Bona Law Submits Comments to Federal Trade Commission Relating to Contact Lens Industry
Bona Law attorneys Jarod Bona and Aaron Gott submitted a comment to the FTC on behalf of LD Vision Group in response to the FTC’s request for submissions on the Contact Lens Rule. LD Vision Group, is a leading online contact-lens retailer that operates the websites LensDiscounters.com and Opticontacts.com and an outspoken advocate of reducing barriers to free trade in the market for replacement contact lenses.
The FTC requested comments from the public as it prepares to revisit the Contact Lens Rule during a routine re-evaluation of its regulations. The Contact Lens Rule was promulgated by the FTC to implement the Fairness to Contact Lens Consumers Act (FCLCA) passed by Congress in 2003. Together with the FCLCA, the Contact Lens Rule requires prescribers to provide patients a copy of their prescriptions and requires them to verify those prescriptions for retailers. It prohibits prescribers from conditioning the release of the prescription on the purchase of contact lenses, other payments, or on signing a waiver. It also prohibits retailers from selling contact lenses to consumers without a prescription. Sellers must either receive a valid, non-expired prescription or verify the prescription by direct communication with the prescriber. Prescribers, in turn, must verify the prescription within eight business hours. Unfortunately, the verification system is used by some prescribers to hamper sales by internet retailers so that they can attempt to re-capture the sale themselves.
Unfair conduct by prescribers are what led to the passage of the FCLCA in the first place. Eye-care providers are unique in that they are allowed to sell the products that they prescribe. Their unique power is complicated by the fact that contact-lenses prescriptions are brand-specific. As one could expect, the eye-care providers use numerous anticompetitive tactics to keep themselves relevant in an age where high-volume, low-margin internet sales lead to lower prices for consumers. These tactics range from prescribing obscure private-label brands that only prescribers can access to exerting pressure on manufacturers to implement vertical pricing policies—or face a massive boycott by the prescribers and their trade association.
LD Vision Group’s comment to the FTC suggests that the FTC should revisit the verification system and make it easier for retailers to sell replacement contact lenses. LD Vision argues that in order to prevent prescribers from thwarting sales by more competitive retailers, the verification rule should further limit the circumstances under which retailers must verify prescriptions with prescribers and even to allow consumers to opt-out of verification provided they receive notice that regular eye exams are necessary for eye health. LD Vision Group also asks the FTC to create an online reporting mechanism for consumers and retailers who encounter providers engaged in anticompetitive tactics. The rule should also prohibit prescribers from limiting the quantity on a contact-lens prescription.
LD Vision Group concludes its argument by asserting that the FTC’s vigilance in enforcing the Contact Lens Rule against prescribers is particularly necessary given the anticompetitive structure of the market for replacement contact-lenses and the resulting conditions—particularly the use of unilateral pricing policies and resale price maintenance by manufacturers.
Federal agencies often issue rules that will affect your business. Other times, like the FTC did here, agencies will revisit rules already in place. In any case, you have a right under federal law to give input and the agency has an obligation to address those comments.