, the fault lies with legal.
Good food for thought for all of us. If you have an ethical question or issue to discuss, please join the Ethics Talk Rounds at
communities.aaep.org/home. We would appreciate your participation, and you can post questions or comments anonymously.
Dr. Morgan is managing veterinarian with Zoetis’ Equine Technical Services group and chair of the AAEP’s Professional Conduct and Ethics Committee.
AAEP News August 2019 III
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