Testimony to the Federal Trade Commission Regarding Proposed Changes to Its Contact Lens Rule

Robert D. Atkinson July 29, 2019
July 29, 2019

For over two decades, optometrists have lobbied for anticompetitive state laws and engaged in a continuing array of anticompetitive behaviors to make it more difficult for their customers to buy contact lens from other channels, including online and “big box” retailers. Unlike medical doctors who sell only their services (examining, diagnosing, and treating patients), optometrists sell both their services (eye exams) and the products they prescribe: contact lenses. It is against the law for consumers to buy lenses without a prescription. And so the profession has both a powerful economic interest (profits) and a powerful tool (the prescription) to make it more difficult for consumers to buy their lenses from lower-cost providers, such as online contact lens companies or big-box retailers.

The optometry industry has long used its unique gatekeeper power to limit patients’ ability to buy lenses outside of its cartel. With the advent of disposable lenses in the 1980s and then the emergence of online contact lens sellers in the mid-1990s, it became easy for patients to shop around for the best prices. But faced with this threat, the trade association for optometrists, the American Optometrist Association (AOA),
fought back.

According to a complaint filed in 1994 by 32 state attorneys general, the AOA leveraged optometrists’ hold on prescriptions to pressure lens manufacturers into distributing only to licensed optometrists, not to alternative providers. The threat was clear: If manufacturers didn’t play ball on optometrists’ terms, then optometrists would starve the manufacturers of business by refusing to prescribe their brands. After six years of litigation, the AOA in 2001 settled with the state attorneys general and the class of consumers they represented, agreeing to pay a fine for the alleged antitrust activity and pledging to refrain from such activity in the future. But meanwhile, through their state professional associations, optometrists were pressuring state legislatures to block legislation that would require optometrists to give prescriptions to patients to fill wherever they choose. Under this pressure campaign, only 22 states were requiring optometrists to give prescriptions to patients as of 2002.

Attempting to rectify this, Congress in 2003 passed the Fairness to Contact Lens Consumers Act (FCLCA), which, among other things, gave patients the same rights when it comes to contact lenses that they have had with eyeglasses since 1979—the freedom to fill eye prescriptions anywhere they choose. But after this law made it easier for consumers to buy lenses from other distribution channels, optometrists fought back again with further restrictive practices, this time by prescribing so-called “doctor only” lenses—limited-distribution brands of lenses that are available only through eye-care professionals. This practice once again drew the ire of state attorneys general, 36 of whom banded together in 2006 to urge Congress to outlaw it.

That was not the end of the story, however. After the “doctor only” avenue of restricting competition was foreclosed, optometrists pressured most contact lens producers to adopt “unilateral pricing policies”—an arrangement in which optometrists agree to prescribe only lenses from manufacturers that impose retail price maintenance schemes, so that other providers such as big-box retailers and online sellers would have no way to compete on price. And today the industry is lobbying heavily in state capitals across the nation to ban or significantly limit the ability of patients to have their eyes examined remotely through online tools.

Finally, there appears to be evidence that many prescribers ignore their obligation to provide patients with their prescriptions in order to increase the likelihood that they will be the one making the sale. For example, a 2008 article from Contact Lens Spectrum found that their reader survey of optometrists “indicates that despite this federal legislation [FCLCA] only half of the respondents replied ‘yes to every patient’ when asked if they release contact lens prescriptions.” A 2015 survey commissioned by 1-800 Contacts and conducted by Survey Sampling International found that just 35 percent of patients were automatically given a hard copy of their prescriptions on their day of their office visit. Moreover, the same survey found that 82 percent of eye care professionals presented purchasing options to their patients before providing the prescriptions. Given that the contact lens rule (CLR) requires that upon completion of a fitting, a patient is to be provided a copy of their prescription automatically, this lax performance of eye care professionals is disturbing.

Moreover, professionals in the industry, as well as their representatives, argue that as professionals they have the best interests of the patient at heart. The lion’s share of professionals likely believe they do. But most likely believe that there is no conflict between their own interests (e.g., selling their patients contact lenses and their patient interests (getting the best price on the right lens). This is why simply relying on existing market forces and industry professional norms to advance the intent and purpose of the FCLCA and the CLR does not work because prescribers have both an incentive and ability to limit consumer choice.

There is one other key factor why federal rules to enable consumer choice and competition are in the interests of consumers. Some industries are able to benefit from economies of scale, thereby benefiting consumers with higher productivity and lower prices. The optometry industry is not one of those industries, which is why, according to the U.S. Census Bureau, in 2016 there were almost 22,000 optometry establishments in the United States, averaging 6 employees per establishment. Because it is a local serving industry where offices are located near to where people live and work it makes no economic sense to have much larger offices. In contrast, the sale of contact lenses knows no such limits. Big box stores as well as online sellers can and do attain scale economies and efficiencies in the sale of contact lenses, bringing needed productivity gains to the U.S. economy as well as lower prices and more convenience to contact lens wearers.

It is in this context of a long set of industry practices to deny consumers the benefit of choice and competition and the benefits that large-scale sellers bring that the FTC is rightly proposing new rules governing contact lens prescription release.