As enforcement activity intensifies across the animal health sector, companies face growing exposure to criminal, civil, and regulatory risks tied to pharmaceuticals, compliance gaps, and evolving market trends. In a discussion hosted by Venable, partners Warren Hamel and Valerie Cohen emphasized that this increased scrutiny mirrors patterns long seen in human healthcare and demands proactive risk mitigation and compliance infrastructure. The discussion addressed that expanding federal and state oversight is creating new challenges for companies operating across the animal health sector.
Criminal Enforcement Trends in Animal Health
Hamel warned that enforcement agencies are increasingly focused on issues ranging from opioid diversion to supply chain violations, noting that opioids have been "a matter of intense federal and state criminal enforcement focus for decades." He described how practices such as "vet shopping," or taking pets to multiple vets to obtain opioids, have prompted states to expand monitoring programs and oversight mechanisms.
At the same time, regulators are scrutinizing risks tied to veterinary drugs with a potential for human misuse. Hamel highlighted drugs like xylazine, explaining that its effects "put it square in the target zone for diversion to human use." He noted that recent cases signal that regulators are closely examining how products move through the supply chain, with significant enforcement consequences, including multi-million-dollar forfeitures, probation, and corporate compliance mandates.
Civil Litigation and False Claims Risks
Cohen outlined pressures in civil litigation, emphasizing that "civil litigation and civil investigations can be extremely disruptive and very costly." This is driven in part by the continued "humanization of pet care." As companies introduce products and services that parallel human healthcare, including supplements, pharmaceuticals, and technology-enabled diagnostics, they are encountering litigation grounded in familiar legal theories applied in new contexts.
Cohen also highlighted the increasing relevance of the False Claims Act in the animal health space. Although traditionally associated with human healthcare reimbursement, the statute can be triggered wherever federal or state funds are involved, including research grants and government-supported programs. Cohen noted that she has seen "novel uses of the False Claims Act over the last year," signaling it may become a more significant enforcement tool as the industry evolves.
Compliance Strategies and Emerging Risks
Both speakers emphasized that compliance expectations are rising in tandem with enforcement activity, particularly as companies expand into areas such as telemedicine, direct-to-consumer distribution, and federally funded initiatives. Regulators are increasingly focused on whether organizations have implemented effective systems to identify and mitigate risk, not just their response to isolated violations.
Hamel underscored that building a corporate culture of compliance is "a keystone of staying on the right side of the law," while acknowledging it can be particularly challenging for growing organizations. This includes ensuring that compliance considerations are integrated into business operations, supported by training, auditing, and internal controls that can withstand regulatory scrutiny.
To learn more about our Animal Health Group, click here.