(Peter Ferrara) – Johnson and Johnson sells nearly 40 percent of the world’s contact lenses. But it used to have a virtual legal monopoly in the United States. Previously, regulations required patients to get prescriptions for contact lenses from licensed optometrists. But these eye doctors were not obligated to give those prescriptions to their customers.
So their patients were not free to take their prescriptions to whatever contact lens manufacturers would give them the lowest price. They could ask the manufacturer to get the prescription from their optometrist. But that gave the optometrist decisive power over the transaction.
If the optometrist was difficult to reach, or didn’t respond in a timely manner, the doc could effectively pocket veto the patient’s choice. That is why most patients just ended up buying their contacts from the optometrist at inflated prices, with the choice of manufacturer made by the eye doc rather than the patient.
There was no competition in that market as a result, especially with the kickbacks Johnson and Johnson gave to optometrists. That meant high prices for contact lenses prevailed, to the benefit of Johnson and Johnson and optometrists.
But Congress acted to liberate the contact lens market in 2003, with The Fairness in Contact Lens Consumers Act. That legislation required optometrists to give the prescriptions to their patients on demand. And the docs were required to respond to inquiries within eight hours. So no more effective pocket vetoes.
But research surveys show most consumers were not aware of their legal right to their written prescriptions, and the consequent power this gave them to shop around in a competitive, lower-cost marketplace. As a result, one-third of patients still never receive their prescriptions today, and remain captive to the high-cost monopoly option their optometrists offer.
Moreover, lobbyists Johnson and Johnson hired helped draft new legislation, the Contact Lens Consumer Health Protection Act. If passed, this act will effectively regulate many third-party sellers of lenses out of existence by mandating they provide fax numbers, which many don’t have. Moreover, the deadline for optometrists to respond to transaction requests would be eliminated, re-enabling pocket vetoes for no legitimate health reason to squelch the choice of contact lens competitors.
We Want to More Money Without Offering Better Value
Johnson and Johnson and optometrist lobbies argued this legislation is necessary for eye health and patient safety, alleging that keratitis, an inflammation of the cornea, has increased due to online orders. But as Dr. Paul B. Donzis, a professor of pphthalmology at the University of California at Los Angeles, responded, “Based on…authoritative scientific articles, it appears that online sales of contact lenses have not contributed to any increase in the incidence of contact lens related [injury].” The medical journal Eye and Contact Lens published a 20-year epidemiologic study of keratitis in 2007, which reported no increase in keratitis since online sales began.
What really threatens increased keratitis is the reduced competition and increased prices that would result from the bill. The top cause of keratitis is patients’ failure to replace contacts with new ones as scheduled. That would only increase as competition declined and prices rose under the bill going back to previous monopoly practices.
In 2016, the Federal Trade Commission proposed to resolve this debate with a new rule requiring optometrists to obtain a signed document from each patient confirming that the patient did receive a copy of his or her contact lens prescription. The FTC concluded, “The commission has not seen reliable empirical evidence to support a finding that sales [by alternative contact lens retailers] are contributing to increased incidence, or increased risk, of contact lens-related eye problems.”
But in late July, Rep. Leonard Lance (R-NJ) and Rep. Bobby Rush (D-IL) circulated a Dear Colleague letter calling on the FTC to withdraw the proposed new rule because of the supposed costs it would impose on optometrists. But a customer’s simple signature on a standard form would not involve any significant costs. Now, it appears Lance and Rush’s language is being slipped into a Financial Services and General Government (FSGG) appropriations committee bill, which will be voted on by the Appropriations Committee at the upcoming mark-up.
It is important that Sens. Shelley More Capito (R-W.V.) and Chris Coons (D-Del.), leaders of that committee, understand that the FTC rule would only enshrine all the more concretely the increased competition, consumer choice, and lower prices resulting from the 2003 legislation. Lower prices and increased choice would only encourage greater eye health through timely purchases of new, fresh, clean contact lenses. The time to act is now.
Peter Ferrara is a senior fellow at the Heartland Institute, senior policy advisor at the National Tax Limitation Foundation, and principal and general counsel at the Raddington Group, an international economic consulting firm. He served in the White House Office of Policy Development under President Reagan, and as U.S. associate deputy attorney general under President George H.W. Bush.